There are different sources of income. You can make a sizeable amount of money from a job. In the long term, it doesn’t beat some of the other income sources.
If you don’t have other sources of income, it will be difficult to generate wealth. It’s difficult to save your way to wealth. Even if you put money into a retirement that is a future income stream for you.
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Focus on Business and Real Estate Sources of Income
Whenever possible, you should look at building a business and developing real estate assets.
Unless you have a a high income job, it is worth building up your other income streams.
Business and real estate are the two income streams that help people get wealthy. If you look at the wealthiest people in the world, they have some combination business and real estate assets.
If you focus on business and real estate income, you will naturally get other sources of income.
It will greatly increase your net worth. If you have a job, look at investing the base amount for your retirement. This is usually in a 401k or IRA plan. Many jobs with pensions are automatically enrolled.
Look at switching over to working on your business, when you have enough funds to justify moving over.
What Are the Different Sources of Incomes?
Your Job – Earned Income
Your Job is one the best ways to make money. Look at getting promoted or finding another career, if you can’t increase your income potential. You can leverage your skills for higher pay.
Read: How to Start A Business At Home
Business Income
Earned Income
Your business income can be earned. There are different ways to get paid in this field. You can get paid for a service done, paid by the hour, or for a project.
In general, you will want clients for your business. Focus on getting traffic for your business. The more potential clients you reach, the more chances that you will be able to sell your products and services.
There are different ways to earn money. It can be a recurring amount of a one time payment. Consider your business and how to make more money.
Read: What Business Can I Start With No Money
Interest Income
Whenever possible consider getting interest through your business. Usually, it will be through some kind of financing. If you have a way to protect yourself from default, it’s a good way to get payment.
Read: Owner Financing 101
Royalties and Licensing
Look at getting royalties or licensing rights. This is popular with software and other digital products.
If you can franchise your business, you can get royalties and licensing rights for sharing your business name and systems.
Real Estate Assets
Rental Income
Rental income is a good way to generate income. It’s a good way to leverage your money and have other people paying for your asset.
It’s a good stream of income that you can reinvest into other assets. It may be worth managing your own property in the beginning, but you will want to have other people managing your property.
Read: Is Real Estate Investing High or Low Risk?
Capital Gains
Capital gains occurs whenever you buy and sell real estate property. In general, it happens when you enhance the value of your asset.
You can look at forcing the value by rehabbing property. If it’s commercial property look at increasing rent and lowering vacancies.
For some people, you can wait till the market increases the value of your property. In general, real estate as tended to appreciate in value.
Paper Assets
Dividend Income
If you own a share of a company, they may sometimes give a dividend. The business essentially pays their owners. Depending on the company, they may pay out dividends or nothing at all.
Interest Income
Some assets have interest rates. Look at getting higher interest rates to maximize your growth.
You can look at special paper assets like notes and tax liens. These asset classes usually have higher interest rates.
Capital Gains
Whenever you sell a paper asset for profit, you get capital gains. You will need to pay taxes on these amounts. It pertains to those looking to cash out their portfolio or for those trading stocks.
The Benefit of Developing a Business
Multiple Sources of Income
A business can generate multiple sources of income. It’s important for businesses to diversify their products and services. It is a way to increase revenue and protect their bottom line.
If something becomes unpopular, they can rely on their other income streams. If a business isn’t progressing, it is regressing. Your business needs to constantly innovate and build more streams of income.
A business can create multiple products and services. Look at developing a customer base and serving that group of people. The more you can benefit your customer base, the more they will buy from you.
Tax Benefits for Businesses
Businesses are able to write off their expenses. A lot of times you can lower your tax burden.
As an employee, there aren’t as many write-offs. Taxes benefit businesses.
Income Potential: Not Capping What You Can Make
For most people, there is a cap to their income. Unless you see ways to become a CEO of a major corporation, you will find caps to your wealth.
Look at developing some kind of business. A business doesn’t have an income cap.
If you can find a market for your products and services, you can increase your brand awareness and make more sales.
Focus on Your Business
Look at expanding your business. The more you are able to build out your systems and create new profits, the more revenue you will be able to generate.
When you come to a point that it doesn’t take as much of your time, you can look at other businesses.
Look at incorporating your business with other businesses. For example, if you have a personal fitness brand, you can create an online course and coaching program. You can look into selling this for profit.
Creating Systems For Your Business
You don’t have a business if you are the one working in your business. You are essentially a freelancer. You get paid for the work you do.
A business occurs when you work on your business. You want to create systems by hiring people to do work.
Look at hiring out your work so you can make money without worrying about your business. The more you develop your systems, the more money you will make.
Look at Franchising Your Business
If you have systems, you can franchise your business. Look at creating proof for your business model.
In the beginning, you can look at expanding your locations. The more locations you have, the more profit you can make. Don’t forsake your quality, or all of your businesses will start to falter.
If you don’t have additional funds, you can look into getting franchise partners. If you have people interested in a business, you can give them your name and the proper systems.
Your franchises can provide you with franchising fees and licensing fees. If you own some of the supply chains and resources, you can require people to purchase from these platforms.
Think about building a business that is systematic. You have a reliable product and a way to sell your product.
Create Other Businesses
Why are there angel investors that are willing to invest in businesses? It’s because businesses have potential to make a lot of money.
Try to keep as much equity into your company and look to build it up.
For a lot of people, it starts as a side hustle. As you are able to increase revenue, you get into it full time and hire people.
You can create multiple locations, and work on other businesses that interest you.
Working on Real Estate Assets
As you generate funds, you will need to invest your funds. I recommend that you look at investing in real estate.
It’s a good way to make money through appreciation. If it cash flows, you will make money through the monthly payments.
Read: 13 Real Estate Investing Strategies and The Best Way When You Are Starting Out
Single Family Homes
Single Family Homes are the bread and butter of real estate investments. A lot of people have done really well with single family homes. Consider looking at these types of investments if you have an opportunity.
Multi-Families
Multi-families are great for some markets. In other markets, they are a bad investment because they draw in the wrong type of tenants.
Apartments
Apartments are a good way to leverage each unit in a cost efficient manner. Look into syndications and make sure you get in the right apartment.
If you can increase rents, make repairs, and lower vacancies, it can be a great investment. The value of your apartment can exponentially increase.
Commercial Property
Commercial property is a specific niche within real estate. It can include apartments, warehouses, churches, offices, and other types of buildings.
Make sure your commercial property is rentable. In general, you can make a sizeable amount of money in the future by selling it for more.
Real Estate Investing as a Business Model
Whenever you look into real estate investing, it’s best that you scale up.
It ends up becoming a type of business. You can look into rehabbing homes, wholesaling, and syndication.
All of these types of investments require more time and expertise.
Read: 39 Real Estate Related Niches That You Can Build a Business Around
Frequently Asked Questions:
What is the best type of business?
The best type of business is the one that requires little to no work and makes money for you. It’s about creating systems so that you free up more of your time.
Who makes the most amount of money?
The people that make the most amount of money are involved with business and real estate. Look into these ventures if you want to increase wealth.
Should I buy a franchise?
If you want a system already set up, it may be worth looking at. Don’t buy a job. Make sure that you are able to make money without working in your business.
