| Income (flow) | Wealth (stock) | |
|---|---|---|
| Nature | Money earned or received over a period of time (per month, per year) | Total value of assets owned at a point in time |
| Examples | Wages, salary, rent, interest, profit, dividends | Property, savings, shares, gold, business equity |
| India examples | An engineer's monthly salary; a farmer's seasonal income; interest on a fixed deposit; a company's annual profit | Market value of a Mumbai house; gold holdings; current savings balance; a business owner's equity |
| Connection | Saved income adds to wealth | Wealth generates income (interest, dividends, rent) |
Analogy: income is the water flowing from the tap (per minute); wealth is the water already in the bath (at one moment). A newly qualified doctor may have high income but low wealth; a retiree may have low income but high wealth. Wealth inequality is usually wider than income inequality because wealth compounds and is passed on through inheritance.