The Seven Income Stream Fallacy: The Power of Focus Over Quantity (2024)

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The Seven Income Stream Fallacy: The Power of Focus Over Quantity? ›

In a world that champions the mantra “more is better,” the allure of building multiple streams of income is potent. The conventional wisdom suggests that the wealthiest individuals have an average of seven income streams. However, this idea often leads to a fallacy of quantity over quality.

How many income streams should you have? You can have as many income streams as you want, but the right number for you will depend on your goals and current resources. If you don't have a lot of time to devote to establishing many passive income streams, it may make sense to only have a few until you can free up time.

Meaning of income stream in English

a regular supply of money that comes from something such as an investment or business: These bonds provide steady income streams. There would be an attractive income stream from renting out part of the property.

That's where the concept of having multiple streams of income comes into play. As the saying goes, the average millionaire has 7 streams of income. In this article, we will delve into these income streams and explore how they can pave the way for you to become a millionaire.

Multiple streams of income are different types of income that come from different sources. You can have multiple streams of personal and/or business income. Each income stream can be passive, semi-passive or active. We'll look at some examples of each later.

Understanding the Seven Income Streams

The most written about income streams typically include: earned income, profit income, interest income, dividend income, rental income, capital gains, and royalties.

Having multiple income streams is a wise financial strategy that can help you achieve financial security, independence, and freedom. It involves generating income from different sources such as your main job, side hustles, investments, and passive income streams.

Generally, income streams are converted into indicators of value by using rates and factors. The two basic formulas are: Income divided by a rate equals value: I ÷ R = V. Income multiplied by a factor (multiplier) equals value: I × F = V = I × M.

Passive income is money that doesn't take much time or effort to make and you don't earn it from a traditional job. It can include earnings from rental properties, dividends from stocks, selling courses online, and other projects where you're not involved in the continued generation of revenue.

What creates 90% of millionaires? ›

Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.

In the United States, the concept of being rich is often a subject of discussion, curiosity and, sometimes, aspiration. Charles Schwab's 2023 Modern Wealth Survey provides insights into this topic, revealing that the average American equates being wealthy with a net worth of approximately $2.2 million.

In the U.S., it may take you $5.81 million to be in the top 1%, but it takes a minimum net worth of $30 million to be considered among the ultra-high net worth crowd. As of the end of 2023, this ultra-high net worth population is on the rise, reaching 626,000 globally, up from just over 600,000 a year earlier.

Nowadays, it's pretty common to have more than one source of income. Studies show that about 45% of working Americans are hustling on the side, and experts think this trend will keep growing. But how do you monitor all these income streams and ensure they're doing well?

According to the latest census figures, 7.8% of U.S. workers have more than one job. Interestingly, people working in healthcare and food services were likely to have a second job.

Whether it's through a side hustle, investments or gig work, having multiple sources of income can make your financial life more stable — but it also makes finances more complicated.

The most important reason to have multiple streams of income is if one source of income stops or is eliminated you can rely on another source. There's always a safety net to catch you if anything were to go awry. This is the beauty of having multiple streams of income.

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