The key to creating indestructible wealth is multiple streams of revenue. The problem is that many people barely grasp one — let alone all seven types of income. In this article, we’ll review all of them and how to make them work for you…
The 7 Types of Income
Achieving financial freedom is a numbers game — just not in the way you think…
It’s about having multiple streams of income and knowing how to use them together.
Unfortunately, real financial literacy isn’t taught in the traditional education system. For that reason, I will define the seven types of income. Then, you can determine how to apply them to your financial situation.
Earned Income
The first type of income is the one everyone is familiar with — earned income. Although we all know this one, very few take full advantage of it…
SPECIFICALLY, THERE ARE THREE WAYS TO EARN MONEY AT WHATEVER JOB YOU ARE AT.
The most obvious is your base pay. That is your salary or whatever you get paid per hour. The mistake a lot of you make is that you stay here…
An additional method for adding some earned income is commissions. Even if commission is not a part of your job description, most employers will be open to it if you ask.
AFTER ALL, YOU ARE OFFERING TO BRING IN REVENUE TO THEIR BUSINESS.
In the same way, you can propose extra earned income in the form of bonuses for hitting production targets.
Again this is a win-win situation because the business owner has added earning potential and you have the potential to get paid.
Hopefully, you see the possibility of earning more just within this first of the seven types of income. Let’s get your creative juices flowing with the next one…
Profit Income
I won’t spend too much time explaining profit income because it is so simple…
You have a product or service, then you sell it and make a profit. Easy as that.
The issue with making significant profits with this type of income it requires:
- An initial investment in inventory.
- And, the time it takes to sell it.
Nevertheless, it is a tried and true strategy to secure capital. Don’t discount it.
Interest Income
For the most part, this is the slowest of the types of income. Because of that, I don’t recommend it as a means to build wealth. Still, you should know and understand it.
This third type of income comes from interest. The dilemma with this is that to make substantial gains in interest…
YOU NEED A HUGE PILE OF CASH TO BEGIN WITH!
Making the most of great interest rates helps you with the rest of the types of income. But, don’t expect to save your way to being rich.
Dividend Income
Dividend income is the revenue you earn from investing in the stock market. Despite how popular this method is, it is not ideal…
First and foremost, you can’t control the stock market. Also, you only get paid quarterly.
If you’re one of the few winning at this game, great. But, I wouldn’t rely on it as my main source of income.
Rental Income
I’m not going to sugar-coat it….
MULTIFAMILY REAL ESTATE IS MY FAVORITE TYPE OF INCOME.
I could go on forever about all the reasons I love multifamily real estate. You get paid monthly and there are tax advantages.
You need to know the lay of the land to create wealth investing in real estate. However, it is worth it once you do…
Capital Gains
Next, we will discuss capital gains.
This form of income comes from the sale of an investment. That can be a stock, a stake in a company, or a piece of real estate.
This is one of the slowest types of income for a few reasons. Often, you must hold your investment for a specific period of time. Also, choosing the right time to sell is crucial to making this work.
Take that into consideration before counting on capital gains.
Royalty Income
Royalties come in from legally allowing others to use your name or brand in a specific way.
Many of you may be familiar with royalties in reference to creative fields. Unfortunately, a lot of creatives don’t make enough with this as they should because they:
- Don’t understand its advantages and disadvantages.
- Sign away the rights to their own content.
BECAUSE OF THAT, THESE ARTISTS MAKE THE MAJORITY OF THEIR ROYALTY INCOME AFTER THEY PASS AWAY…
So, I encourage you to learn about how to apply this type of income while YOU can take advantage of it.
Why Be Master of ALL Types of Income — Not One
Ultimately, the logic behind why to get all of the types of income working for you is plain to see.
RELYING TOO MUCH ON ONE FLOW OF REVENUE IS DANGEROUS.
The truth is that any of these capital sources could be shut off at any time…
You could lose your job…
The stock market may turn…
Or, the banks may go under.
Real financial freedom comes from understanding and using all of these to their full potential.
Learn them all and be great.
— Grant Cardone
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