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

FAQs

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

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.

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.

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.

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.

Shares are often seen as the best way to generate an income. That's largely because investing in shares over the long term has generated the highest and most consistent returns.

Spotify pays roughly $0.04 per 10 streams, which means you'd need 1,000 streams to generate $4 in revenue. This is influenced by various factors, like country, subscription type, and licensing agreements.

Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.

How to generate 7 streams of income? ›

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.

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.

Most income streams are account based, that is you set up an account with your super fund, transfer a portion of your super to the account and then your fund pays you the amount you choose (subject to minimum drawdown requirements).