How Can You Become Wealthy Realistically?
Let’s face it, financial management is confusing. So how can you become wealthy realistically? I mean how many streams of income are you actually aware of? As said by Warren Buffet (Multi-Billionaire) "The average millionnaire has seven streams of income". "He also said "Never rely on only one source of income”. Most people however, generate money from only one income stream. Is this you?
Find out which income streams are the best for you. There is so much more to earning money than you may even know. Remember, the internet has a tendency to show people’s success but never the journey. The journey is never glorified as much as the end result, but it is the journey that brings us the most fulfilment in life, not the end result.
Most people are not even looking to become overnight millionaires, they just want to stop trading their time for money. They want to reduce the amount of time it takes them to earn money, and hence live a more comfortable life. But like most of us we just want to find a way of balancing our time spent working around all the other things we want to do with our lives.
If you want to know how many income streams wealthy millionaires apply in their lives then please read on…
When you earn income it usually comes from a job where you are either doing something for somebody else or spending your time, e.g. working in an office or a salesman for a company. This is a typical example of trading your time for money. Some people may describe this as going to ‘jail’ everyday, or you may love your job so much that it feels like going to the circus. Mostly this is where your quality of life suffers because in most cases your job will only pay you enough to get you by. It is easy to become comfortable in your job because the alternative is just too risky. But it takes risk to do what the owners of your company did in order for them to be as successful as they are.
This comfort zone is your biggest trap because you have not created the skills necessary to rebuild yourself when a looming redundancy comes your way. The mere thought of getting the sack or being made redundant gives everybody in this situation the chills.
This is when you sell something for money like a product or a service, and you receive profit in exchange for the product. This is where entrepreneurs come in, they sell something for a profit. These days it is becoming easier and easier to become an entrepreneur. No longer do you need huge investments, affiliate marketing and Amazon FBA are perfect examples of starting a business with little to no investments.
A lot of time and effort is required, especially at the beginning, but most people are not equipped to deal with the challenges that entrepreneurship brings. It takes a very powerful mind-set and absolute personal responsibility to make it happen.
If you want to become an entrepreneur and stop trading your time for money then you need to identify a product or a service that you want to sell. You then need to manage it well. Work on your mind-set, such as reading books by entrepreneurs, and find yourself mentors to help keep you motivated and accountable.
Interest Earned Income
Interest Earned Income is a passive income which is usually received from savings in a bank. This income has the least amount of risk and with enough money can earn you a truly a massive return with the power of compounding. This actually beats the first two income sources as you can earn while you sleep.
Dividend income is when you own part of another company. It is an equally passive income as Interest Income, but this makes you a shareholder of a company and opens you up to receiving Dividends. A very small number of the world’s population invest in the stock market because let’s face, it’s very complicated and most traders are only interested in their own fees anyway.
If you invest smartly in large corporations then you can earn more of a passive income from this source than from Interest Income. If you are looking for adequate cash flow and want to earn a good income, learn how to invest in the stock market as this will be the key ingredient to making you wealthy – you just need to look at the successful billionaire Warren Buffet.
If you own a house or an apartment or any other kind of building, then renting it out is another income that is even better than the others because not only do you own the building, you also earn a passive income from rent. And the best thing about it is that somebody else is paying the mortgage.
There are however drawbacks such as the amount of money required to buy the property that can lead to generating a regular rental income. Since a large investment is required you most likely will need another source of income to pay for the property, and/or at least have a good credit score to get a mortgage. Unless of course you have a large sum of money available to purchase the property outright.
Capital Gains is when you buy a share and sell it for a profit, e.g you buy a share for £10 and sell it for £12 - the £2 is the capital gains. This also applies to the property market, so for instance if you buy a house for £120K and sell it for £150K - the £30K would be your capital gains. Make sure you check out the laws on tax before investing however.
If you have a product or an idea, then you can make money in royalties from letting it out to somebody. Whoever you ‘rent’ this product or idea out to will do all the hard work in generating a revenue and you in-turn will receive a small percentage of what they earn. Good idea ain’t it? This is the model that franchises like McDonalds and Subway use, although they do a bit more than just letting you use their name.
Not all wealthy people use all three sources of income, most just become good at two of them and perfect their skills in that area to make the most out of it. Warren Buffet for instance uses only Capital Gains and Dividend income and he is a billionaire. And even then, he picked a small area of each and became an expert in them.
The best place to start is just that, start! Focus on what you can do right now. Pick one of the above income streams and find a small part of a small part of a small part. Learn it, perfect it and grow it. Become the best you can in a small niche in that income stream.
Do not risk your financial life on just one income stream. One of these income streams could change your life!
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