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If someone told you that millionaires have seven different income streamsyour first thought might be: seven? I’m struggling to keep up with one paycheck and these people here are collecting seven similar Pokémon cards? But according to the IRS, that’s exactly what the average millionaire does.
The logic is simple. Relying on one income stream is like balancing on a tightrope without a safety net: one falter or layoff and you’re in trouble. But with multiple income streams you have a financial safety net that turns making money into a game of “the more the merrier.”
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What are these magical income streams and how do millionaires make them work? Let’s break them down – and spoiler alert: they’re not as out of reach as you might think.
The 7 Income Streams Millionaires Use
This is what the IRS data reveals where millionaires get their cash flow from:
1. Earned Income: Yep, that’s your good old salary. This is the starting point for most people, but millionaires don’t stop there.
2. Dividend Income: Money from stocks that pay you for owning them. It’s like being on a company’s VIP list, except the benefits are cold, hard cash.
3. Rental Income: Ownership of property that others pay to live or work in. Think of it as the landlord of your financial dreams.
4. Business Profits: Running or investing in income-generating businesses. It could be anything from a tech startup to a local coffee shop.
See also: Maker of the $60,000 foldable house has built 3 factory buildings, more than 600 homes and big plans to fix housing you can become an investor today for $0.80 per share.
5. Royalty income: Money from intellectual property – books, music, inventions, you name it. Write a hit and you can get paid forever.
6. Capital Gains: Selling assets such as stocks or real estate for more than you paid. It’s not predictable, but it can be a game changer.
7. Interest income: income from borrowing money through savings accounts, bonds or other vehicles.
Rental income as a power move
Rental income isn’t just a paycheck – it’s freedom. Once you have enough rental income, you can take a step back (if you want) and have time to build up those other flows. TIME becomes your most valuable asset.