Today I’m going to give you an exclusive look into the income streams of millionaires.

At some point in your lifetime, you’ve probably wondered how the rich actually make money. The truth is that millionaires are no different than anyone else. The reason why millionaires are able to generate so much wealth, is because they have multiple income streams.

Research shows that on average, millionaires have 7 different income streams. However, ordinary people – such as the middle class, only have one income stream. To compare the two would be like saying the middle class person works only one job, while the millionaire works seven jobs. But as you may know, once you become a millionaire, you’ll never have to work again.

So if there’s nothing separating millionaires from ordinary people, why do most middle class people only have one income stream? Think back to when you were a child – what did your parents tell you to do?

“Go to school, get good grades, and land a high paying job.”

You see most people are not wired to become millionaires. They are wired to find a job. These people are not even aware there are other ways to make money – such as starting your own business, investing in high return assets, becoming an entrepreneur or even making YouTube videos. In order to become rich, you need to know how to build multiple streams of income, besides just working a job. Here are 7 income streams of millionaires, and how they make millionaires rich.

1. Earned Income

Earned income is the first of many income streams of millionaires. This type income is one most people understand – you trade your hours for dollars. But this is also the biggest mistake most people make. They attempt to try to make more money by trading more of their time in order to do so.

Let’s say you have a full time job right now. If you want to earn more money, most likely the people around you would tell you to work more hours. Man up, and take that graveyard shift. Or give up your weekends, and work during your off time. That’s a big mistake, because you are trading more of your time in order to earn more income. What you actually want to do, is to trade less time for more income. 

Now I know what you’re thinking: “Dan, how am I supposed to earn more money by working LESS?” 

For example, let’s say you work at Starbucks and you’re currently making $13/hour. To earn more at your job, you would have to work more hours. But instead of putting in more work, what you want to do is think. Most people don’t think, that is why they are stuck in a cycle of trading their time for money. Successful people know that they will never become rich by working at a job. That is why they use their brain, to think of alternative ways to generate more money.

Successful people use their minds to create money, not their time. Click To Tweet

Why Rich People Use Their Brain Instead Of Their Muscles To Make More Money

What you want to do is think about how you could be more valuable at your job. For example, let’s say your current job position at Starbucks is cashier. In order to become more valuable, you would need to become promoted to supervisor or branch manager. Now instead of making $13/hour, you are making $15 or $16/hour. You are increasing the amount of value you are delivering to your boss, without increasing the amount of time you have to work. Now, you are able to work the same amount of hours and earn more income, without needing to work harder.

Another example of how to earn more income by working less, is the High Income Skill of copywriting. Let’s say you are a copywriter that helps businesses to promote their products. You write 3 emails, and you charge $100 per email. And let’s say the time it takes you to write 3 emails, is around 2 hours. That means you are essentially earning $150/hour, because you have a skill that generates a high income. 

Every person on this planet only has 24 hours a day. If you want to become rich, you need to think of your time as a limited resource and spend it wisely. If you are trading your hours for dollars, you are not using your time very efficiently. It is true that the more hours you work, the more you will earn, but if it takes you 40 years and you’ve already grown old by the time you earn your money, what’s the point? You want to earn your money when you are young, so you have time to enjoy it. In order to do that, you need to work smarter, not harder. And you do that by delivering more value.

2. Business Income

Business income is about trading a product or service for money. A good example of business income, is my eCommerce business – the Dan Lok Shop. At the Dan Lok Shop, we offer both digital and physical products such as T-shirts, CD’s, online programs and courses and much more.

Business income is an effective way to generate more income. Some other examples of business income are grocery stores, bubble tea shops and fast food restaurants. They provide a product which people buy. And the more sales they make, the more income they generate. Instead of working for money, the business generates income by trading products for money. And the more valuable the product is, the more they can charge – allowing them to earn even more income.

Starting a business is a good way to generate business income. If you can find a valuable product or service to offer to the marketplace, you can charge very high prices that people are willing to pay. Luxury stores such as jewelry stores and designer clothing stores are examples of business income that charge high ticket prices. Some of the most successful businesses out there, are businesses that use a high ticket business model. The amount of revenue generated, can range anywhere from $10,000 to over $100,000 monthly.

3. Interest Income

Interest income is a way to earn money by lending your money out to somebody. Some examples of interest income are CD’s (Certificate of Deposit), interest from savings from a bank account or carrying a note. You earn income by collecting on the interest you get every month, similar to how credit card companies charge you interest when you buy things on credit.

Here is a good example of what a note is. Many years ago, I sold a company to my business partner. The deal was very simple: He would pay me a down payment, which is a small percentage of the total amount, and I would carry a note, or IOU, for 5 years. For the next 5 years, my business partner would pay me back every month in small payments, plus interest. 

My business partner is willing to buy the business from me because it is a proven income stream. In exchange, I get back my money and generate interest every month from the IOU. I am able to use my business skills to create a business that generates money, and then sell that business to generate income from the interest. That way, I essentially get paid twice for doing only one thing: Building a business.

4. Dividend Income

Dividend income is a form of income you earn by owning shares in a company. This is also known as dividend stocks.

income streams of millionaires

Let’s say you own 30 shares of stock in a company and that stock pays $2 in annual dividends. You would earn $60 a year, just by owning and holding onto that stock. Some companies pay dividends annually, and some pay quarterly. That means if you’re looking to invest in dividend stocks, there are many companies you can choose from, as different companies offer different rates of return.

5. Rental Income

Rental income is a result of you owning something and renting it out to someone else. It could be an apartment that is being rented out to a family, or from commercial real estate, which is used by other business owners as a location for them to set up their business.

Rental income is a very powerful type of income stream. Most millionaires that are wealthy, either hold or generate most of their income from real estate. It is one of the most common vehicles of investment that they utilize and leverage.

Here is an example of why real estate is so powerful. Let’s say you want to buy $100,000 worth of stocks. In order to do that, you would need $100,00 in cold hard cash, assuming we don’t buy on margins or use other risky alternatives. To buy $100,000 of stocks, you would need the full amount in cash to do so.

Now if you wanted to buy $100,000 worth of real estate, would you need $100,00 in cash to do so? The answer is no, because there are ways you can get a loan. There are banks, private investors, institutions and insurance companies that are willing to loan you money to buy real estate. The reason you can’t buy stocks with a loan, is because these same institutions are not willing to loan you money to buy stocks, but they will loan you money to buy real estate. They see it as a lower risk investment, and are willing to lend you money.

Real estate is one of the most common vehicles the rich invest their money in. Click To Tweet

Why Banks Will Loan You Money For Real Estate But Not Stocks

The reason these institutions will not loan you money for stocks but will loan you money for real estate, is this:

Let’s say you purchase $100,000 worth of stocks. How much would those stocks be worth the minute you buy them? According to the marketplace, it would be worth $100,000.

Now let’s say you were to buy a piece of real estate for $100,000. The worth of this property would actually not be $100,000. It could be worth $80,000, or even $120,000. This is because of something called a “Motivated Seller”. Homeowners that sell their property do so because of different reasons. It could be due to a divorce, or they need the money now for a medical emergency. There are many reasons why someone would sell – and very often when people are motivated, they will sell at a much lower price than what the property is actually worth. They need the money NOW, which is why they are willing to undercut the price in order to do so. That means you could be buying a piece of real estate for a much lower price than what the marketplace values it at.

income streams of millionaires

Other reasons are because someone sees a piece of real estate as more valuable than what you think it is worth. With stocks, the value of a share is fixed by the share price. However, there is no fixed price for a piece of property in the real estate industry. A home that you think is only worth $200,000 could be worth $400,000 to another investor. It all depends on the perspective of the buyer.

6. Advertising Income

Advertising income is income generated primarily by advertisers. This could be from a website, blog, YouTube channel, Instagram profile and many more. For example, let’s say you have a blog. And your blog gets around 20,000 visitors a month. Since you are able to consistently generate traffic to your website, advertisers are willing to pay you money to put their ads on your blog. They want those eyeballs on their products, and are willing to give you money to advertise their products on your content.

If you frequently browse YouTube, you will most likely have ran into an example of advertising income. When you’re browsing cute cat videos and you come across a 5 second ad at the beginning of the video, that is a form of advertising income. Whenever someone clicks on the video and watches that ad, the advertiser pays the video creator money. The more views the video has, the more money the video creator makes from the advertiser. The best part about YouTube ads, is that it may take a little bit of time to create and get going, but once that happens the income is automatically generated. You don’t have to do any work to maintain the video or get people to view it – YouTube handles all of that for you.

7. Royalty And Licensing Income

The 7th and last type of income streams of millionaires is royalty and licensing income. It simply means that you are the creator of a product, idea or process, and you license it out to let someone else use your idea for a fee. Since ideas and creations are considered private property, by law you cannot use someone else’s idea or creation without the owner’s consent. To obtain this consent, people usually pay the owner a fee for the rights to use it.

For example, my latest book “Unlock It” took a year to write, finish and publish. Every time someone buys my book, I get paid a royalty on it from the work that I did once. The same goes for every platform where my book can be found – such as Amazon or in bookstores. The best part about writing a book, is that for many many years to come, I will continue to collect royalties from my book sales. That’s one of the best benefits of royalty income – you do the work once, but you get paid for it over a lifetime. It’s a very effective way to minimize the time you spend working and maximize the amount of income you can produce.

The Benefits Of Having Multiple Income Streams To Produce Income On Autopilot

Those are the 7 income streams of millionaires. Rich people get rich by having multiple streams of income, allowing them to efficiently trade their time for money. Unlike most middle class employees, rich people do not trade hours for dollars. They use their brain and their financial knowledge to think of alternative ways to do less work, while generating more income.

Rich people understand that they have a limited amount of time. Trading hours of dollars can only generate so much income. That’s why the best way to become wealthy, is to create multiple streams of income that provide you with income passively. Advertisers, royalties, rental and dividend income are some examples of passive income, because you don’t have to do anything to generate it. Passive income allows you to sleep knowing that there’s money flowing into your bank account. And since you sleep for 8 hours a day, that’s 8 hours worth of income you are generating by working smart.

These are just some of the basic income streams of millionaires. There are many other types as well, such as leveraging influencers, partnering with brand name companies and leveraging life insurance to gain more money. All of these methods focus on maximizing income while minimizing time spent. If you are interested in discovering more about the different types of income streams that exist, click here to learn how to leverage property taxes as a source of income.