7 Streams of Income to build wealth | What they are and how to generate them | South African

hey guys i'm tash and welcome to five minutes to five so today we're talking seven streams of income what are they why do you need them and how can we get them let's get started so if you read the books on building wealth they all tend to speak about this concept of seven streams of income now there's a belief that in order to become a millionaire you need to have at least seven streams of income that's really a simplified way of saying you need diversification right you need lots of different streams of income so that if something's going bad here we can rely on this income and i think after 2020 we can agree that you always need some sort of backup plan somewhere tom carley the author of rich habits found that 65 of millionaires had three sources of income 45 percent of millionaires had four sources and 29 had five or more so on the basis of that i would think three is the very minimum you need to get to but if you can get to seven that is not a bad thing so what are these sources and how can we get them source number one earned income this is probably the simplest one to understand it just basically means your salary it's money you earn for doing something generally if you have a job you're already earning earned income it can be the foundation for the other income streams that you will generate number two profit income so profit income would be from some sort of business so in absolute layman's terms if you have something that has a cost and you're able to sell it for more than it cost you you're making a profit right now generally if you are working a job if you're trying to make profit income then we'll be looking at some sort of side hustle if you want tips on how to start your side hustle that is an e-commerce business in south africa please check out my side hustle um video number three is rental income now i think this one scares people because they think okay now i have to have two houses scary this simplified of us rental income could even be you rent out a house yourself because maybe you don't own a house or something but you are able to afford a two-bedroom place so you rent out a two-period place and you sub-lease that second bedroom and you stop listen for a little bit more than you should right and now you're making rental income on top of giving rental income to your landlord then there's also renting out actual equipment so maybe you're a student university and you have a laptop and you don't mind renting it out you can really try get creative with it number four is interest income now we can get really simple with this and just say if you have a fixed deposit or a savings account you'll be earning interest income you could go out and loan money to people as well i don't know about all that you could just rather keep it simple this is really where as i said earned income number one was going to come in and be the foundation of all your other incomes it can come in an interest income it can come in in our fifth income which is dividend income so if you invest in stocks you will earn dividend income but this is where your earned income comes in again because when you're earning income through your salary you're able to then use that to invest in stocks or put your money into bank accounts so now you're getting dividend income and interest income off of your earned income number six is capital gain when you have a capital asset so a house for instance and you sell it for more than you bought it for then that's like we said profit but it's looked at as a capital gain so it's making profits from large capital um disposals one thing to remember is that stocks count as capital assets so unless you're trading in them that's a different story if you're trading in them to make income then they won't be capital assets but if you're buying stocks to invest and then once in a while you sell off a few you will have capital gains so that's great you can use your earned income yet again to invest in stocks invest in portfolios and then when you sell them off at a profit you've made a capital gain while you've held them you've made dividend income i'm loving how earned income really is the foundation of so many of your other forms of income number seven this is a tough one royalty income you earn royalty income by providing somebody the right to use something that you've created or invented something that's really popular lately is creating courses and tutorials right so if you go to sites like udemy you can create a course if you know how to do something even if it's something from varsity that you learned and you were so passionate about and you did really well in one major tip as i spoke about in the video that earned income really is the foundation for so many different types of income so the longer you can hold on to that earned income the more you can grow other kinds of income including your profit income that business has to be funded somehow i hope you enjoyed the video give it a like and 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Channel: Investing and Adulting

Views: 1,943

Keywords: #7streamsofincome #generateincome #buildwealth #millionairetips #millionaires #SouthAfricanYouTuber

Id: UpGfIwqEkoc

Length: 5min 36sec (336 seconds)

Published: Fri Jan 01 2021