It’s often said that millionaires have 7 sources of income and this is how they stay rich. Whilst the poor have only 1 source of income and thus can’t take risks, the rich have seven so that they can take financial risks, risks that the poor can’t.
1. Salary/earned income
Whilst most millionaires don’t work a typical job, unlike ‘poor people’. They do typically have a wage, this can be from a job or being the executive of their own company.
2. Dividend income
Millionaires tend to try the stock market. They buy stocks, these stocks pay annual or biannual dividends, which are payments made by the corporation. These payments are made for doing nothing but owning the stock.
3. Rental Income
Whilst most millionaires don’t have portfolios as big as Donald Trump or Grant Cardone. They do have a few rentals. Whether they’re a duplex or a sixteen unit apartment building, it’s the income you gain from renting them out to tenants.
4. Business profits
Most millionaires are businessmen. Their businesses turn a profit, millionaires use that profit. They invest it in order to make them more money.
In order to let it compound over time and make them more wealthy.
5. Interest
Millionaires use their money to lend to others. They buy Treasury Bills, government debt underwritten by the Treasury. They do Peer to peer lending or receive interest from a bank account. Millionaires take these risks, knowing that they can capitalize on them.
6. Royalties
Millionaires own things. They use their money to buy things. They buy things that make them more money. Whether it’s music, photos, videos or intellectual property.
Another company purchases the rights to use a certain idea, they do all the hard work and in return, they pay a small percentage of their revenue.
7. Capital gains
Whilst Elizabeth Warren may be trying to increase the tax on this, for the moment, she’s not in charge. Capital gains is where there’s an increase in the price of an asset, such as when a stock increases in value.
This is where you bought a given stock at $10, and you sell it at $15, pocketing the $5 difference.
Why do millionaires have 7 sources of income?
Security, Millionaires understand that money is never secure. They understand that one misplaced step can cost them everything. So the more sources of income they have, the more secure they feel. If one source of income falls through, they have 6 left.
Whereas, if a ‘poor person’ loses their one source of income, there’ll be a problem. The ‘poor person’ will have to get in debt, for mere day to day living, which is unacceptable for a millionaire.
How do millionaires become millionaires?
The poor want to be rich. So they pretend they are. They spend more than they earn. They buy brand new cars. Not outright, but through finance. They buy big houses. Far too expensive for their income.
They get deep into debt. Millionaires know better. They live below their means. The poor poke fun at them. For being ‘cheap’ or for being ‘poor’. Millionaires invest their money. They never overspend. Over time, this adds up.
The poor are always looking for the easy way. Ponzi and get rich quick schemes entice poor people. Millionaires rarely fall for these. They know that wealth isn’t created overnight. They know they have to work for it. Time is a millionaires’ best friend.
Consistency, a millionaire knows that being relentless is key. Every month, they need to invest X money. Every month, without failure.
They don’t do what everyone else does. Poor people work a job, a 9-5 existence. Most millionaires don’t do this, they run their own businesses.
As a wise man once said. “If you do what the majority do, you’ll end up like the majority.” The rich know this and this is what they use to profit.
Mindset. Poor people have a very different mindset. With poor people, whatever happens in their life, is never their fault. They get fired, it’s their jackass boss, it’s never them.
They complain. Poor people always find something to moan about. If it’s warm, it’s too warm, they complain that they want it to be colder and when it’s cold, they complain that they want it to be warmer.
The rich think different. The rich know there’s no point in complaining, it won’t get them anywhere and it only wastes their time. They see time as valuable, a commodity that they can’t buy more of.
They realize that whatever poor people are complaining about, they can profit from. That’s the real reason why entrepreneurs go from broke to billionaire. Just take a look at the Forbes 400.
Will you try to get seven sources of income now? Have you already got seven sources of income? Tell me in the comments below!
