The Best Kept Secrets Of The Wealthy!
This article will address some of the best-kept secrets of the wealthy. First of all, the rich mostly earn “passive” and “portfolio” income…not earned income! The wealthy know these two types of income will allow them huge tax advantages.
Many wealthy individuals do not work for money. Instead, the rich make sure their money is working for them! A famous quote by the author and entrepreneur, Robert Kiyosaki, states this “Don’t work for money; make it work for you.” The wealthy know this all to well.
The Wealthy Own Passive And Portfolio Income
There are 3 types of income: earned income, passive income, and portfolio income. Earned income is derived from getting paid to work. This income is what the “majority” of Americans work for! Passive income is earnings where the individual is not actively involved. The IRS treats passive income differently. An example of this type of income would be owning rental properties and collecting rent payments. Another type of income is Portfolio income. This income is from the dividends and capital gains derived from investing in stocks. Portfolio income also includes interest from bonds and annuities.
The rich know well the differences between these three types of income! The wealthy get to enjoy the tax breaks the government gives them from their “passive” and “portfolio” income.
The Wealthy Get Tax Breaks From The Government
In addition, many wealthy individuals own businesses which gives them a “huge” tax advantage over the poor and middle class. They are allowed to deduct their expenses from their income first and, then pay taxes on the money remaining!
The poor and middle class, however, do not get the tax breaks of the wealthy. The majority of them work, instead, for “earned” income. Earned income is taxed by the government the very heaviest!
With earned income the poor and middle class have the disadvantage of having to pay their taxes first out of their paychecks! And, the remainder of their paycheck is what they pay their expenses with. The government takes “its cut” off the top of the working class’s paychecks.
Wealthy People Educate Themselves
People that are wealthy continuously educate themselves. They have good financial literacy. They are constantly learning how to become wealthy. Wealthy people take the time to read everything they can regarding wealth by going online and reading books. They spend their time educating themselves. The wealthy also learn from “others” who have achieved wealth.
In conclusion, wealthy individuals maximize their income by taking tax breaks that the poor and middle class are not allowed to take! These lower tax rates by the government allow the rich to grow their money “faster”. Many wealthy individuals also have the tax advantages of owning their own businesses.
In addition, the rich know the best way to make their money work for them is by earning “passive” and “portfolio” income…not earned income. The wealthy continuously spend time educating themselves on these types of income.
