This is a Financial IQ Test.
The average millionaire doesn’t have just 1 stream of income.
They have atleast 7 income streams.
1. Earned Income – Money that you earn by doing something. For e.g. the money that you make in your job, the salary you get by working for someone else.
2. Profit – Money that you earn by selling something for more than it costs you to make. For e.g. Businesses selling their goods at a profit, whether at the retail or wholesale level, as distributors or manufacturers.
3. Interest – Money you get as a result of lending your money to someone else to use, e.g. putting it in the bank, lending it to the government in the form of buying Treasury Bills etc.
4. Dividend Income – Money that you get as a return on shares of a company you own. For e.g. the dividend that most companies announce at the year end. Typically you will have to own shares to get dividends.
5. Rental Income – Money that you get as a result of renting out an asset that you have. For e.g. This will be a house, or a building.
6. Capital Gains – Money that you get as a result of increase in value of an asset that you own. For e.g. when you buy shares at $10 and sell them at $11 – the $1 is capital gains, or if you buy your house for $200,000 and sell it for $220,000 the $20,000 is your capital gain.
7. Royalties – Money you get as a result of letting someone use your products, ideas, or processes. They make all the revenues, they do all the hard work and you get a small percentage of what ever they earn. For e.g. if you have a Subway Franchise – the royalty you send to Subway for using their processes, their logo, and marketing etc.
So here’s the question you have to ask yourself.
Do you want to be rich?
Do you want to be a millionaire?
Then you need to ‘up’ your income streams!
Becoming an entrepreneur often means that you only have one; it may be a very large income but it’s usually from just one source.