Jake Tuff 
Business persons talking in the office
Income diversification is crucial to building wealth and reaching financial success, and the average millionaire boasts seven different sources of passive and active income that help him or her meet their financial goals.
Residual or passive income refers to money you make without exerting much upfront work, such as renting out property or selling digital products. It can also come from investing in companies with dividend-paying stockholders.
Passive income
Passive income can be an excellent way to boost your financial portfolio. You can earn passive income in various ways, including investing in dividend-yielding stocks and real estate investment trusts (REITs). Some forms of passive income require upfront work or financial investments such as purchasing and managing rental properties – but bear in mind these activities require ongoing costs such as maintenance, repair, and insurance costs that you must factor into their profitability.
Producing digital products can also provide an avenue to generate passive income. You could, for instance, upload photos to stock photo websites and receive royalties when others use them; create and sell online courses or digital content; license your intellectual property to generate royalties; or even license out your intellectual property to earn royalties.
Michelle Schroeder-Gardner, 33, earns passive income through her blog Making Sense of Cents, writing about personal finance, blogging and investing. In addition, Michelle generates additional passive income through affiliate marketing as well as by offering various courses through her website.
Investing
Investing is an excellent way to increase wealth and diversify sources of income. As a long-term strategy with lower risk than other forms of savings such as emergency funds or paying rent each month, investing can be used as a source of funds without leaving home or exerting much effort.
Diversifying your portfolio to protect it from market volatility is the best way to secure its return. You can do this by investing in various size companies, emerging markets and international stocks – this helps lower the risk of any one company collapsing and may lead to higher returns overall.
Diversify your investment portfolio further by including alternative assets, like real estate and collectibles. These non-correlated investments tend to provide steady returns over time without negatively affecting stock and bond markets; plus they’re usually tax-advantaged when held within a retirement account.
Property rental
Have you heard the phrase, “don’t put all your eggs in one basket”? Investing in rental properties is a surefire way to diversify your investment portfolio, whether that means purchasing and holding single-family homes, multi-unit buildings or student housing – investing can generate solid returns by diversifying.
Real estate tends to have less of a direct correlation to securities markets than stocks and bonds do, enabling you to more efficiently hedge against market downturns by adding rental properties to your portfolio.
Diversifying your portfolio with vacation rentals and fix-and-flip investments is also beneficial; each type of property offers its own tenant pool and requires different maintenance and operational expenses. Plus, tax deductions such as mortgage interest, property taxes, repairs can help build wealth faster!
Side hustles
Side hustles are small business ventures that supplement your full-time employment. Many side hustles involve services, like cleaning, tutoring or dog walking; others sell handmade crafts or online content – perfect options for anyone wanting to add extra money without too much of their own time invested! Plus many can even be tax deductible; Everlance provides an easy way of tracking mileage expenses and other business expenses.
A great side hustle involves choosing something you are passionate about and enjoy doing, for instance if you love comics you could start blogging about it to draw in an audience and generate revenue or become an influencer on Instagram or YouTube, creating engaging microcontent while earning through ads or sponsors.
Another way is to sign up with freelancer websites like Upwork and find contract work that best matches your skillset. Although this option might not yield as much passive income than investments do, it could provide extra cash while you wait for their returns to materialize.
