Multiplying Wealth with Multiple Streams of Income
Everyone says you need multiple streams of income to build wealth. While that may be true, no one ever actually says what those income streams are. A study found that 65% of self-made millionaires gained their wealth through multiple streams of income. Specifically, they had three or more streams of income to help them become millionaires. These are the seven streams of income that the IRS has identified:
#1 Earned income
Earned income is the money you get from working your daily job. This is by far the most common income type for most adults. But it doesn’t have to end there. There are more ways to have additional income streams.
#2 Business income
Business income is the income you earn from a business you own. Some people have a side hustle or business in addition to their day job. Income from your business is considered a separate stream of income.
#3 Interest income
This is one of my favorites because it's the most passive. Interest income refers to what you earn when you invest your money. When you become a capital investor with Epic Impact Investors, you are putting your money to work. That allows your money to grow exponentially because your money is working for you by earning a higher rate of return in addition to your earned income. So, interest income is definitely a viable way to multiply your wealth and help you on your way to millionaire status.
#4 Dividend income
When you invest in the stock market, some shares of stock that you invest in will pay you dividends. This is additional income for you. This is essentially a share of the profits from the company you invested in. As your stock portfolio grows, this can be a very lucrative income stream.
#5 Rental income
90% of the richest people in the world became rich through real estate. When you own real estate that is not your primary residence (in most cases), you can receive income from renting it out. Rental income comes in different ways – you can list your property on Airbnb or VRBO, or get long-term tenants. You can use that rental income to supplement any other income streams. Once you start investing in real estate, owning property is a primary means of wealth building. So, you want to keep this type of income on your radar.
#6 Capital gains
Capital gains typically gets mixed reviews because people mainly mention it when they’re talking about taxes. To get taxed on capital gains, you must earn capital gains income. This type of income is acquired through the sale of assets, such as art, stocks, businesses, loans, or real estate. You essentially are receiving the value of the appreciation of your asset over time as a lump sum income when you sell that asset.
#7 Royalty or licensing income
This is where intellectual property comes into play. If you are a writer, musician, publisher, or another type of artist, your work is protected by copyright law. The work you create is considered intellectual property. Securing a Copyright, Trademark, and/or a Patent on your work allows you to take official ownership of it. When your work is licensed, you can receive royalties on it. This allows you to get licensing income.
These seven streams of income can help you produce wealth or help you multiply your wealth. While you're determining what type of legacy you want to leave for the next generation, consider what you current income streams are and make a plan to multiply them using the options above.
If you have questions, you can reach out to me right here.
Epic Impact Investors is a black-owned hard money lender in Chicago. We are determined to cultivate community by investing in our communities through lending, property development, and reaching out to those who want to become investors. This helps our communities build wealth. Join us and become a capital investor today.