First thing is to ask yourself
How many streams of income are they?
Are you generating money using only one stream?
How many streams do the wealthy millionaires apply?
Done? Well if you're answers weren't
>4
Yes
More than 1 obviously
there is much more to earning money than what you are probably aware of, so anyone who has googled how to become a millionaire has stumbled on "7 Streams of Income" but just incase you haven't here they are along with the pros and cons of each.
1. Earned Income
Do you have a job? Do you exchange your time and energy for money? Yes?
Yay you are getting earned income.
Earned Income is the money that you earn by doing something or by spending your time
Pros!
Money .... Duh! You have money coming in and you can beat your chest and say you earned that shii
Comfort: if you do it right you get to live comfortably, you have the essentials and the occasional splurge here and there. You can provide for yourself and your family
Get to climb the Corporate Ladder: If you love what you do and you do it well to the best of your ability, you'll be at the top in no time and you'll be making the big boy bucks
Cons!
Poor Quality of Life: this is definitely where your quality of life will suffer the most, because you will be trading your time for money. Heard that JOB means Just Over Broke, this is because in most cases, your job will pay you just enough to keep you from being broke.
Unrealised Dreams: If you aren't 1000% passionate about your field and climbing to the top, you will be helping someone else realise their dreams and alot may pass you by.
The main reason most people are not able to think beyond earning money through a job, is because in most cases your job will provide you with enough money to put you in a comfort zone. Unfortunately, this will eventually become your biggest enemy and will keep you away from leading an extraordinary life.
Most people will spend majority of their time in this income stream and still will never have enough money to lead a truly wealthy life.
Earned Income is an amazing starting point but that is it a STARTING POINT.
2. Profit Income
Are you an entrepreneur? Do you put money in a project and let it make bigger money?
Yasss that's Profit or Possible Profit income
To be an entrepreneur and start earning profits, you will need to identify a product or a service that you want to sell, and then sell and manage it well, and manage your clients equally well.
Money that you earn by selling something for more than it costs you to make. e.g. Businesses selling their goods at a profit, whether at the retail or wholesale level, as distributors or manufacturers. You need to be an entrepreneur for earning profits.
Pros!
Again Money .... If things go well the money here seems sweeter than one from Earned income, mainly because you’re bearing it all. (Rather than a cog in a machine you’re the darn electricity, without you nothing is going to work)
Comfort: if you do it right you get to live even more comfortably.
Realised Dreams: Being an entrepreneur, you get to pursue what you want, realise your own dreams and eventually make your own hours,hopefully making the big boy bucks.
Cons!
Risk!!! As a budding entrepreneur, I cannot stress this point enough, the risk involved is prominent, as it is called profit it could easily change to break even “income” or even loss “income”.
Time: If you are trying to get profit income whilst getting earned income, you better structure everything well because this will also take away a lot of your time, at least in the initial stages - until you learn to manage it really well and the source is able to make money on its own.
Money: Yup, this is one of those "spend money to make money" plans you will definitely need some sort of investments whether small or large.
Entrepreneurship requires a different kind of mindset and risk taking capability.
A lot of people with the 'Earned Income' want to move to this category at some stage of their career or life, however many find it difficult to make the move because of the risks involved, statistics and overall fear of the unknown. Most often, this lack of courage is justified because of the family constraints and needs.
Do not stop reading now, alot of people, believe that after 'Earned Income' and 'Profit Income' whats next?
These are definitely not the only viable means to earn serious money.
3. Interest Income
Do you have money in the bank? Did you buy bonds? Did you lend money to your sister to buy Avengers Endgame tickets on the basis that she pays you 5% more when she is paying you back?
Hurray you got Interest Income.
'Interest Income' is the money you get as a result of lending your money to someone else to use, e.g. putting it in the bank, lending it to the government in the form of buying Treasury Bills etc.
Pros!
Again Money .... This is an amazing source of passive income
Power of Compounding: Compound interest is one of the best things we have access to and if you keep investing into your interest income stream your interest income stream will be so good to you
Cons!
Snail Money: Most of this requires your money to be untouched and it involves dedication and some times interest rates and inflation rates may be annoying
Time: Just like in snail money this takes time and its means you gotta play the long game.
Money: Yup, this however means you gotta invest money to make money
Discipline: If you don't have discipline, you'll break the investment before you can attain the height of your interest income
Its easy to doubt the power or this stream and very easy to underestimate the amount of wealth hat 'Interest Income' can generate, just remember that when money is combined with the power of compounding it is not a force to be reckoned with.
This is a true passive income with the least amount of risk.
4. Dividend Income
Do you have stock?
You're most likely getting Dividend Income.
Lets be honest this can easily be better than Interest Income, this is because It is equally passive and it also makes you a shareholder of a company. WooHoo!!
This comes as a return on shares of a company you own. For e.g. the dividend that most companies announce at the year end. (I hope you follow the A-Z's on our Instagram and Facebook stories)
Lets do the math, you got 5 shares in a company worth £300 in total and at the end of the year they pay dividend of 5.00 on each share. that is £25 on £300, now imagine you that for 12 companies for a few years. Each company pays dividends on a different month. You're making monthly income.
If you can calculate the Dividend Math (The dates and all) you could start earning dividend in not time.
Pros!
Again Money .... This is an amazing source of passive income, some times you can get surprise dividends
Power of Compounding: As in the aforementioned, if you reinvest this income you would be amazed how your wealth grows.
Share holder: You are actually a shareholder in a company and your voice matters. Yay!
Cons!
Mean Stocks: Some stocks don't pay dividend, some pay dividend with more stocks and for
Time: Timing in the sense that some stocks don't pay frequently
Money: Yup, again you have to have stock in the company first and stock in its own can be risky
This is passive income mixed with power.
5. Rental Income
Do you have something that you make people pay to use?
Good Job, you're getting rental income.
This is the money that you get as a result of renting out an asset that you have, like a house or online space. Now, this income is even better but there are inherent drawbacks of this kind of income over the above 4 types of incomes.
Pros!
Again Money .... This is an amazing source of passive income and it can be as long lasting as the come
Time: This is a pro and a con, in most cases you can just leave your rental source of income and watch it grow, it can be amazing and quite hands off.
Can lead to other Sources of Income: You can easily get Capital gains from this source.
Cons!
Money!!: You'll definitely need other sources of income, for some sources of rental income you need big money definitely the crème de la crème of use money to make money.
Research: Yes for all the rest you definitely need to research beforehand but this is solely dependent on research, location is everything
Time: Timing in the sense that housing market can be volatile and you might have to wait a bit to make over your start up costs, can be immovable, because of its lack of liquidity it may take time to exchange to cash.
This is boss income.
6. Capital Gains
Remember that card you bought for £1 that is now worth £30? That worthless tee that can be sold for £5000 because so and so signed it? or that collectors item you own that is now worth 100x its value?
Yup those are Capital Gains
This is the money that you get as a result of increase in value of an asset that you own.
Pros!
Hands Off: This is a pro and a con, leave your source of income and watch it grow, it is very hands off.
Cons!
Tax: There are different tax laws in different countries on capital gains for big items, {these can be sorted out.}
Long Game: For most capital gains, you're going to have to play the long game.
This is wish come true income
7. Royalty Income
Do you have an idea that you let someone use? Do you get paid for your book/ music ?
You're getting royalties
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 what ever they earn.
Pros!
Easy Money: This is an amazing source of passive income and it can be long lasting as long as it maintains its validity. As it is your design, you can most likely price it to match your effort or even more.
Hands Off: This is a pro and a con, leave your source of income and watch it grow, it is very hands off.
Realised Dreams: Being an entrepreneur, you get to pursue what you want, realise your own dreams and eventually make your own hours,hopefully making the big boy bucks.
Cons!
Creativity: If you are not creative this maybe a tad hard to attain, as the biggest challenge here is to create something unique and then make it marketable and repeatable.
Time: A lot of people don't use this as their only source but rather a secondary source, either way you would need to carve out time to pursue this and you would most likely need money while you do.
This is Biggest Boy income.
Ask yourself:
How many did you already know?
How many streams of Income do you have?
Which additional stream is the best for you?
Which are you going to try?
Overall, these are the 7 streams of income simplified, hope you understood and enjoyed it, so make a goal and start building those streams.
As my favourite saying goes:
Comentários