Why the Rich have Multiple Income Sources
By Miguel Dos Anjos
Most People have One Source of Income
Most
people have one source of income, and that is their 9 – 5 job. And so; most
people are broke, and poor. While not most top, rich people, but ALL people on
the top have at least 7 income sources.
A job is great, important,
and there is nothing wrong with it. It will provide food, and shelter, but in
order to catapult forward financially a job has to be used as a gate way, or a
bridge into becoming and, being rich.
Scalability
A barber for example may rent a chair in a
hair salon; pay $40 a day for that chair, cut 5 to 8 hairs in the day, and get
paid around $150 a day, which after paying the $40 chair rental, $110 is
profit. This is ok for the barber, he, or she has no worries, regarding the
building, or dealing with lots of money, but that is it. He worked all day, the
only way for him to make more money is getting richer customers, and maybe
double charge them, and then he may make $200 a day, but at this point it is no
longer scalable, and $200 becomes the cap.
The next step
would be renting, or owning the entire hair salon, with 5 to 10 chairs, use one
chair, and rent the other 9 chairs. Then he makes his $100 to $200 a day, and
collect rent from the other chairs. Charging $40 per chair, times 9 chairs
equals $360, plus his own $200 chair, all this equals $560, now this is his new
daily cap.
And finally the
third step would be for that barber to own 2, or 10 barber shops, no longer cut
hairs himself, but manage, or coordinate. $400 times 10 locations equals $4k
daily (This is an example of scalability, I’m not saying become a barber. There
are more aspects, and numbers involved).
The Most Common Passive Income Sources
As
we see from that example the rich skips and, avoids that daily cap by investing,
converting active income into passive income. The most common passive income
sources are:
1- Interest collected from: high APY
(savings) account, peer to peer lending, bonds, or companies.
2- Dividends from: investments,
partnerships, or stocks.
3- Capital gains: sale of
investments.
4- Royalties: products you sell.
5- Rental income: usually real
estate.
6- Business: active, or not
(webpage, sale of products, service, or information)
3 Steps Formula
Being
the barber in the first example is fine until developing enough investing capital,
and passive collecting income to come out of exchanging time for money. The formula
is very simple, and contain 3 steps:
1- Sell time for money (work a job)
2- Spend less than you earn (save)
3- Invest the savings to grow
passively (invest)
Done.
These 3 steps are the core. Your job is the bridge that over time can bring you
fully from the 1st part (selling time for money) of the formula to
the 3rd part (passive income) of the formula.
Reaching
the first million is the hardest. Owning a business, or lending money to
somebody to fund their business; both require money upfront. To have $100k
invested, or $1M portfolio is the hardest part, and takes time, and planning.
But every $100k invested next, or the second $1M portfolio increase will
require less time, and less struggle, because money makes money, and more money
makes more money. 10% return on $100k is $10K, to achieve the same result of
$10K return with only $10k to invest requires 100% return, which’s impossible
to do over night, or very hard.
-> Leave your comments, and thoughts in the comment section below!
-> Check our YouTube channel here: Make/Save/Invest
-> Follow and Subscribe to this page to get the next post!
Comments
Post a Comment