The average millionaire has seven streams of income, and that’s statics, baby. If this looks tiring to manage, you should know most of those are passive, so don’t worry about the poor millionaires. And, although, for many in this category, the first million is the hardest to make and it can take up to 20 years to reach that point, the second comes as easy as you say “passive income”. Because you guessed it, this is their secret. Here’s how they make it.
From Active to Passive
If you don’t inherit a ton of money to start your passive income journey, then you should start active and reach the passive point. Here are some ways in which the rich and wealthy have managed to elude their economic limitations and build an empire.
- Save more money than usual. Learn how to get frugal and save more money while you still work. It will help you achieve the financial stability you need to start making passive income.
- Earn more money than usual. Get a side hustle or two that will help you earn more money on a monthly basis. Yes, this sounds like “stop being poor” but we are unironically here.
One of the above doesn’t exclude the other. They are actions that should be taken simultaneously. However, these will help you get the finances you need to start making the active income that will help you get passive, in time.
So, which are the popular passive income streams used by millionaires?
No matter the passive income stream that you think of, it can be put in one of the two categories below.
- You start a business that offers value (money) and you enjoy some of that money.
- You lend money to someone else to build something of value and they pay you for the opportunity.
Bot for both scenarios you need money or savings. In fact, all potential passive income streams rely on savings. Here is a list of six passive income streams you can explore.
- Interest on loans to companies or private individuals. Peer-to-peer lending is a good example.
- Dividends from all your partnerships and investments.
- Rental income, which is the best stream of passive income.
- Royalties from the licenses or products you sell.
- Capital gains are generated by sales or investments.
So, how do I build multiple streams of income?
When you think about multiple streams of income, you should think about sources of income, not completely different types of income you make. You could be making passive income from 4 rental properties, interest, capital gains, and dividends. You would still have 7 streams of income.
Of course, not all passive income streams are created equal. You need to find the right balance in your own case. Sometimes, it can take a while, and you may need to get a little creative. For instance, there are millionaires that have started making money from a simple website that asked for no monetary investments. So, pick your battles wisely.