The average millionaire has seven income streams, and understanding these income streams can help you build wealth and financial security. According to Dalton Hogarth Tokyo Japan’s review, you do not need to be a millionaire but can become one when you understand these income sources.

Let us explore the seven types of income that the wealthy often have and how you can start creating them yourself:

1. Earned or Active Income

Earned income is the money you make from working, whether a salary, hourly wage, or freelance earnings. It’s the most common form of income and serves as the foundation for many for building wealth.

However, relying solely on earned income can limit your financial growth, as there’s a cap on how much you can earn based on your time and effort.

2. Profit from Business 

Profit income comes from selling goods or services for more than it costs to produce through starting a business, selling products online, or providing a service.

While it requires an entrepreneurial mindset and initial investment, it can lead to significant financial gains and is an important income stream for building wealth.

3. Interest from Cash Investments

Interest income is earned from lending money, whether it’s through savings accounts, bonds, or other investments. Interest returns are typically lower than other income streams; interest income is passive, meaning you do not have to do anything outside of letting the cash stay in the account or investing in debt instruments.

According to Dalton Hogarth Tokyo Japan, interest protects your cash from losing value due to inflation.

4. Dividends from Shares

Dividend income is earned through owning shares in a company. Companies distribute their profits to shareholders as dividends, providing a steady income stream. Dividend income is often taxed lower than earned income, making it an attractive option for building wealth.

5. Rental from Properties

Rental income is earned by renting out property you own, whether it’s a home, apartment, or commercial space. Platforms like Airbnb have made renting out properties more accessible and lucrative for the average person.

6. Capital Gains from Assets

Capital gains are earned from an asset’s value increase, such as stocks, real estate, or art when you sell it for more than you paid. Capital gains are typically taxed at a lower rate than earned income, making them a popular income stream for investors.

7. Royalty from Creations

Royalty income is earned by licensing your creations, such as music, books, or inventions, to others for a fee. While it requires a unique skill set and initial investment, royalty income can provide a steady stream of passive income. Royalty income gives celebrities and musicians passive income.

Wealth Building with a Diverse Income Portfolio

Dalton Hogarth Tokyo Japan believes that everyone should start diversifying their portfolio. While not every millionaire has all seven income streams, diversifying your income can help you build wealth and financial security. Whether starting a side hustle, investing in stocks, or renting out a property, exploring these income streams can help you on your journey to financial freedom.