The Best Kept Secrets Of The Wealthy! Part I

Published by Linda Brown on

This article will address some of the best-kept secrets of the wealthy.  Many wealthy individuals do not work for money.  Instead, the rich make sure their money is working for them! 

The wealthy mostly earn “passive” and “portfolio” income…not earned income!  These individuals know these two types of income will allow them tax advantages. 

The poor and middle class, however, do not get the tax breaks of the wealthy.  The majority work instead for “earned” income.  Earned income is taxed by the government the heaviest!

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.  An example of this type of income would be owning rental properties and collecting rents.  Another type of income is portfolio income.  This income is derived from stocks: dividends, interest and capital gains. 

The rich know well the differences between these three types of income!  The wealthy enjoy the tax breaks the government gives them from their “passive” and “portfolio” income.  

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, with earned income, 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 paycheck.

In conclusion, wealthy individuals maximize their income by taking tax breaks that the poor and middle class are not allowed! These lower tax rates by the government allow the rich to grow their money “faster”.  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.  Many wealthy individuals also have the tax advantages of owning their own businesses.

Linda Brown

I'm an Accountant, Blogger & Investment Consultant with a "Bachelor of Business Administration"degree. Teaching women how to invest in stocks successfully! Men welcome!