We can bet you that you’ve heard that an average millionaire has an average of 7 streams of income constantly flowing in their pockets. However, an average person has only one stream of income which always doesn’t have to be his job. Today, we will share 7 types of income an average millionaire has and will give you tips on how you too can have that. So, let’s begin.
1. Learned Income
This term refers to the money earned from working or by spending time on a project. This could be earnings from your job, salary from working for someone or contract payments. Earned income is the base of all self-made millionaires. These earnings work as building blocks for the aim they need to pursue other income’s dreams. It’s almost impossible to become a millionaire just by your job’s paycheck unless you invest wisely.
2. Profit Income
This refers to earnings gained from selling a service for more money than it cost to make it. This can either be wholesale, retail distribution or manufacture level for goods. Today, it is so easy to create this channel of income with the tools available online. You could start off by investing some money depending upon the funds. Remember, this income requires having an entrepreneurial mindset. AT first, it may be time-consuming before you get the grasp of it all, but as time passes by, it will be well rewarding.
This can boost your earnings and can make you a millionaire within a short time. But this can be risky so you need to do a lot of research to avoid great losses. Experts can also guide you to do marketing, especially in the first year.
For many people, learned income and the profit income is the only sources of the earnings that they know. They tend to forget that there are five viable streams by which they can earn some serious money. Let’s have a look at them too.
3. Interest Income
This isn’t a common income stream, but again for millionaires, this is common. This income comes from lending money in exchange for some interest. This could be by saving money in the bank, through treasury bills given to the government or by lending someone money which we do not recommend. The interest rate ranges between 1-5% making it the least attractive, but you don’t have to actively involved in the investment. Not only this, it happens to be the least risky.
4. Dividend Income
This is one of the best income streams because it is passive. It also makes the participant, a shareholder of the company. You must be thinking of how does it work? When you buy some shares, the company gives them to you. A shareholder is the co-owner of the company. Depending upon the company’s policies, you will be paid in dividends, either quarterly or yearly.
5. Rental Income
This is an income acquired by renting out an asset of your own. This could be an office space, parking space, a home or even a whole building. The property could be commercial or residential. This can add some dollars to your bank account.
6. Capital Gains
This income is also quite possible. It is the income generated as a result of incremented value on your assets. For instance, you buy something for 100 dollars and after some time, you are selling it for 120 dollars. This is how it works. In this example, the capital gain is 20 dollars.
7. Royalty Income
This is the income source that defines what passive income is all about. The earnings are made even after one’s work is done. For this, you need to create a unique product that will later be used by other people. The other people will do the hard work and pay back their small percentage of earnings to you. However, this income is one of the hardest to make. The reason being yet is that you have to create something unique and isn’t easily replaceable.
Some millionaires and even billionaires have become rich by mastering any one or two of the methods above. You need to focus on any of the methods other than the earned income and become rich.
