Do you have multiple streams of income?
Do you have any idea how many multiple streams of income there is? Are you just producing income from one source? Which income streams do the wealthy millionaires use, and how many do they have? Which income stream is best for you? There’s a lot more to making money than you actually realize.
There’s a lot of speculation on how to become a millionaire overnight in the get-rich-quick industry, but the fact is that most people don’t have an intense, all-consuming desire to make a lot more money than they need to live comfortably. Most people, I believe, do not want to make $20 million in a few years.
They just want to avoid exchanging their time for money, or at the very least, cut down on the amount of time they spend earning it.
The keyword here is “quality of life.” “Living comfortably” is a highly subjective state of being that means different things to different people. But one thing we all have in common is that, unless we were born with silver spoons in our mouths, we spend our lives attempting to balance our time spent working with our time spent doing all of the things we enjoy.
I’ll go through multiple streams of income that millionaires use, as well as the benefits and drawbacks of each. It’s possible that you’ll also want to focus on developing multiple streams of income.
Here are seven sources of income for millionaires.
1. Earned Income
Earned income is money earned by doing something or investing your time, such as money earned at a job or a wage earned by working for someone else. Since you will be exchanging your time for money, this is where your quality of life will suffer the most. In most cases, employers can only pay you enough to keep you from going bankrupt.JOB, of course, stands for Just Over Broke. Work would provide you with a relatively comfortable zone, which is why most people are unable to think beyond making money through a job.
Unfortunately, your comfort zone will become your worst enemy, preventing you from living a life of value. You will spend the majority of your life earning money from this source and still not have enough money to live a truly prosperous life.
“Comfort is your biggest trap and coming out of comfort zone your biggest enemy” ~ From the Rat Race to Financial Freedom
2. Profit Income
Businesses selling their products at a profit, whether at the retail or wholesale level, as distributors or producers, gain money by selling something for more than it costs them to produce. To make money, you need to be an entrepreneur.
You may need large sums of money, or you may be able to start a small business for profit with just a few dollars. But, at least in the beginning, this will eat up a lot of your time before you figure out how to do it well and make it churn on its own.
Entrepreneurship requires a unique attitude and willingness to take risks.
Most people who work and are used to ‘Earned Income’ choose to transition to this category at some point in their careers or lives, but find it difficult to do so — largely due to a lack of courage to take additional risks. The majority of the time, this lack of courage is justified by family pressures and needs.
To become an entrepreneur and start making money, you must first find a product or service that you want to market, then sell and manage it effectively, as well as manage your clients.
Many people believe that ‘Earned Income’ and ‘Profit Income’ are the only viable ways to make serious money, but they often overlook the fact that there are five other ‘equally’ viable and serious wealth-generation sources.
3. Interest Income
Money earned as a result of lending your money to someone else to use, such as placing it in the bank or lending it to the government in the form of Treasury Bills, is known as ‘Interest Income.’
This is a perfect source of passive income because you don’t have to do anything until the investment is made. Many people question the seriousness of the wealth that ‘Interest Income’ can produce, but when combined with the power of compounding and the fact that it is a true passive income with the least amount of risk, it can easily outperform the first two sources of income.
4. Dividend Income
This is a greater source of revenue than interest income. It is similarly passive, and it also turns you into a shareholder in a corporation. This is the money you get as a result of owning stock in a company. For example, most businesses announce a dividend at the end of the year. The more appealing this source of income is, the more overlooked and forgotten it is.
Since you are also a party to the Capital Gains that the share price goes through, you will far outweigh the returns from Dividend Income than what you get from Interest Income if you invest smartly on ex-dividend dates of successful blue-chip firms.
This is one of the most important instruments we suggest for producing sufficient Cash Flow while still earning a high level of income.
5. Rental Income
This is the money you earn by renting out a property you own, such as a house or a building. This income is now much greater, but it has inherent disadvantages to the previous four forms of income.
The amount of money needed to build such an asset that can produce daily rental income is one of the most significant disadvantages. Since the money needed is so large, unless you have other sources of income, you will not be able to produce many such assets in your lifetime.
For example, you can start earning ‘Interest Income’ or ‘Dividend Income’ with a $1,000 investment, but you can forget about earning Rental Income with such a small investment.
Another significant disadvantage of this commodity is its (il)liquidity. In times of need or when rebalancing the portfolio mix, it’s difficult to liquefy this asset quickly.
6. Capital Gains
This is the money you get when the value of an asset you own rises in value. For example, if you buy shares at $10 and sell them at $11, you’ve made a $1 profit, or if you buy a house for $200,000 and sell it for $220,000, you’ve made a $20,000 profit. Capital gains are taxed differently in different countries. There are, however, ways to avoid paying taxes.
7. Royalty Income
This is the money you earn by allowing others to use your goods, concepts, or processes. They generate all of the money, they put in all of the efforts, and you get a tiny cut of everything they produce.
For example, if you own a Subway franchise, the royalty you pay them for using their processes, logo, and advertisement is royalty income. If you are a writer, you are compensated for each book sold.
The most difficult part here is coming up with something new and then making it repeatable. To build such an asset, you’ll need specific skills, but once you’ve done so, the amount of money you will make is nearly limitless.
Those were 7 ways to make money. Of curse, there are many more but these are some of the basic ones that are most common.
Millionaires never rely on just one income source but have 5,6 or maybe 7 income sources that make them money.
Most people in the world chase the idea of getting the best-paid job they can get there hands-on, and that isn´t a bad idea. But a better idea would be looking for ideas to build a second income source, a second leg that makes sure they don’t fall into a crisis if the other one falls away.
Stop chasing a well-paid job and look for other ways to make money on your own.