The 7 Income Streams All Millionaires Master

Do you know the average millionaire has between three and seven different unrelated sources of income, multiple streams of income. One source I found said the average millionaire has nine income streams. I have nine income streams. And I became a millionaire age 30, which is about 900 years ago. In this power episode, I'm going to share with you the seven different types of income streams. If you don't have seven income streams, you need to listen to this episode. It's very important. An old money millionaire, someone who's been a millionaire for decades and will be a millionaire, or a deca millionaire for lifetimes, generational wealth, they have unrelated and diverse income streams. They don't have all their income from one source, for example, a job. Because of course, if you get made redundant or you get fired or you become ill, you don't just lose some income, you lose all your income. So whilst multiple streams of income is important, if you have three types of income but from the same source, for example, you have different types of property, but the same source is property, you are still at risk. In fact, I have 340 rental units in my property portfolio that I co own with my business partner. And he said to me about two years ago, we're probably exposed enough now in property. We will keep buying. We might buy a few dozen a year, but we're not going to be buying hundreds because we don't want to be overexposed in that one income stream and that one asset class, even though that source has made us tens of millions of pounds. Look at all these crypto junkies that made tens of millions almost overnight in crypto and then lost tens of millions before the sun came up the next day. In fact, I was at a dinner in Marbella. It was men only. You were only allowed to eat steak, you could not order vegetables. And there was this young lad, he must have been in his mid-20s. He was very cocky, arrogant and bullish. And he was boldly stating how much money he'd made from crypto. Not just crypto, but from one specific cryptocurrency. I believe at this time he'd made 20 to 25 million, something like that, in one cryptocurrency. He was kind enough to get the dinner, but the next time I heard about this guy, he'd lost virtually all of his money holding in that one crypto. I even said to him, well, the way to put the cow on the table for us all to gorge from. I said to him, should you not diversify that money? Shouldn't you put it into real estate? Shouldn't you put it into some physical assets, maybe like gold, or at least take some of it and put it into bitcoin, something like that. And he dismissed me out of sight. He said, what is the point of taking money out of this crypto, which gives me the best return, and putting it into something else that doesn't give me as good a return? The problem is he was only talking about the moment, he was only talking about the best case, and he wasn't thinking about diversification. Sometimes you'll accept a slightly lower rate of return in exchange for diversification, protection and insurance. So mark my words, yes, you probably want to make your money in one income class because, you know, all these successful people say you've got to focus on follow one course until successful. You can't spread yourself thin and try five different businesses at once. No, you can't. But what you can do is plan ahead and have your main income stream maybe 70% of your time, a secondary income stream maybe 20% of your time, and then 10% of your time on everything else, your research and your risky investments. Same with your money. You don't want to invest all your money into one asset class. I got asked by someone just today, how do I invest 600 grand? Well, forgetting the fact that there's so much context, age, attitude to risk, what asset classes you're already in, what asset classes you know very well what asset classes you're passionate about. There's so much context to that question. However, one thing I can say for sure is you would be an idiot to put that 600 grand into one class. In fact, I recommended 5% in one class, 5 to 10% in another class, 10 to 15% in another class, 10% in another class, 20% in another class, and the rest in the sixth class. I recommended with 600 grand, six different asset classes that could be cryptos, gold and silver watches, or art or classic cars, starting and launching a business S&P 500, or FTSE 100, and real estate. So you've got a diversification of asset classes, a diversification of asset types, and a diversification of income streams. Anyway, I'll probably do a future episode detailing that more. But let's now get into the seven different types of income. For me, my biggest is number seven. Although billions are made in number five, in fact, number six is the most passive and number four is the greatest preserver of wealth. Income class number one is earned income, exchanging time for money, having a job, working for a living. This is the most common. This is the most known, but it's the least leveraged. It's the one that you have to work the hardest for. But for the lowest return, you have to work hard for your money rather than your money working hard for you. Now, some influencers in MySpace love to call people who have a job a loser. I don't think that. I think it's a great privilege to have a job. For someone to have faith in you, to pay you 30 or 50 or 100 grand a year, or 500 grand a year, or however much you earn, I think that's a great privilege. The most universally recognized way to make money, feed your family, pay your mortgages, get a couple of cars, is earned income is getting a job. If you have some skills, you can always get a job. You can always earn money. You can also use a job as a stepping stone into starting your own business and use earned income as a stepping stone to get recurring income, passive income, multiple streams of income, and these other six types of income. But warning, be careful of the trap of exchanging time for money, doing overtime, exchanging more and more of your time for less and less of your money because of high inflation and high taxation and the diminishing laws of returns that the more you work, the less incrementally that you earn. And at the very least, save and invest a percentage of your earned income so you can diversify into the other six types of income. The second type of income is interest income. Interest is really simple. It's a percentage return on money you save or money you lend. Now, in the decade preceding lockdown, you would earn virtually nothing from interest. Your money would go into negative in the bank. Even if you loaned money out yourself as a private lender, you would get a very low return. Interest rates were lower than inflation. You would lose money saving and lending. However, things change, interest rates change. They go through cycles. You could have years or a decade of less than 0.5%, and then you could have months at 15%. So the trick here is, when interest rates are really low, you want to borrow as much as you can. Good debt borrowing for assets, not liabilities. And then when interest rates are high, you want to save or lend money as much as you can. As you've seen recently, interest rates are going up and that could be a great opportunity for you to beat inflation or even lend money for a good return. Warning, number two. Never lend your money without a first charge. Ever. Never lend your money without a proper contract and a proper lawyer and proper security on an asset like property. Never. Never. The Third, different type of income is dividend income. Dividend income is income profit from stocks and shares of companies. Now you can either invest into the stock market, the S&P 500, the FTSE 100, and one of the ways you earn on that is through dividend income, or you can own your own company and you can take the dividends. The dividends get distributed to the shareholders. So if you invest in a stock, you become a shareholder and you get dividends according to your shareholding. But if you start the company and you own 100% of the company, you get 100% of the dividends. Dividends are essentially a form of profit that you take as income. Now, lots of people lose money investing in companies, investing in cryptos and platforms, investing in stocks that they do not understand. The lowest risk, most proven way to invest into the stock market for an inflation beating return, something that you could build a retirement on in just a few short decades, is investing IN S&P 500 or FTSE 100, essentially investing in the most successful companies on the planet. This is hands off, it's passive income, but you shouldn't really expect the return to be greater than 5 to 6%. Outside of the UK's and America's top companies, all these other stocks and companies and platforms are high risk to you. You don't own the platform. Can you do all the diligence and research? You probably don't have enough information. So this is highly risky, investing your money into someone else's platform. I don't know if you've seen the collapse of FX and Sam Bankman Fried and you know many of these crypto companies or all the scams that exist in forex and crypto. They prey on your desire to get rich quick and for money to be easy and free. Money is never easy. And free money always has a cost. You pay now or you pay later. So your other option instead of investing into someone else's company or platform, is to build your own company or platform. So I have 14 companies, the main one being Progressive Property. And I own that company, 50, 50 shareholding with my business partner. So when we get dividends, I get 50, he gets 50. We control the platform, we control the revenue, we control the overhead, we control the decisions. We choose when we draw money. Even though many businesses fail, I still think it's lower risk to you having your own business or company and platform that you draw dividends from than investing in ones you don't understand. Obviously a dividend from a FTSE 100 fund or an S&P 500 fund is passive. It literally is passive. That's why it's a low return. A dividend from your company, certainly for the first few years is active, but it's a much higher percentage, could be 50 or 100% instead of 0.01%. The fourth type of income stream technically isn't an income stream, but it is and that's capital. The fourth type of income stream, which technically you could argue is not a form of income stream, but I believe it is, is capital. Capital is essentially cash, a lump of money. Capital is an increase in the value of cash or a lump of money or an increase in value in an asset after you're lending or lia liability costs. If you buy a property for 500 grand with a 400 grand mortgage and it goes up to 1 million in 12 years, which by the way is more than possible and happened quicker in the last cycle in my local area, then you have 600 grand capital on a million pound or million dollar asset. You only put 100 grand down, you've got a 400 grand mortgage. All the asset and capital growth you own after your lending on mortgage costs. So whilst capital is an income, it's not recurring and it doesn't pay inwards. It grows and it grows and it grows. I have high tens of millions worth of assets that I paid in the low millions for. So for example, back in 2008, in the last crash, I was buying single family dwellings for 60, 70 grand on average. Some of them I'd pay 40 or 50 grand for probably maximum 85. Many of those in just 12 years grew to 175, 200, some of them up to 200, 100, 150, sometimes even 200% in a short but full cycle of 12 to 15 years growth. When you have assets that have capital value and growth, you don't need to do anything other than own them for them to grow. You buy classic cars that go up in value, art that goes up in value, Rolex watches that go up in value, stock market and companies that go up in value. Capital is power. Capital happens regardless of whether you succeed or fail in life. Capital is security. Now you can have passive capital growth. You buy real estate, you wait, don't wait to buy property. Buy property and wait. Or you can have forced capital growth when you start a company for nothing and you force it to be worth a million and 10 million and then 100 million with your sweat equity. It's really weird how we have this culture now of owning nothing and Being happy. I'm not just talking about the New World Order and the World Economic Forum, not something else. But you know, all these vagabonders and these lifestylers and these people who don't want to own anything, they don't want any material items to control them. Problem is they're missing out on being really rich through capital growth. Rolexes will go up whether you wear them on your wrist or not. Properties will go up whether you own them and live in them or not. So my strategy for buying assets is buy, hold, die. Another example, I bought 120,000 square foot department store with lots of space above to develop and in fact we built up many floors and stories. I paid 3.8 million for what is now 120,000 square foot and at peak was worth 22 to 23 million pounds. In fact, because of the strong rental increase that keeps going up, we sold 4/5 of the bottom floor off for 3.6 million. We paid 3.8 million for the whole block. We rented 1/5 of the bottom floor for 50 grand a year. That rent's gone up quite a lot now and we developed the upper floors into 99 apartments, bringing us a seven figure a year rental income. Income stream number five is profit income. Profit does what it says on the tin. Profits from a business, profit from buying low and selling high. You buy stock, you sell it, you create products and services under a company which you sell to consumers and your money left, after all, overhead, fixed and variable costs is profit. Now when it comes to profit, revenue is vanity and net profit is sanity. It's no good doing 10 million a year in sales and having a few hundred grand left at the end of it all because you're taking all the risk. When you're a small, lean business, you should be able to hit net profit margins of 30, 40% or more. This recent budget should warn you that your pension is not safe and secure and they're coming for your inheritance. Do you even know how much is in your pension or where your pension is invested? Add to this the recent inheritance tax grab on your pensions and the risk of a market crash. You probably didn't know this and I didn't until recently, but physical gold can be added to your pension. Pot gold is inheritance tax free and has grown 700% in the last 20 years. You probably know from my content I'm investing heavily in silver and gold and that's why I've partnered with Direct Bullion. Myself and Nigel Farage are brand ambassadors and Direct Bullion can help you with gold to protect and grow your pension. I buy my gold and silver from direct bullion and I don't earn any money on any purchases of gold or silver if you buy direct from direct bullion. So if you go to robmore.directbullion.com you can get a great price on your silver and gold and you can get the Pension Gold Investing guide completely for free. As you know, I don't do many strategic partnerships and when I do, I do them with people who are credible, who've been doing it a long time, who invested things that I invest into and gold and silver's going wild. I'm investing heavily in gold and silver and I recommend you check out robmore.directbullion.com when you're a medium sized business, 20% net profit margin should be achievable. And then when you're a big business you might be 10%, 5% or someone like Tesco's who does billions in revenue, but it's 3% net profit margin. What I love about profits is they have no ceiling, they are infinitely scalable. You're not going to really get anything above a 5 or 6% return consistently in the stock market investing in other companies. But if you're a lean startup, you could get a 30% or a 40% net profit margin a year with any business or company that you run. Like I said, I have 14 of them. The effort that you put in, you get back. You can't put any effort in or positively impact a company on the S&P 500 or the FTSE 100. But the sweat, the time, the energy and the love that you put into your own company could take a company from zero to many millions. Back in 2007 I launched my very first company. I've now done more than a quarter of a billion in sales. These companies generate tens of millions a year and help me become a net worth millionaire nearly 15 years ago. Quick warning about profit income. The faster you scale, the lower your net profit margins will be. So be careful about scaling with speed and losing control of your costs. The next thing you have to be careful with, which is relevant to all of these income streams unfortunately, is that dirty evil three letter word tax. I'll do more content on this, but people think that their biggest expense is their mortgage or their staff costs or marketing. Your biggest expense by a mile is tax and if it isn't, it will be as soon as you start making money. The sixth type of income is royalty income. Royalty income is passive recurring income from assets that you own. Could be a license, it could be intellectual property, it could be a franchise. Now I'll get to rental income in a moment, but a great example of royalty income are Christmas number ones. Mariah Carey every Christmas earns more than anyone else on the planet, alive or dead, from a Christmas number one. She wrote decades ago. When people say to me, oh, there's no such thing as passive income, Mariah Carey knows there is. I don't know if you know the Christmas number one by Slade. It's Christmas, the one you're probably singing in your head. They wrote their Christmas number one in the early 1970s, 50 years ago, and they earn half a million pounds every Christmas, every year. And they probably will for the next hundred years. This is royalty income. Royalty income is recurring income. If you work on the film for a salary, that's occurring income. If you get a share of the ongoing royalties, that's recurring income. One of the reasons people pay a lot of money for a McDonald's franchise is once that franchise is set up, that is a system. And the owner will earn royalty income. Recurring royalty income. You could license your name. Michael Jordan became a billionaire licensing his name to Nike, creating one of the biggest sporting collaborations in the history of the world. And he has earned for decades royalties on his own name. And the seventh and final type of income is rental income from property. Now you can have royalty income in the form of rental. You could rent cars, watches, clothes, a room in your house. But I deem real estate and property as its own section. Rental income from property is the final type of income stream. Property is possibly the most proven long term asset class ever. In fact, if you go back to 1088, just after the Doomsday Book was created, there is data to suggest that the total land and property value in the UK was around £1,000,000. Fast forward just over a thousand years and you cannot get a garage in Kensington, Mayfair and Chelsea for a million pounds anymore. Property is proven to go up. Property is. Property is proven to go up. Property is also. Property is proven to go up. Property is proven to go up. Don't wait to buy property. Buy property and wait. Property is also rare in that it's one of the only asset classes that has what I call the secret triad of money. Number four, income stream. Capital only has capital. Number six, income stream. Royalty only has income, but property has all three. You can make money when you buy by getting a discount off the value. You get capital growth when you own it and you get an income stream recurring. So for example, with gold, you can't buy gold below market value. The price you pay today is what it's worth today. Okay, you could buy it wholesale, but it's wholesale or retail and the price is fixed. You can't buy one kilo of gold for half a kilo of price. However, you can buy a 200 grand property for 150 grand or less. You can buy from a motivated seller. You can, you can cash in on a crash. So you can buy what's called below market value and have instant equity bought in from purchase. Then you rent it out and you get an income stream and then over time the capital value goes up and you earn three ways. And this is why I own 340 rental units in my personal portfolio and we manage 1350 tenant rental units in our property management company because property works. So quick checklist. Number one, earned income. I still do exchange some time for money. I get my paid keynote speaking fee, I launched some NFTs that I sold and I occasionally do some hours of work. But remember, this is the lowest form of labour and the highest exchange of time. So be careful not to sell your life away. Number two, Well, I have many millions of pounds in the bank and I don't like to leave a lot of money in the bank. So at the moment I'm earning pretty good interest. Number three, dividend income. I pay myself a salary from my companies, but I also take a regular monthly dividend. Those dividends, sometimes monthly, can be many hundreds of thousands of pounds. Number four, capital. I get capital growth from all the 340 rental units that I own. I also have a big business portfolio which gets capital growth and then all my other asset classes like classic cars are watches, gold, etc. I'm not telling you how much and I'm not telling you where they are. Number five, profit income. We make profit in our companies and we pay ourselves those in the form of dividends or drawings. Number six, royalty income. So I've written 19 books and I get a royalty income from the 19 paperback books. So I get two royalty incomes from the same asset class. One audiobook, one paperback book. I have my Rob Team membership site which totals around 9,9500 members. And then I earn multiple streams of income from all the social media channels that I have which is also earning on the intellectual property of my knowledge and my personal brand. And then of course the big one, number seven, rental income. We've already talked about that. And I will be cashing in on the crash. I will be buying more property. Even though maybe I'm exposed enough now, certainly in residential property in my town center. I'm going to be buying property every year for the rest of my life. Buy, hold, die. So when all is said and done, more is said than done. And to know and not to do is not to know. I hope you found this episode useful. Let me know in the comments what you think. I wonder if you wouldn't mind leaving a review. I don't ask for reviews. I think across my two podcasts I've done over 1300 episodes and I never ask for a review. Now I am Leave me a review if you find this content useful. Because of course that's good feedback for me to do more episodes like this. Thanks for tuning in. And remember, if you don't risk anything, you risk everything. This episode was brought to you by Disruptive Media, Helping Bold Entrepreneurs stand out through podcasting, Video and Social content. Visit disruptive media.co.uk to learn more. This episode was brought to you by Disruptive Media, Helping Bold Entrepreneurs Stand out through Podcasting, Video and social content. Visit disruptivemedia.co uk to learn more.