7 Income Streams of Millionaires

The Free Dictionary by Farlex described Income Stream as the money a company generates on a regular basis. For example, a company may have a steady income stream from its primary client, and periodic revenue from other smaller clients. An income stream connotes steady pay.

It is an amount of money that keeps coming in or being produced from an investment or by selling products or services. It is a steady flow of money from a property and when evaluating the property, one has to evaluate the strength and durability of the income stream.

Income Streams

The Seven Income Streams of Millionaires

Millionaires put their money in different businesses, including their primary residence, mutual funds, stocks and retirement accounts.
Millionaires focus on putting their money where it is going to grow. They are careful not to put a large amount of money into items that will depreciate

According to the Internal Revenue Service (IRS), the revenue service of the United States Federal Government, most millionaires have these seven income streams:

1. Interest Income:
This 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, savings, bonds, cash deposits etc.This is a great source of passive income where your active involvement is not needed once the investment is done.

2. Dividend Income:
This income gets even better than Interest Income. It is equally passive and not only that, 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.

3. Earned Income:
Earned Income is the money that you earn by doing something or by spending your time. It is the money that you make in your job, the salary you get by working for someone else.

4. Rental Income: This is income from rental real estate. It is the money that you get as a result of renting out an asset that you have, like a house, or a building. This income could be better but there are could also be some inherent drawbacks in this kind of income.

5. 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.

6. Capital Gains: This is from selling appreciated assets. It is the money that you get as a result of increase in value of an asset that you own. For e.g. Shares or Properties when the value appreciate 

7. Profits: This is earned from businesses owned for example, by selling something for more than it costs you to make, 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.

The order in which you create these various income streams dictates the ultimate success you will enjoy. Most people focus on three of these income streams like earned income, interest income, and dividend income.

In my humble opinion, rental income is the single most important income stream. This income stream should be number one priority. The main reason is because it has the potential to reduce the need for earned income. Once you have enough rental income to walk away from your job, you now have enough time which is the most important asset we have. You can then leverage your time to create new income streams like the followings:.
  • Start a new business.
  • You can create websites.
  • Write a book.
  • Invest your rents into dividend stocks.
  • Invest your rents in bonds, CDs, etc.
  • Invest your rents into other small businesses.
  • You can continue to invest in rental real estate.
By focusing on rental income as our primary income stream, you unlock the doors to all other income streams. This same opportunity does not exist when we focus our time on earned income, dividend income, and interest income. income

Creating multiple income streams allows a person to diversify the various cash flow sources that are coming in. In the event one dries up, then there are other sources of to lessen the loss.


Reasons to Have Multiple Income Streams

Having multiple streams of income is no longer a luxury, it has become a necessity. If the high rate of unemployment and mounting job losses have taught us anything, it is that nobody's job is safe. Unfortunately for most people, their only source of income is from their job, which is very risky.

There is no defined number of extra income streams you should create. Just as long as the time you spend maintaining them doesn't become too stressful and as long as they produce positive cash flow.

There are lots of important benefits to creating many income streams to decrease your risk of having your main source of income suddenly dry up. Even if your alternative sources of income cannot cover your monthly expenses, they can at least help lessen the blow of a job loss or other unexpected expense. If you are fortunate, these income streams could potentially do more than just supplementing your income and help build up your savings accounts.

You can however focus on what you can do right now from one of these income streams and then become the best you can in a small niche in that income stream and build up.

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