Saturday, January 23, 2021

Actionable Steps to Building 7 Income Streams Like a Millionaire

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1. Don’t quit your job early.

Your employment income will be what funds your other income streams. Even if you do have investors, you will be expected to work for them and manage the company, so technically, this will be your job.

Having a steady income will take up a large proportion of your time. Still, it will provide you with stability to diversify your income and experiment with your passion projects and investments.

One tip you could utilize is to pursue a role with uncapped income potential based on performance as a way to maximize your income from those 40 hours per week, but this might not always work in your favor, so use with caution.

2. Invest in stocks.

I recently read an amazing article that showed even if you have $1.00 in your account — you can start investing. In my opinion, stock investment is the second-best most consistent (property investment being the best), long-term, passive source of income if you allow it to be just that — consistent, long-term and passive.

Let’s break down why.

Allowing your income to be consistent means letting the profit pile up without spending it or reducing the amount you invested. Ideally, you will only increase the amount, but if you allow yourself to be patient in the long-term and you place your earnings back in the market, you will earn compounded interest — profit on your profit. This will only work if your investment strategy is low-risk, long-term and passive, working on the backburn while you do other things.

Don’t allow yourself to be consumed by the hold-sell day trading game. In 2011, a research paper revealed that individual investors who traded actively and speculatively without diversified portfolios typically lost money over time.

Experts suggest starting early with this type of income building. As it grows exponentially, the longer you have it due to compounding — ‘the process in which an asset’s earnings, from either capital gains or interest, are reinvested to generate additional earnings over time.

3. Start collecting rent

I know. Saving up the money to buy your first property is hard. Trust me, I know. I worked multiple side jobs, on top of my normal job, just to buy one at an early stage in my life. If you start small, though, you can scale more quickly. This can mean many things.

For Beginner to Intermediate Investors:

  • Talk to your landlord about subletting a room or a bed in your room, if that is possible if you don’t own property. You can create listings on multiple sites, which can generate a semi-consistent income stream.

For Intermediate and Expert Investors:

  • Find properties that you can buy with the income you have (might not be your dream home, but they might be someone else’s) and place them on the market.

The idea is that you save enough to buy your first property, and then use this as an income stream to make further investments. It doesn’t matter how big or small it is — it matters that it will consistently bring money in, so that is the research you need to do. Ask yourself questions like — would there be demand for this property for renters, and if you are buying internationally — what will your taxes look like?

Things to consider are:

  • schools and universities nearby

4. Create a digital product and allow others to use it at a cost.

Royalty income is payments for royalties from selling rights to use something that you created. The YouTube video you make is used as a vehicle by the platform for ad placement, for which you are given a royalty payment. The Medium article you create behind a metered paywall serves a similar purpose, as you are allowing the site to use something you have written. If you are an academic, writing journal articles will earn you monthly royalty fees based on readership and impact of your research. If you are a musical artist or a photographer, your work can be monetized similarly.

Digital products can and should (in my opinion) be created around your areas of expertise. They should demonstrate your abilities. That is not necessarily a ‘must’ through, I mean, look at the rise of OnlyFans.

In recent years, tutorials and online courses have also skyrocketed into popularity, creating a platform for many niche topics to be examined in this format. Even if you consider your skills non-digital, there is almost certainly a chance that someone would benefit from a well-designed course on sewing, household electrical maintenance or wall plastering, sooner or later (I did in the past four months, of all three).

There are no limits on what you offer as long as there is a demand for it and value in it.

5. Start a business and grow it in your free time.

This might seem like commonplace advice, but the key phrase is — in your free time. That is, after work. I am painfully aware that this is not something that would appeal to anyone. Still, it appears to be commonplace for every millionaire in the book to aim at diversification of their ‘main’ source of income and generate multiple income streams, each of which of equal merit.

At the same time, avoid burn-out and attempt to maintain a healthy work-life balance, whatever this means for you.

6. Open up a savings account and forget it exists.

This is easy. I use an account that gives me a higher interest rate if my savings are consistently (each month) higher than £50.

You should always choose a savings account that pays you more than 0.75% on your money and set up a payment order from your bank account to a savings account for a set amount each month. Increase the amount, based on the growth of your earnings and treat this as a retirement fund. In other words, forget about its existence and revisit it in 20 years.

7. Sell appreciated assets.

An appreciated asset is an asset that has a higher market value than its book value or taxable value and which, upon its sale, will generate a capital gain. Examples include works of art, rare books, and antiques.

I know this sounds crazy-hard but could be relatively straightforward. You know about thrifting. I mean, who doesn’t — it’s such a hot topic nowadays. I regularly visit second-hand shops, which sell clothes by the kilo and find luxury, often never-been-used clothing there. The store owners don’t know or don’t have time to check the value of every item they sell. Buying such clothes and selling them, priced appropriately, will generate a capital gain. The same can be applied to antique furniture or possessions in your family, which rot in the attic and are not used or not of emotional value to members of your family.

You can also create such assets yourself. For example, if you are good at social media, you can create multiple social media accounts on platforms such as Instagram, Youtube, even Facebook pages and offer them for sale. I recommend you research the demand before starting so that you can target a specific niche with your content. By knowing there are many up-and-coming real estate agents in your area, you can create a real estate blog, Facebook page and Instagram, and aim to grow an organic following in this niche. You can later offer to realtors to sell them your pages.

On paper, this digital product (i.e., brand, social media page or intellectual property) will likely be priced very insignificantly, but in reality, pages with an organic following of 50,000+, interested in real estate might be something worth coughing up a significant amount of money for.

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