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Your wealth-building goals have a better opportunity to come to fruition when your income is strategically focused on diversification. With multiple streams, you reduce reliance on one income outlet, while maximizing earning potential.READ THE ARTICLE
Five of the seven sources explored here include:
📌 Earned income: As the traditional money you earn from employment, it provides consistent income. However, job loss or capped salaries can make sole reliance on this stream tricky if no other sources exist.
📌 Capital gains: The profits you make from selling an asset, such as stocks or real estate, at a higher price than what you originally paid. This income is best utilized for the long term and in retirement to minimize taxes and maximize growth.
📌 Interest income: Assets you receive by lending money to others, whether it be through a “savings account, money market account, certificates of deposit or fixed income securities.” While considered low-risk and reliable, it’s also subject to inflation risk.
📌 Dividend income: Passive income earned by owning stocks that pay dividends. Although not affected by market volatility (like capital gains), this stream also tends to underperform long-term in comparison to stocks.
📌 Rental income: In addition to being reliable, rental income is also an inflation hedge and can provide tax benefits. However, the “rental hassle” can sometimes outweigh the benefits.
If you’re in the accumulation stage, you can leverage multiple streams of income to get you to retirement. Once you’re in retirement, you can diversify income streams to create more financial stability and confidence.