7 Streams of income you need in order to become rich (How to build multiple income streams)

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On average most people have a single stream of income which is their day job; they are living from paycheck to paycheck

Majority of all rich people and millionaires have multiple stream of income

To become successful financially you need to have multiple streams of income, your income should be able to come passively from different directions

Income is either active income or passive income

Active income involves you putting in your time in order to earn it while passive income doesn’t require you to put in a lot of your time

So what are the common streams of income?

These are the 7 multiple income streams to have

  1. Earned income

Earned income is the income you get from your day job, it involves you trading your time in order to earn it, it is the common type of income stream for most people

It is got from active participation or trading your time for money, it includes dirty and white collar jobs

Earned income offers great opportunity to build other streams of income because you have a steady cash flow coming to your bank account,

With this income, chances of becoming rich or wealth are limited because there is a cap on how much time and money you can make

Your earnings will depend on your efforts and time

Once you have this income, you should start diversifying your income sources so as to earn more

Earned income should lay the foundation for you to tap into other income sources, start a side hustle or start investing; with this income you will pay lot of taxes

  • Profit income

Profit income is the income you make from selling products above their buying prices,

This income is the basis of all businesses, they exist to make profits, all you do is to buy low priced products and sell them at a high price

You will make profits if the price you sell the products is greater than the buying price

It also includes selling a product at a price that is above their production cost

This income is for entrepreneurs

  • Interest rate

Interest rate is the income you get from lending out money to earn interest, this is best for people who have the money to lend out to individuals, groups of individuals

This can be inform of purchasing bonds, certificate of deposit and treasury bills

The rule of thumb is you need to lend money to people, whom you can trust, don’t lend out money to friends and relatives

So you will have to charge people interest,

If done well, this income is profitable

  • Dividend income

Dividend income is the income got from purchasing shares in a given company, by buying share you become part of the owners of the company

As a shareholder you become part of the owners of the company and you’re entitled to receive dividends when a company makes profits

You can choose to invest in individual stocks or index funds,

Index funds is all about investing money in multiple companies at the same time e.g. the S&P 500

While individual stocks involve purchasing stocks in a single company,

Individual stocks are profitable but have a high risk; all you need to do is to invest in companies that are undervalued but have the potential to grow

  • Rental income

Rental income is income produced by renting out your property to tenants

This income is obtained from investing in real estate, rental property, single family homes, houses, duplex, commercial real estate, apartments, and rental offices

  • Residual income/ Royalty income

Residual income is the income obtained from your creation that keeps bringing in a steady cash flow from time to time,

It includes income from selling photos, video clips, film, movies, or using your ideas

Royalty income involves licensing people to use your ideas or product to make more money e.g. videos, images, photos, music, books and comedy etc

  • Capital gains

Capital gains income is the income you get when you purchase an asset that will gain value over time

The best assets to buy include real estate, rental property, office space etc

This marks the end of the top 7 income streams every person must have

Which of the above incomes do you have? Share your opinion with us in the comments below