7 Streams of Income Millionaires have!
This is the first article I'm writing about personal finance. Here it goes:
Let's start with types of income :
There are broadly two main categories of income: active income and passive income
1. Active income refers to income received for performing a service. Wages, tips, salaries, commissions, and income from businesses in which there is material participation are examples of active income.
If you received in the form of a paycheck is an excellent example of active income.
It is when self-employment gets into the scene that makes things get a little blurry. Self-employment can be quantified or counted as an active income when there is a day-to-day working time investment and requires adequate attention.
2. Passive incomes include earnings from a rental property, limited partnership, or other business in which a person is not actively involved—a silent investor, for example.
They say that every millionaire has these seven streams of income; and the seven streams of income are :
1. Earned income - This essentially is your active income, that is, money made from your job. Most people have this as the only stream of income coming in.
2. Stock/ Dividend Income - The money you make from investments in the stock market from an appreciation of assets and dividend income.
3. Rental Income - Which comes from the rent received from real estate assets and properties a person might have.
4. Capital Gains - Money from selling investments and assets at a profit.
5. Interest Income - The passive money earned from interest on fixed deposits and whatnot.
6. Business Profit Income - The passive money earned from your business that is usually a side business for another source.
7. Royalty Income - When you put in work and create something that then leads to money coming in. For instance, this is the income received from writing books or during present times like a blogging youtube channel.
Based on this premise, there is a presumption that all millionaires have these seven streams of income. This premise probably has some truth in it as the pattern seen with most of them is consistent. However, people forget in this supposition that most of the millionaires did not become rich/wealthy because they had these seven streams of income. But they became what they are because of one thing that worked for them, and it was only on becoming rich that they started creating other streams of income.
People usually confuse themselves and assume that instead of having one source of income, they need multiple paychecks. And that is what will make them rich (Imagine getting your salary seven times ).
If you want to create a new income stream, either you have to invest your time into it, or you need to invest your money into it. If you don't have the money, you have to invest your time, but there is only so much time in the day. If you don't have enough money, you will probably dilute yourself a little too much and end up making no real income, let alone increasing it.
I hope this helps anyone who is reading this.
Until next time!
Shout out to Michael Longmire for the picture.