The 10 Keys to Creating Wealth: Number 4: Income Streams
The fourth of the 10 Keys To Creating Wealth, by Michael Ellison, founder of TriVita, is income streams.
Imagine that your wealth is like a reservoir. Funds flow into your wealth reservoir from a source, similar to a small stream or river. The more streams you have flowing into your wealth reservoir, the deeper it will become.
Possessing multiple income streams allows a person to build a reservoir of wealth that can take advantage of what Einstein called "the most powerful force in the universe": compounding interest.
3 Ways To Build Income
1. Labor Compensation
This income stream is usually derived from a day job where a person trades his time and labor for a wage.
A person locked into labor compensation is likely to think of multiple income streams as taking on additional jobs.
2. Hiring Employees
Generally speaking, this income stream occurs from employing people to complete a task. The employer earns a percentage and/or makes a profit after paying the employees.
Labor compensation and the hiring of employees are both restricted by specific acts of labor and time frames.
These income streams may create a small reservoir of funds, but they are unlikely to create a large wealth reservoir.
The income of the wealthy is not tied to labor-intensive, task-based income.
3. Residual or Recurring Income
This powerful stream of income is generated by something someone owns or creates.
The income flows without a time constraint, and without any additional labor for the owner.
Some examples of residual income streams include:
- royalty payments
- recurring commissions form a sale, such as a life insurance policy
- a product distributor receiving income from a multi-tiered compensation model
Remember: A day job can produce a treadmill effect,
but a treadmill is not a "fast track" to wealth.
3 Big Advantages of Multiple Income Streams
1. Greater Financial Stability
The income for most people is tied to their job so in the event that they lose their job or cannot work due to injury or illness, their quality of life is directly impacted. Sadly, most people live paycheck to paycheck.
Individuals with mutliple streams of income keep adding to their wealth reservoir and are much less affected if one of their income streams dries up.
2. The Ability to Maintain a Desired Quality of Life
Most households have far more outgoing streams of funds than incoming. And the outflow is constantly increasing with rising costs and inflation. Just look at how much medical costs, tuition fees, and transportation costs have risen over the last few years.
Multiple income streams are often necessary to keep up with outflow of income.
3. Positioning for Growth
Creating and owning multiple income streams has a powerful cumulative effect as these streams keep adding to your wealth reservoir and it keeps growing.
Assets Determine Wealth
Real financial wealth is determined by the value of your assets minus the total amount owed against them. Multiple income streams can generate a reservoir of valuable assets.
Also consider that assets such as real estate, stocks and bonds, and collectibles, can increase in value over time and therefore create another income stream.
A 21st Century Example of Income Streams Tied to An Asset
The TriVita cooperative marketing business opportunity is a 21st century business model that has all the above components related to wealth creation.
The business model has income streams that work for a person 24/7. Income creates a business asset and as income grows, so does the value of the asset.
Michael Ellison founded TriVita in 1999 to fulfill his mission to create a company dedicated to helping people achieve physical, spiritual, and financial wellness.
==> Click here for a complete review of the TriVita cooperative marketing opportunity.
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October 29th, 2009 at 10:04 am
[...] 4. Income Streams [...]
December 4th, 2009 at 10:40 pm
It´s important to build up more than only one stream of income to be independend. Nice Post in a great Serie!
February 3rd, 2010 at 8:51 pm
Well the idea is great. Yes to relate it into reality, we should continuously find ways to let our income increase and not to be stock on the usual income we get.
April 8th, 2010 at 11:09 pm
We All strive to earn extra income streams and increase our earnings, some are obviously more successful than others at this.
April 27th, 2010 at 2:40 am
G'day, It's nice to stumble upon a good website like this one. Would you mind if I use some of your info, and I'll put a link back to your site?
June 1st, 2010 at 3:15 pm
I started with a small company, worked to get it streamlined, after adding 4 more, it required additional help. this is where family members come in handy, in keeping payroll down to acheve the final goal,