Grow your wealth with these 5 different income streams
Opinions expressed by entrepreneur The shareholders themselves.
It is very interesting to study millionaires, because most often they are ordinary, ordinary people with remarkable discipline and focus. Very wealthy individuals get this way by working differently (not necessarily harder or smarter) than the rest of the world. A great idea about millionaires is that they usually have multiple streams of income.
A 2018 article on CNBC highlighted the following interesting aspect of millionaires:
65% of millionaires have three sources of income
45% of millionaires have four sources of income
29% of millionaires have five or more sources of income
Most people have at least one source of income: their work. They go to work on weekdays, and after enough working days, they receive a salary. However, more than half of the millionaires have three sources of total income. For some, this is work plus at least two others. For others, this may not include work at all.
Having multiple income streams is a powerful wealth building tool, because the right streams can negatively increase your wealth. If you are looking to grow your wealth as the wealthy do, here are the top five sources of income that will boost your bottom line:
Related Topics: Need More Criticism? Check out these 7 Income Streams That Actually Generate Passive Income
1. Real Estate Syndicates
Passive income streams are one of the basic building blocks of wealth. Every person on this planet has only so many hours in the day. No matter how much you actively work with, you will always reach a maximum of how much you can earn and how much you can save. You can increase your wealth through passive income, because you will earn money even while you sleep!
Real estate loans are one of the best sources of passive income. A consortium is a group of investors who buy a commercial or multi-family property. These investments typically last for five years and feature annual returns of around 8%. On top of those above-average returns, group loans sell off the purchased building, sometimes providing investors with a 30%-50% total return at the end of those five years.
In general, while all investments risk losing money, it is not uncommon for mortgages to yield 80%-100% profit over five years. An investment that will negatively double your money every five years? This is why group loans are so powerful for building wealth!
2. Investment income
Another common type of passive income stream that will increase your wealth is having investment income. The comparisons are investments, but this category is more general, including dividends and bonds. Many millionaires have CDs, engage in P2P lending and own shares in stocks like McDonald’s, which pay a regular dividend.
These investments won’t pay life-changing money, but as your wealth grows, the stock market is a great place to safely park your money as it grows and generate quarterly or monthly income. The key to building wealth is diversification, and making income generating investments in stocks or bonds will help you achieve that goal!
Related Topics: Escape the Nine-to-Five Grind: How to Generate Passive Income Streams
3. Business income
Unless you have contractual obligations with your primary job not to start a side hustle, many millionaires have grown their fortunes through side gigs.
Owning a business, whether making or selling something or providing services, opens up a world of unlimited income possibilities. Let’s say you are a developer and you create a game in your spare time. This game may develop your following and passively earn an extra $100 per day. Just like this, your side party earns an extra $3000 a month!
You can take that money and reinvest it in the business to earn more, or you can take advantage of your side gig to save more money tax-free. Your main job may give you a 401(k), but you can open an SEP and contribute less than 25% of your (your) salary or $61,000.
Imagine being able to contribute $20,000 with your day job 401(k) and defer up to $61,000 with your SEP from your side business. If you do it right, you can put off more than $80,000 a year, and if you invest it wisely, the sky is the limit for wealth! When done right, business income is vital to generating wealth.
4. Royalties and licensing
This category is less common but essential. If you have the opportunity to create a product, idea, or process, you can sometimes license it and charge a fee each time they use it.
Royalties can be anything – you might start a band and run your songs on a streaming platform. Or you can create a YouTube channel and make a fairly passive income from views.
Proprietary and licensing income streams are great, because they are usually consistent. Let’s say you invent a new waffle iron, for example, and a company buys that design. You will earn from every sold iron. In this case, you can expect a reasonably strong income stream for the foreseeable future!
5. Rent your car
Peer-to-peer car rental has become remarkably popular, thanks to the shortage in the market. When the pandemic hit, big companies like Hertz closed down and sold many of their cars. With chips in short supply, these companies are finding themselves difficult to keep pace with the increasing demand.
Now, companies like Turo are offering the ability to rent out their cars to others. Some people have turned it into a side business of sorts, and have earned quite a bit of passive income. In fact, a 22-year-old student in Toronto managed to develop a small fleet of four luxury cars.
It’s not just properties that you can invest in and rent – if market trends continue, car rental is quickly turning into a viable source of income!
Related Topics: 7 Ways To Make Extra Income Even With A Full Time Job
If you want to increase your net worth, you need multiple sources of income. Over-reliance on a single stream (usually a function) is risky. What happens if you lose it? Likewise, if your individual income stream requires work, you determine how much you can make, because there are only so many hours in the day that you can work.
All five sources of income listed above are great ways to grow your net worth. If you haven’t done so already, consider diversifying your portfolio by implementing the income sources suggested above!
Business strategies, entrepreneurship tips and inspirational stories all in one place. Discover what’s new Businessmen’s library