Menu #4: Your employer controls your salary, not your income

STATS STACK 🥞

$7 million in thirty seconds — that’s how much this year’s Super Bowl advertisers will spend in the time it takes you to rewatch your favorite TikTok video (Source: CNBC).

86% of people surveyed have at least one financial goal for 2024, among whom the most common goal is paying down debt (Source: Bankrate survey).

3 decades from now, the number of Americans ages 100 and older is projected to more than quadruple (Source: U.S. Census Bureau).

DEEP DISH 🍕
Your employer controls your salary, not your income

Let's chat about a topic that's close to the heart of many who dream of building wealth - income diversification. Relying solely on a traditional 9-5 job, while comforting and beneficial in many ways, might not always cut it when it comes to really growing your wealth.

In fairness, having a 9-5 has a plethora of advantages including health benefits, retirement plan, somewhat stable/predictable income, structured learning environment, camaraderie amongst work colleagues and so much more. Also, it’s often the catalyst for most people to embark on the income types below. But the difficult truth is that it’s hard to build wealth by solely earning income as a W2 employee.

On a personal note, we’ve benefited from having access to these 5 different income streams below. We’re leveraging the income from our stable 9-5 to invest in other streams that earn more money through active and passive means.

5 Types of Income

Entrepreneurial Income (active)

Here's where you get a bit entrepreneurial. Ever sold lemonade as a kid? That's entrepreneurial income. With technology, this has become easier. For instance, purchasing items from Amazon has become a staple in many homes around the country. Most people are buyers on Amazon but have you ever thought of selling products on Amazon? Thousands of people make a living or supplement their 9 to 5 income by doing this. There are several popular ways people make extra cash, but remember, always do your homework before jumping in.

Interest Income (passive)

You know how banks charge you interest? Well, you can earn it too. For instance, we mentioned last week that government bonds are a relatively safe investment that will generate interest. You can also generate interest income through utilizing a high-yield savings account. How would it feel to start or continue earning interest on your money, instead of just paying it? Glorious—yes we agree.

Dividend Income (passive)

Investing in stocks can generate dividends, which are regular profit-sharing payments made between a company and you, as the shareholder. If you buy stocks in one or more of these “dividend-paying” companies, the more shares you have, the bigger your dividend payout. In other words, the amount of dividend income distributed to you as a shareholder is proportional to the amount of shares you own. Companies that issue dividends may do so on a quarterly or semiannual basis, which can add to your growing pile of passive income.

Rental Income (both active & passive)

Real estate is one of the tried and true ways of building wealth in the United States. Owning an investment property has multiple financial benefits including: providing cash flow, lowering tax burden, capital appreciation and so much more. Rental income is earned through the profits made from renting an investment property to a tenant. For instance, a property may cost a landlord $1,200 a month in overhead. The overhead includes mortgage, insurance, property taxes, and maintenance. If that landlord rents out that same property for $1,500, she would make an additional $300 a month or $3,600 a year of net income from that property. That extra money made is income in her pocket every month. This type of real estate income takes time and attention for it to be a sustainable success.

Real Estate Syndicates (passive)

Real estate syndicates are an alternative type of real estate income, which is much more passive than the rental income mentioned above. This is when you pool your money with other investors to buy a property. It's a way to get into real estate without the heavy lifting of managing a property. You invest, the syndicate handles the rest, and you get a share of the earnings. It’s a smart way to diversify and get into the real estate game with less risk and hassle.

Conclusion

Remember, building wealth isn't just about working hard at your day job. It's about being smart with your money, exploring different avenues, and maybe even taking some calculated risks. Whether it's selling products online, earning interest, collecting dividends, renting out property, or investing in real estate syndicates, there are plenty of ways to make your money work for you. Reach out to us if you have questions or feedback about any of these!

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SWEET LINKS 🍰
Digital bites we think you’ll like

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Would you like fries with that? — For most of us, spending is way more fun than saving. Check out this visual representation of how much Americans are spending on burgers, iPhones, and Amazon packages every second.

Patience = profits — The chances of you losing your money in the S&P 500 in 1 day is almost 50%. But the longer you wait, the lower your chances of losing money over time.