Almost everyone in the world is looking for ways to earn income as you grow. We need it to pay for food, home, travel, family, medical, or anything one wants to do. Most of people have only one kind of income stream. Key to success & take risks in life is developing multiple income streams. This will not only help you fulfill the needs but also reduce the mental pressure & you can think of ideas to create value in the ecosystem. Let's discuss few types of income streams:
Earned Income
This is the type of income most of us have. We do job/work or sell our skills to earn money. Almost everyone is aware of it & after college or getting education we always look for ways to land on a good job to have a better income. Others do tough jobs and get paid. It's one of the hard thing & requires consistent effort & energy. If you lose health or in someway can't do job, you loses the benefits & all the income.
Profit Income
Profit income comes from buying something cheaper & selling it for a better price. or Sometime creating something from raw materials & selling it to take out profits. Most of the business falling this category & is also quite common. We all use & buy things someone else has crafted.
Interest Income
Interest Income is mostly the way banks operate. If you have good amount of money saved, you can borrow it to others and have them pay interests. This type of income needs a good capital to start from. Although now a days we can save money in bank saving accounts and earn interest on it. Technically bank uses that money to lend & shares small amount of profits with holders. This income stream is not one of best way as one can make more money with other income streams, but definitely it requires less effort & so are the returns.
Residual Income
This type of income has became common after boom of internet. Residual income is when one gets paid after a long time of completing a work. For example, writing a book, when a good amount of books are sold one can get some decent amount of money. The best part here than earned income is you no more need to spend time to generate income. Once the value you provided is good enough, it would keep generating income over some time.
Dividend Income
We all know we get dividends from owning stocks. This is one of common income stream after interests from banks. Basically the stocks are publicly traded shares of company & mega companies often pay a nice part of their earnings in the for of dividends to it's shareholders. This can also be risky due to variation in stock market & businesses. but this can also lead to higher returns in long run if good research is made.
Rental Income
If you own an asset, rent it to others & earn some money. This is very common in case of land & real estate business. If you own a property or an apartment, a nice amount of money can be made. with advancement of technology & internet now more renting opportunities are available. This category can also produce capital gain income which is discussed in next section. This one is must to have for people. I myself plan to create one in near future.
Capital Gains
If one of the asset you hold increases in price overtime, the incomes generated by it is known as capital gains. People hold gold, precious metals, land, properties, stocks and many other things to get capital gains. Now a days even crypto can be held for capital gains. We are all familiar with Bitcoin example, that if you have bought one 10 years ago, how much capital one must have gained.
Royalty Income
Royalty income comes from selling your ideas or products or inventions. If someone else uses your idea to generate income they pay a part of it to creator as a royalty. This one is really hard to get in as you may have to think an idea which is unique. Brands do it in form of having franchises, once they get popular and have good products. Anybody who uses the same brand name pays a cut to brand.
Do you know any other form of income? let me know in comments.
