Sorry Jay-z!! If there are a million ways to get it, then why just choose one?! I’m thinking two, three, four…
Statistics show that millionaires have an average of seven sources of income. (I’m sure Jay-z has more than that). Hence the saying, “the rich get richer” because the more you have the more you’ll get.
There are two types of income:
Active income: refers to income received from performing a service. This includes wages, tips, salaries, commissions and income from businesses in which there is a material participation.
Passive income: earnings derived from a rental property, limited partnership or other enterprise in which a person is not actively involved.
There is often this misconception that passive income requires absolutely no work at all; however, there is some work involved in the creation stage. However, the income is not tied to work hours.
For the average American, we start with active income. The “day job/9 to 5” that we use as an investment tool to fund our side hustles until they are running on their own. There are only 24 hours in a day so the ideal goal is to maximize your streams of passive income.
Common types of passive income:
- Interest – from a variety of loans, either to individuals or companies
- Dividends – from investments or partnerships
- Capital gains – from the sale of investments
- Royalties – from products you sell or licenses
- Rental income – from real estate investments
- Publishing an e-book or online course
