There are a bunch of different ways you generate money. Here I am going to share 7 Streams Of Income with you that most of the millionaires have and you should also start building these sources for your better financial future.
1. Earned Income
Earned Income is the money that you earn by doing something or by spending your time. For e.g. the money that you make in your job, the salary you get by working for someone else.
2. Profit Income
Money that you earn by selling something for more than it costs you to make. For e.g. businesses selling their goods at a profit, whether to a retailer or wholesaler as distributors of manufacturers. You need to be an entrepreneur, start a side hustle and build a business for earning profits.
3. Interest Income
Interest Income is the money you get as a result of lending your money to someone else to use. For e.g. putting it in the bank, lending it to the government in the form of buying Treasury Bills, etc.
This is a great source of passive income where your active involvement is not needed once the investment is done. Many doubt the seriousness of wealth interest income can generate, but when combined with the power of compounding, and the fact that this is a true passive income with the least amount of risk, this can beat any of the first 2 sources of income generation hands down.
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4. Dividend Income
This income gets even better than interest income. It is equally passive and not only that, but it also makes you a shareholder of a company. This is the money that you get as a return on shares of a company you own. For e.g. the dividend that most companies announce at the year-end. The better this stream of income sounds, the more ignored and neglected is this source of income.
5. Rental Income
This is the money that you get as a result of renting out an asset that you have, like a house, or a building. Since the money required is huge, you may only be able to create few such assets in your lifetime and it also depends upon how much cash and property you have, unless you have other sources of income
6. Capital Gains
This is the money that you get as a result of an increase in the value of an asset that you own. For e.g. when you buy shares at $10,000 and sell them at $11,000 – the $1,000 is capital gain, or if you buy your house for $200,000 and sell it for $220,000 the $20,000 is your capital gain. And one thing you must know is that you have to pay taxes on capital gains too if your gain exceeds a certain amount.
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7. Royalty Income
This is the money you get as a result of letting someone use your products, ideas, or processes. They make all the revenues, they do all the hard work and you get a small percentage of whatever they earn. But there is no limit up to which you can earn.
For e.g. if you have a McDonald’s Franchise – the royalty you send to McDonald’s for using their processes, their logo, and marketing, etc is royalty income for them. The same goes with the book author, you get paid for every copy of the book sold.
Conclusion: So these are the 7 Streams Of Income you can choose a couple of them and can start to work upon them in order to increase your overall income. Having only one stream of income is too dangerous in the 21st century. Keep it to the safe side for yourself and for your family. You can choose a minimum of 3 streams of income for a better future.
“The key to financial freedom and great wealth is a person’s ability or skill to convert earned income into passive income and/or portfolio income”
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