If you understand and apply the information in this blog post, you can be wealthy. I almost never say that, but the information in this blog post is achievable by anyone. Your goal should be to have all 7 of these types of income as quickly as possible. For most of us, it may take 40 or 50 years, but for some of you, you can accomplish this much quicker, especially given the incredibly varied ways to make money nowadays.
Here are the 7 types of income that lead to wealth
1. Earned Income. This is Income you receive from having a job, or self-employment. This is the highest taxed income. It includes the money you get from salaries, wages, bonuses, and tips. With earned income you are trading your time and your efforts for money. For more on earned income, check out this article: https://investinganswers.com/dictionary/e/earned-income
2. Profit Income. Income from buying something low, and selling it at a higher price so that you get a profit. It's the revenue leftover after expenses. You may hate to sell, but selling is how the world does business. Everyone is selling you something, maybe it's your turn.
3. Royalty Income. Income from someone using your work. You could write a book on a topic you know, love, have lots of experience with, and can talk all day about. Get paid royalties from it, and you are in this ballgame. Royalties can also come from patents and trademarks.
4. Rental Income. This is income from owning, and then renting out the property, land, or equipment. Whatever the case, get in this game. It can be plumbing equipment, cookware, or a dump truck. Do yourself a favor and buy something that appreciates in value, so you can also take advantage of the last item on this list!
5. Interest Income. This is income from lending your money for someone else to use. You can collect "simple interest" where you collect interest on the principal, or you could benefit from "compound interest" where you collect interest on the principal, and interest on the interest. Interest income comes from banks accounts, CDs, or loans to the government in the form of the purchase of T-bills. You can also lend money to individuals or businesses and collect interest, or invest in your jobs retirement account and benefit from the amazing multiplying effect of compound interest. You get the point. There are many ways to benefit from interest income.
6. Dividend Income. This is income you get from owning stocks. Specifically, this is any distribution of a company's earnings to shareholders from stocks you own. For some companies this is paid out quarterly, and you can always choose to reinvest this income back into the purchase of more company stock.
7. Capital Gains Income. This is income you get from the rise in value of an appreciating asset that gives it a higher value then the purchase price. Owning a home, a piece of land, a building, or any other type of investment property, will net you income from capital gains on the sale of said property. This is why it's important to always invest in assets that appreciate in value. That appreciation is yours!
Understanding money does not have to be an overwhelmingly complicated scary monster. These 7 types of income are achievable by anyone!
I did not make these up, so if you want to learn more about them, you can find tons of information about them all over the internet. I think they are incredibly important to know and strive for.
You can do it!