Here are 7 Income streams for millionaires....
1. Earned Income - Money that you earn by doing something. For e.g. the money that you make in your job, the salary you get by working for someone else. ~ Many Millionaires Drop this form of Income simply for Freedom.2. Profit - 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 at the retail or wholesale level, as distributors or manufacturers.
3. Interest - 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.
4. Dividend Income - 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. Typically you will have to own shares to get dividends.
5. Rental Income - Money that you get as a result of renting out an asset that you have. For e.g. This will be a house, or a building.
6. Capital Gains - Money that you get as a result of increase in value of an asset that you own. For e.g. when you buy shares at $10 and sell them at $11 - the $1 is capital gains, or if you buy your house for $200,000 and sell it for $220,000 the $20,000 is your capital gain.
7. Royalties - 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. For e.g. if you have a Subway Franchise - the royalty you send to Subway for using their processes, their logo, and marketing etc.
8. Brokerage - Money you make when you buy and sell goods or assets for others.
"the centralized lenders operate through brokers"
A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal
Brokers usually establish a firm or Network to receive a percentage from the profits of their network.
Network marketing is a business model that depends on person-to-person sales by independent representatives, often working from home. A network marketing business may require you to build a network of business partners or salespeople to assist with lead generation and closing sales.
Many Millionaires have all of these 7 income streams.
Here is another way of looking at these 7 streams from the perspective of a Financial planner:
Active income. Active income is income that is a byproduct of working. For example, let’s assume you are a salaried employee at a Fortune 500 company. A standard 9 to 5 would be active income. It is active income because it requires effort on your part.
Interest income. Interest income is the product of placing money into a high-yield savings account. A high-yield savings has a higher interest rate than a normal savings account. The bank pays you a set interest rate each month for banking with them. This form of income is passive. It is passive because the interest accumulates each month while you sit back and relax.
Dividends. Dividends are a return on investment for holding stocks. For instance, if you held 1,000 shares of a stock that pays a $0.50 dividend on a set basis, you would receive dividends of $500. The $500 is either paid out or reinvested. The reinvestment of dividends allows you to buy more shares of the same stock. Reinvesting dividends increases the number of shares held. The more shares you hold the larger your dividends grow.
Capital gains. Capital gains are a byproduct of buying, holding and selling stocks. A stock worth $5,000 today could be worth $10,000 in 5 years due to price appreciation. The difference in value is a capital gain. Once the stock is sold the capital gain is realized.
Rental income. Income derived from renting out a property to others. Let’s assume you own a duplex home and live in one unit while renting out the second unit to a tenant. The rent for the second unit is considered rental income. Rental properties that pay rent each month and appreciates in value is a perfect scenario.
Royalty income. Income derived from copyrights, franchises or patents. Let’s say you own a successful restaurant brand and decide to franchise it to a friend. In return, your friend pays you a stated royalty, let’s say 10% of their net income, for the use of your franchise. This is common within the fast-food industry.
Business income. Business income is from profits earned by selling a product or providing services.
This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.
