How to create multiple streams of income? You probably know that the averagemillionaire has seven streams of income on average and it’s for good some reasons. When you have multiple streams of income, you’re able to accelerate. How quickly you’re able to accomplish a financial goal because you have more money coming in and also you’re diversifying the pathways to which money comes into your life.
If you lose your job, you still have money coming in from other avenues and that’s the whole point of having multiple streams of income to diversify your income sources and also to help you increase your income.So let’s discuss the different types of income that exists and some ideas, on which you can use these different types of income to create multiple income streams for yourself.
Types of Income
- Active Income
The first type of income is called earned income or active income and this is basically income that you earn by exchanging your time for money. Working full-time or part-time at a job or working actively in your business, these are all ways in which you generate earned income. Some ideas to generate an income or to increase your earned income could be finding a better paying job.It could be getting a part-time job in addition to your full-time job.
It could be starting a side hustle, it could be increasing your prices in your business, and so earned income is basically you exchanging your time for money, and that’s one type of income source. However, it’s kind of hard to diversify an active income stream, if you’re actively working in that situation exchange your time for money, so you want to start thinking about more passive types of income streams.
- Passive Income
Passive income is basically when your assets are generating income for you, without exchanging your time, or your services for that income. Some ideas to generate passive income, could be earning interest on your bank account. It could be getting into real estate investing, where you rent out a property that generates you monthly rent. But you’re not actually in the building actively working every single month to earn that money.
It could be putting in the ground work to create a product, or services.That you can then sell passively without having to actively participate in that, so, for instance laying, the groundwork to create a courseor to write a book.Those are all examples of ways in which you can create passive income.
Other ideas could be becoming an affiliate from a product. That has already been created and basically what you do is to expose that product to your audience or people.That you know and they basically buy the product from you without having to put in the work of actually creating the product. So when you start to think about passive income, start thinking about in what ways, you can put your assets to work for you, and it’s also important to keep in mind.
When you are planning out, how to earn passive income? It may not be immediately passive. Like the exampleI gave, where you have to lay the groundwork to create a course or to create a book, or whatever other type of products, you may create. You have to lay the groundwork putting the time and the effort to create it. But then once it has been created, it can become a form of passive income for your interest on bank accounts.
Is not necessarily a great way to earn passive income, but it is a form of passive income, because your money is earning interest for you even though the interest might be very small based on the interest rates that exist today. So, just start thinking about different ways, in which you can put your assets to work for you to help you generate passive income.
- Portfolio Income
The third type of income you can earn is portfolio income, and this is one of my favorite ways to earn money, this is basically when your investments are earning income for you. You can earn money from dividends, from capital gains, from interests,from compounding, it’s just really a great way to earn money. Because your money is actively working for you, and it’s not tied to an interest rate in a bank account, and so stocks bonds mutual funds “ETFs”, are all great ways to earn portfolio income.
If you are currently investing in an employer a time, and account or you have an “IRA” you are earning portfolio income. That is one of the great way to increase your income stream.Having portfolio income is another great way to create multiple streams of income for yourself. When you start thinking about increasing your income and creating multiple streams of income, you want to think about creating a combination of the different types of income.
That I just talked about so the earned or active income, passive income, and a portfolio income, and like I said the average millionaire has seven streams of income, and so they mix and match these different income streams, it could be having a job, and a side business earning money from rental real estate, and earning money from your investment portfolio, basically figure out different ways in which you can create a mix, and match of the different income types to create multiple streams of income for yourself.