The Seven Income Stream Fallacy: The Power of Focus Over Quantity (2024)

FAQs

The Seven Income Stream Fallacy: The Power of Focus Over Quantity? ›

In a world that champions the mantra “more is better,” the allure of building multiple streams of income is potent. The conventional wisdom suggests that the wealthiest individuals have an average of seven income streams. However, this idea often leads to a fallacy of quantity over quality.

By incorporating various income sources, such as earned income, profit income, rental income, dividend income, interest income, royalty income, and capital gains, you can create a robust and resilient financial foundation. Remember, building multiple streams of income requires time, effort, and a strategic approach.

You can have as many income streams as you want, but the right number for you will depend on your goals and current resources. If you don't have a lot of time to devote to establishing many passive income streams, it may make sense to only have a few until you can free up time.

Meaning of income stream in English

a regular supply of money that comes from something such as an investment or business: These bonds provide steady income streams. There would be an attractive income stream from renting out part of the property.

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!

According to a report from the IRS, the average millionaire has not one, not two, but seven different sources of income. That's right – seven streams of money flowing into their bank accounts, building their net worth and securing their financial future. Why are multiple income streams so powerful?

On average, you'll have to earn 300,000 to 350,000 streams to generate roughly $1000. Due to those variables we mentioned above, however, streams are not created equally. The actual number of streams needed to earn $1000 can range anywhere from 150,000 on the low side to 600,000 on the high side.

How to passively make $2000 a month? ›

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.

The most written about income streams typically include: earned income, profit income, interest income, dividend income, rental income, capital gains, and royalties. The theory goes that diversifying your income in this way can protect you against financial downturns and accelerate wealth accumulation.

If you're looking to build wealth and financial stability, diversifying your streams of income can be a powerful strategy. By generating multiple sources of revenue, you can reduce your reliance on any single income stream and increase your earning potential over time.

Generally, income streams are converted into indicators of value by using rates and factors. The two basic formulas are: Income divided by a rate equals value: I ÷ R = V. Income multiplied by a factor (multiplier) equals value: I × F = V = I × M.

The Bible also offers some pretty amazingly specific guidance on diversifying our income streams. Ecclesiastes 11:2 says, "Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth." In other words, don't put all your eggs in one basket.

Three of the main types of income are earned, passive and portfolio. Earned income includes wages, salary, tips and commissions. Passive or unearned income could come from rental properties, royalties and limited partnerships. Portfolio or investment income includes interest, dividends and capital gains on investments.