What are the 3 Types of Income?

Income can arrive in your bank account or wallet in a few different ways. That’s because in addition to working hard for your money, you can also make your money work hard for you.

Income in general falls into one of three different categories, and understanding how they each work can help unlock new ways to make money. We’ll take a look at these income types and how addy plays a role in one particular category.

Three types of income

The three types of income are earned, passive and portfolio. It’s important to note that these are rather loose distinctions with a bit of overlap. For example, there may be some activities that fall under passive income even though a bit of activity is involved. Similarly, some may consider specific portfolio income as passive if you’re not doing much beyond investing.

Still, these categories help with analyzing and assessing your revenue streams and may open up new ways to make money.


The most familiar type of income is that which is earned. Also known as active income, this category comprises all the money you make directly from working a job, providing a service or taking in any money related to two. Wages and tips are types of earned income, as are any benefits or compensation you may receive from a job. Whether you are working for a big company or for yourself, money you make and any associated monies are considered earned income.


Also known as unearned income, this type of income enters your bank account without you having done anything – or next to nothing. Passive income is what you make while you’re doing other things. Most notably, this includes rental income you make from an owned property or any money you make through a business in which you are not actively involved.

Passive income also comprises inheritance money, lottery winnings, alimony, gifts and certain government benefits.

Passive income isn’t always 100% passive. It may indeed require some work up front, or some light effort once and while depending on what the specific endeavor is. For example, renting out property and earning money is generally considered passive income, however whether you hire a property manager or tend to the work yourself may alter the definition of “passive.”


Portfolio income is generally that money that is made through stocks, real estate and cryptocurrency investments. Dividends and interest you make through investing are considered portfolio income. Opening a savings account, for example, and earning interest on that also falls under the umbrella of portfolio income, as well as any interest you may make with loans.

You can earn portfolio income by being an active manager of your investments or by enabling a third party to take care of them.

Income with addy

addy members can unlock passive income by investing in commercial real estate properties. Members may invest anywhere from $1 to $1,500 in available properties with a chance to earn passive income in one of two ways. Generally, this is done through rent, where quarterly or annual distributions may arrive directly from rent collection to member’s addy wallets. We call these Owners’ Days!

Members can also earn money when a property is sold. We call these exits!

Both are forms of passive income because after you invest, your work is done. Your money (and addy) does all the work for you. You don’t even need to keep your membership in order to collect your distributions; your investment is locked in and guaranteed.

With high upfront costs, a scarcity of supply and plenty of due diligence required to buy and manage a property,  it’s harder than ever to own property. addy breaks down these barriers to make real estate – and passive income – accessible for all.

 Earn passive income with addy:

2 thoughts on “What are the 3 Types of Income?

  1. Sagun Goel says:

    Hi there,
    I was researching a Addy and seams like an excellent Idea…but a quick questions with respect to rental income distributions.
    1. How do I report the Cash-Flow income distributed to the investor will be reported on tax return as investor cannot report it as Rental income as he/she do not legally own the property?
    2. Is there any T-Slips provided by Addy end of the year to simply the tax reporting?

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