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Author: Michael Press Article source: http://www.passiveincomeinfo.com/. Used with author's permission.
I'm sure that you have heard the old saying that goes, "The rich get richer and the poor get poorer". Well, there's a reason why the saying exists, and that's because it is 100% true. The rich do get richer, and the poor do get poorer. But why is that?
First lets take a look at why the rich get richer. The rich have their money working for them. So, they don't need to work in order to make money. Their investments provide them with capital gains or passive income. The rich focus primarily on "capital gains" and "passive income" instead of "earned income". The rich are constantly creating and building assets with the money they have. They create or build more assets to provide them with more sources of passive income. The rich don't need to worry about layoffs or taking days off because they don't work for their money. Remember, passive income is the key to becoming wealthy.
The poor on the other hand focus too much on "earned income". The main source of income for the poor is "earned income", and it usually remains the same amount for a long period of time. In the meantime, the expenses of the poor generally increase over time. A new child comes along, medical bills need to be paid, gasoline prices keep going up, taxes go up, etc. And while all this is happening, the amount of money from a poor persons earned income remains that same. That's why the poor get poorer. The make barely enough in earned income to cover their expenses. The rich on the other hand make well more than enough in passive income to cover their expenses.
If you focus too much on "earned income", you can start making the transition to financial freedom by learning to invest for capital gains and passive income. The poor just keep getting poorer because most of them are afraid to make the leap from earned income to passive income. They are addicted to their earned income, and jump for joy whenever a raise or promotion comes about. Don't become addicted to earned income. Michael Press is an investor and teenage entrepreneur. He currently owns and operates http://www.passiveincomeinfo.com, a free website with articles about how to build wealth.
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