1. Earned Income - obtained from working for someone or a company.

2. Passive Income - income generated from business.

3. Portfolio Income - income generated from investments in paper assets.

Earned Income comes from having a job in a company or in someone else's business. You get paid for your time and services rendered.
This indicates that the income an employee can generate from working for an employer is limited. There is the possibility that an employee may devote extra effort thinking the employer will pay him/her more. It is a rare possibility particularly when business is difficult, but possible.
And even if it happens, it is still limited. Whatever additional profit gained by the employer as a result of the employee's extra effort, the employer will get the bigger "slice of the pie." You are, in effect, making someone else rich through your added effort. Don't think I'm discouraging this. It is a good act. Basically, you trade your time away for money.

If you are an employee, you get your money or paycheck after everything else. It is earned income, less taxes and everything else deductible, before money reaches your hand. And if ever the money reaches your hand, the next place it is bound to go is to pay your bills. If the amount is not enough, you are bound to borrow, which makes you debt-ridden if it accumulates. Now, this is one big mistake. Don't ever get debt-ridden. It is the quicksand to poverty.
Earned Income is a safe way to generate an income. There is not much thinking to do. Except for a few high paying, high profile jobs, your work is mostly concentrated on a few things. Day after day, year after year, unconsciously, you will keep repeating the same functions over and over again. This discourages creativity, so boredom starts to set in. It is because of this boredom that getting to work every morning is such a drag and you keep on looking forward to weekends, holidays, and vacations.
Unless you really love what you do without consideration to the income it generates, or unless you are highly paid, or unless there is a lot more to learn in your job, or unless financial security is of no importance to you, there is no reason for you to stay long in the "rat race."

The earlier it is to get out of the trap, the better chances you will attain financial success.

Passive Income is generated from businesses. You can sell products or offer services, or a combination thereof. Examples are buying/selling real estate, trading merchandise as in wholesaling and retailing, etc. In many cases, you need not be physically present in your place of business.
There are also small businesses like vending machines where you hardly require an employee to visit those machines for refill (since you can do it yourself).

You can also go with franchising; either be a franchiser or a franchisee. The list is endless as long as you do what you love to do.
The beauty of going into your own business is that you work for yourself and not for someone else. You enrich yourself, not someone else. Your time is disciplined but more flexible because you can make your own schedule.
Another advantage of going into business, especially in your own corporation, is that you earn and spend before tax is deducted, unlike being an employee where you are taxed before you spend.

Portfolio Income, just like passive income, is making money work for you. Portfolio Income is generated from paper assets like bonds, stock market, certificate of deposits, and mutual funds. They are called paper assets because literally, they are businesses that revolve on papers.
It is in portfolio income where financial knowledge is of vital importance. Your intellect interacting with creativity can either unmake or make you rich.

Most people spend their whole life working for an earned income without realising the important aspect of the other 2 incomes.

I believe most people are pretty capable of having an earned income (eg. the years of education since you are a kid is to prepare you for this income).

If you would like to read more on how to increase your passive and
portfolio income, you can click on the below link to find out more even if you have little or no financial background. It also includes true case study.

Read up more on how to earn your passive and portfolio income here.

Source: http://www.ArticlePros.com/author.php?Jason Lim