Self-made millionaires have multiple income streams: Here’s how (2024)

Dubai: Global surveys show that self-made millionaires have multiple income streams, but how do they go about it and how does it work if you already have a full-time job?

There is a renowned global study of 6,000-plus wealthy individuals that was conducted over the span of six years, as well as another five-year survey that studied the habits of millionaires.

Based on it, we look at possible steps one can take to build income streams like a millionaire to help challenge misconceptions about millionaire wealth and myths that hinder your money from growing.

Self-made millionaires have multiple income streams: Here’s how (1)

What research reveals about millionaires and their income streams

The above research of the daily habits of the rich, showed that self-made millionaires have had multiple income streams over the years:

• 65 per cent of self-made millionaires had three streams of income.

• 45 per cent of self-made millionaires had four streams of income.

• 30 per cent of self-made millionaires had five or more streams of income

Also, each additional stream they added gave them wealth that they could then leverage and invest into another.

Self-made millionaires have multiple income streams: Here’s how (2)

What are the types of income millionaires have?

Here are the types of income they had, which can be divided into seven categories.

1. Investment income: This is the money earned in the form of dividends from stocks owned. Dividends are regular payments of profit made to investors who own a company's stock.

2. Earned income: This is the common salaried income earned from contracted employment.

3. Rental income: As the name suggests, it is the rents from properties they own.

4. Royalty income: These are payments for royalties from selling rights to use something they’ve written or invented.

5. Capital gains: This is the money you get from selling assets whose values have appreciated.

6. Profits: This the money earned after deducting expenses from businesses they own.

7. Interest income: This is essentially money from savings, deposits, bonds, or other lending activities.

Diversification of investment (the practice of spreading your investments around so that your exposure to any one type of asset is limited) has been around for ages, but these findings show that this idea can be applied to income streams.

Moreover, these findings also show that diversification or creating multiple streams of income isn't just a survival technique for those looking to minimise losses when putting all their money into one asset, but rather it's also a strategy for building wealth.

Self-made millionaires have multiple income streams: Here’s how (3)

What should I learn from these surveys in order to become a millionaire? Here are 5 key takeaways!

• #1 - Having a full-time job is a plus, so is investing in stocks and property

Your employment income will be what funds your other income streams. Still, it will provide you with stability to diversify your income and experiment with your passion projects and investments.

Stock and property investments are regarded by experts as the most consistent, long-term, passive source of income.

Here’s why. Allowing your income to be consistent means letting the profit pile up without spending it or reducing the amount you invested.

Ideally, you will only increase the amount, but if you allow yourself to be patient in the long-term and you place your earnings back in the market, you will earn compounded interest — profit on your profit.

However, veteran investors opine how this will only work if your investment strategy is low-risk, long-term and passive, working on the backburner while you do other things.

Self-made millionaires have multiple income streams: Here’s how (4)

• #2 - Start a business on the side, let the business generate more income streams

An interesting trend among millionaires is that most of them have businesses of their own – ones that they have either launched as entrepreneurs or by having partly invested in another start-up.

According to a study by the Economist, about half of the world's millionaires own their own businesses. Another key takeaway is to find multiple streams of income to incorporate within your existing business.

For example, let’s say you’re a blogger and writer by trade who gets paid to create content. However, you can also sell digital courses where you can teach other people how to become well-paid writers.

Or, you can self-publish and sell books on the topic on Amazon. You can also make money in affiliate sales by recommending the products you use to run your business.

What this simply means is grow your business in your free time. While this seems nearly impossible for most people, this is evidently the way to do it, as the above millionaire surveys indicate.

Because it appears to be commonplace for every millionaire in the book to aim at diversification of their ‘main’ source of income and generate multiple income streams, each of which of equal merit.

Self-made millionaires have multiple income streams: Here’s how (5)

• #3 - Create passive sources of income, with rental income being a popular option

Passive income refers to money that you earn without having to trade time for money. While saving up the money to buy your first property is hard, if you start small, though, you can scale more quickly. However, this can mean many things. Let’s simplify with a few instances.

For beginner to intermediate-level investors, investment advisors suggest seeking approval from your landlord about subletting a room or a bed in your room, if that is possible, if you don’t own property.

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Or, buy a share of a rental property. You can buy 10-50 per cent of property on the rental market and collect the relevant proportion of the rent. There are numerous schemes wherein you can own just a share of property with Dh2,000 to Dh5,000.

As your property income increases, you can find properties that you can buy with the income you have and place them on the market. You can also find bigger properties you can buy cheaper than their market value and increase in value through quick renovations.

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• #4 - How about royalty income? Create a product and allow others to use it at a cost

Royalty income is payments for royalties from selling rights to use something that you created. The YouTube video a person makes is used as a vehicle by the platform for ad placement, for which you are given a royalty payment.

If you are an academic, writing journal articles will earn you monthly royalty fees based on readership and impact of your research. If you are a musical artist or a photographer, your work can be monetised similarly.

Digital products can be created around your areas of expertise. They should demonstrate your abilities. In recent years, tutorials and online courses have also skyrocketed into popularity, creating a platform for many niche topics to be examined in this format.

The logic experts explain is simple when it comes to earning a royalty income, there are no limits on what you offer as long as there is a demand for it and value in it.

Self-made millionaires have multiple income streams: Here’s how (7)

• #5 - Have a high-yield savings account, sell appreciated assets

Use an account that gives you a higher interest rate, if your savings are consistently (each month) higher than a certain amount.

Experts evaluate how you should always choose a savings account that pays you more than 0.75 per cent on your money and set up an instruction from your current account to a savings account for a set amount each month. Increase the amount, based your earnings on and treat this as a retirement fund.

Selling appreciated assets seems to be another common habit among millionaires. An appreciated asset is an asset that has a higher market value than its book value or taxable value and which, upon its sale, will generate a capital gain. Examples include works of art, rare books, and antiques.

For example, you could visit second-hand shops, which sell items by weight and find luxury, often never-been-used items there. Buying such items and selling them, priced appropriately, will generate a capital gain.

The same can be applied to antique furniture or possessions in your family, which are not used or not of emotional value to members of your family. You can also create such assets yourself.

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Bottom line?

Research shows that there are seven streams of income that research demonstrates are consistent amongst millionaire tax returns, with the majority of millionaires having upwards of three income streams.

Simply put, saving money is integral and experts recommend at least save 10-20 per cent of your net income every year. Next, in order to becoming a millionaire you need to expand your means, meaning start a side business or side career that generates additional income.

Invest your savings and additional income into investments that generate passive income such as rentals. If you can't do it on your own, partner with others and keep building your portfolio of assets that generate passive income.

According to the surveys, while three streams of income seems to be the magic number for the self-made millionaires, the more income streams you can create in life, the more secure will your financial house be.

And the surveys also proved that contrary to popular myth, you don’t need to quit your day job to start a business and become a millionaire.

Self-made millionaires have multiple income streams: Here’s how (2024)

FAQs

Self-made millionaires have multiple income streams: Here’s how? ›

Create multiple income streams

Do most millionaires have multiple streams of income? ›

The average millionaire has seven streams of income, which may sound surprising to many. However, it is their mindset that leads them to achieve this financial milestone.

How did most self-made millionaires get rich? ›

No matter the percentage that separates the two groups, one differentiator sets them apart more than all the rest: how they grew their fortunes. Self-made millionaires tended to rely on capital appreciation from investments — as well as salary, stock options and profit-sharing.

What are the 7 streams of income? ›

Understanding the Seven Income Streams

The most written about income streams typically include: earned income, profit income, interest income, dividend income, rental income, capital gains, and royalties.

How do 90% of millionaires make their money? ›

Real estate investment has long been a cornerstone of financial success, with approximately 90% of millionaires attributing their wealth in part to real estate holdings. In this article, we delve into the reasons why real estate is a preferred vehicle for creating millionaires and how you can leverage its potential.

What is the best passive income for millionaires? ›

Rental Income

The truth is that rental income has made more millionaires and billionaires than any other strategy.

How rare are self-made millionaires? ›

79% Of Millionaires Are Self-Made — Lessons From Those Who Built Wealth Without Inheritance. Recent studies have shown that the notion that most millionaires are born into wealth is a myth. Recent studies have shown that the notion that most millionaires are born into wealth is a myth.

What percentage of Americans have a net worth of over $1,000,000? ›

Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.

What do 90% of all millionaires become so through owning? ›

Ninety percent of all millionaires become so through owing real estate.

What does the Bible say about multiple streams of income? ›

Verse Summary: What Ecclesiastes 11:2 Has to Say About Money

Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.” In other words: Avoid risk, avoid disaster, by diversifying your income!

What is the most common source of wealth? ›

Pension assets make up the largest source of net wealth of all asset types and is remarkably stable across the wealth distribution at the fourth decile and above.

What is the number one source of income for most people? ›

Wages and salaries comprise the largest overall source of total income. For most tax filers in the U.S., the largest income number on their own Form 1040 appears on the line where they report wages, salaries, tips, and other compensation for their work.

How can I make $5000 a month in passive income? ›

Rent Out Assets. If you like the idea of earning passive income, one idea to make $5,000 per month is to rent out things for money. This is probably the best option if you're very busy with your job and don't have time to start a new side hustle.

What is 90% of all millionaires? ›

Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.

What is the most common path to wealth among millionaires? ›

The key for most millionaires is to save money before spending it. No matter how much their annual salary may be, most millionaires put their money where it can grow, usually in stocks, bonds and other types of stable investments.

What percentage of people have multiple streams of income? ›

According to the latest census figures, 7.8% of U.S. workers have more than one job. Interestingly, people working in healthcare and food services were likely to have a second job.

Do most millionaires earn more than $500000 per year? ›

False—Less than 15% of millionaires have income over $500,000 per year. They build their wealth through their assets. 3. Most millionaires work fewer than 40 hours a week.

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