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Many people dream of becoming millionaires, but what does it really take to reach this level of wealth? According to an IRS report, the average millionaire has not one, not two, but seven different sources of income. That’s right – seven streams of money flow into their bank accounts, building their wealth and securing their financial future.
Why are multiple revenue streams so powerful? It all comes down to diversification and risk management. Just as a smart investor spreads his money across asset classes to minimize potential losses, a millionaire understands the importance of not being dependent on a single source of income.
Think about it: if you only have one way to make money, like a traditional 9-to-5 job, what happens if you get fired or your company goes bankrupt? Suddenly your entire livelihood is in jeopardy. But when you have multiple irons in the fire, the loss of one source of income is certainly not ideal, but it is not catastrophic either. You have other streams to fall back on as you regroup and rebuild.
The 7 income streams
So what are these seven income streams that millionaires rely on? The IRS data shows:
1. Dividend income from stocks
2. Income earned from a salary
3. Rental income from real estate
4. Intellectual property from royalties, inventions, etc.
5. Capital gains from the sale of assets that have increased in value
6. Profit from a business
7. Interest from savings, bond or credit activities
Building these sieves can take years, even decades. But you have to start somewhere. Fortunately, there are a few income streams on this list that are very accessible to the average person and can be excellent ways to expand beyond a single paycheck.
Let’s highlight three of the most accessible options:
Dividend income from shares
Investing in solid, dividend-paying stocks can give you a steady stream of quarterly or even monthly income. And thanks to the power of compound interest, those dividends can really add up over time as you reinvest them.
One of the most popular dividend-oriented ETFs is the Schwab US Dividend Equity ETF (NYSE:SCHD). With an expense ratio of just 0.06% and a strong track record of performance and rising payouts, SCHD is an excellent way to build a diversified portfolio of dividend stocks. Over the past five years, SCHD has delivered an annualized return of approximately 11% and is currently returning approximately 3.5%. That means a $10,000 investment would yield $350 a year in dividends—not enough to retire, but a good start.
Trending: If there was a new fund backed by Jeff Bezos that offered a target return of 7-9% with monthly dividends, would you invest in it?
Rental income from real estate
Owning investment properties that you rent to tenants is a proven method of generating additional income. And in the age of Airbnb and VRBO, it’s easier than ever for everyday people to become landlords.
However, purchasing physical real estate requires quite a bit of upfront capital. That’s where a platform like Arrived comes in. Backed by Amazon.com Inc. founder Jeff Bezos, Arrival lets anyone buy fractions of rental properties for as little as $100. You get the benefits of being a landlord – passive income, property appreciation, diversification – without having to dealing with the hassle of finding tenants, cashing rent checks or fixing broken toilets.
Arrivald offers shares of both detached homes and their Single Family Residential Fund for broader diversification. To date, Arrivald has completed more than 378 real estate deals with an average dividend yield of 4.2% and has already returned more than $4.5 million in dividends to investors. With more than $161 million in assets under management, Arrival makes real estate investing more accessible than ever.
You can click here to view the properties currently available on Arrivald and start collecting monthly rental income.
Interest income
With the current high interest rate environment, this is the perfect time to generate interest income and lock in higher interest rates.
Basecamp Alpine Notes from EquityMultiple is an exclusive product aimed at beginning investors that delivers a target APY of 9.0% over a short term of 3 months with a minimum investment of just $1,000. With zero fees, monthly interest payments, and Alpine Note’s strong track record of meeting all payment obligations, Basecamp is an excellent place to put your extra money to work.
If you are looking for a long-term source of income, you can transfer the money to subsequent notes at maturity. More than 79% of Alpine Note investors choose to continue investing.
You can learn more about Basecamp Alpine Notes and start generating interest income by clicking here.
Don’t wait to build multiple sources of income
Building multiple streams of income is one of the most important steps you can take on your journey to financial freedom and achieving that coveted millionaire status. By starting with accessible options like dividend stocks through the SCHD ETF, fractional rental properties through Arrivald, and higher-yielding cash investments like Basecamp Alpine Notes, you can start building a diverse portfolio of income-producing assets—without getting rich yet.
Remember, the average millionaire has seven income streams. Why not start building some of your own today? Your future self will thank you.
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This article The Average Millionaire Has 7 Income Sources – Here’s 3 You Can Start Building Today originally appeared on Benzinga.com
