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  • Microsoft, one of the largest tech companies in the world has created 3 billionaires but

  • it also has created over 12K millionaires, that's a big number. In fact, now we have

  • more millionaires than ever had, largely due to the rise of the internet and globalization.

  • But making money, or keeping your money isn't easy because the world is changing so fast

  • that if you aren't smart enough, you might lose your wealth in a blink of an eye, that's

  • why an average millionaire has 7 streams of income.

  • You don't want to put all of your eggs in one basket if something goes wrong! You are

  • doomed. So, Let's find out the different streams of

  • income,

  • Ordinary Income  The most usual type of income which is also

  • known as ordinary income. It includes wages, salaries, bonuses, and commissions.

  • Its when you are directly trading your time for money. Of course, it has its own limitations

  • since your time is always limited but that's not the only problem with this type of income.

  • In 2018, the government (US) collected 3.3 trillion dollars in taxes. and more than half

  • (51%) of that came from income taxes. In comparison, the corporate income tax only made 8 percent

  • of the government's revenue. Which means people with this type of income

  • pay most of the taxes.

  • Another 35 percent of revenue comes from payroll taxes, which suppose to be split between you

  • and your employer to fund social security, medicare and so on. But research has shown

  • that employers pass their portion of the cost to workers.

  • So, People with earned income pay 86 percent of all the taxes while billionaires pay almost

  • nothing.

  • In one way its the easiest form of income because you don't have to do a lot of thinking

  • or take any risk, with some set of skills, you can find a job, that's why it's highly

  • taxed. But it's not sustainable at all since if you lose this job, you lose your only source

  • of income.

  • But don't worry, in this video you will learn what type of income millionaires or

  • billionaires have to make so much money while avoiding taxes completely.

  • 2. Secondly, Capital Gains

  • Capital Gains is when you buy an asset such as a stock or property and then sell it for

  • a higher price. That profit margin is your capital gain.

  • Let's say you buy 100 stocks for 100 dollars each, or 10 000 dollars in total, the stock

  • price rises to 120 dollars, and you decide to cash-out (12K).

  • So your capital gain is 2K Dollars.

  • The tax rate is typically around 15 to 20 percent at best on capital gains on long term

  • investment and 37 in the short term. And if you pay attention it's really popular among

  • the millionaires not because the tax rate is just 20 percent but if you are smart about

  • it, you can literally pay 0 tax on it.

  • The first way one is super easy. Just don't sell, keep holding your investment, even if

  • you make billions of dollars, you don't have to pay a dime. But that might not work

  • for everyone, you might have to sell some of your investment to have cash on your hands.

  • that's why there is a second way!

  • Tax-loss harvesting! Its when you sell an investment at all a loss

  • to reduce your tax bill. At first glance it doesn't make sense, why would you purposely

  • lose money. Let me explain.

  • Let's say you are a professional investor and you have multiple stocks in your portfolio.

  • Your stock “A” increased by 300 thousand dollars which is great.

  • But unfortunately, your stock “B” decreased by 25 percent, your 200 thousand dollars investment

  • now worth only a 150 thousand dollars.

  • and let's say you want to sell 50 thousand dollars of your stock A to have some cash.

  • Ideally, you should be paying a 15 percent capital gain tax (7.5K dollars).

  • But there is another way, sell your stock B first for 150K dollars and buy a similar

  • investment for the same amount ($150K) to realize your loss.

  • since you have a 50 thousand dollars of realized loss, you can deduct it from your tax bill.

  • So if you are selling 50 thousand dollars of your stock A, you can deduct the $50K loss.

  • Boom, your tax bill is zero! ( $50K (capital gain from stock A) - $50K (realized loss from

  • selling stock B) x 15% ( capital gain tax) = $0)

  • It's much more complicated than this, and I have oversimplified it and ignored a lot

  • of details but that's the idea behind it! usually, it's not done manually but rather

  • through a computer with a specific algorithm that makes it much easier.

  • Investors continuously sell their bad investments and reinvest the money back into a similar

  • asset to realizes losses because you can keep carrying them forward for the rest of your

  • life. SO when you make a capital gain, you either dramatically lower your taxes bill

  • or pay nothing at all.

  • 3. dividend income

  • but that's not the only income you get from purchasing stock. owning a stock is like owning

  • a piece of a company, even if that means owning such a small percentage that it won't make

  • any difference. And its understandable because companies nowadays grow to trillions of dollars.

  • And as one of the owners, the company has to share with you its profits as a form of

  • a dividend.

  • However, companies usually don't pay dividends even if they make billions of dollars such

  • as Google, Boeing or facebook, because they keep the profits within the company to reinvest

  • it back. That's why most investors are concerned about the stock price and not the dividend.

  • But companies like Apple do pay dividends. As of November 2018, Apple paid shareholders

  • dividend of 73 cents per share. That's not much, but something is better than nothing.

  • Dividend income is taxed base on your income tax bracket, most people would fall between

  • 12 to 24 percent. However there is still a way to avoid those

  • taxes as well, but we will keep that for

  • another video.

  • 4. next, Rental Income

  • rental income is probably everyone's favorite. You buy a property and then rent it out!

  • It's mostly passive where you don't have to be actively involved. However, from my

  • experience, its much more time consuming than most people think.

  • Tenants come and go, some stay for a few months, others for a few years. Some take care of

  • your property others don't give a damn. Some pay on time and won't get you a single

  • problem, others are just unnecessary headaches, so it has its pros and cons.

  • However, there is also the commercial property that you rent out to businesses which in some

  • cases is a better ideaTheoretically you rent almost anything starting

  • from your car to your phone. However real estate is the most common one.

  • 5. Fifthly, Royalty Income

  • In 1997, a guy named Jeff Bezos filed a patent, a method for ordering items online. Instead

  • of first adding your item to your shopping cart and then clicking BUY (on amazon), You

  • could simply click buyit sounds so simple that no one should have

  • patented that, but for the last 2 decades, Amazon made billions of dollars licensing

  • this patent to companies such as AppleThat's why corporations file for a lot of

  • patents, even if they don't need them because they could be a potential source of income.

  • This is the real passive income. You keep getting paid after your work is done, but

  • that also includes, writing a book, shooting a movie.

  • This form of income is usually popular among the artist, Musicians for example usually

  • make money by letting other people use or sell their music.

  • 6. Interest Income

  • It's one of the easiest and simplest ways to generate income. it's more of a passive

  • income where you not actively involved in it. that's why the rate of return is typically

  • much lower than other forms of investments. Its when you lend money to government, banks

  • or corporations in a form of bonds. The bank usually takes your money and lent

  • to someone else at a higher interest rate! it keeps collecting the payment from the borrower

  • then pays you back your portion of the deal and pockets the rest! that's how banks make

  • money in short!

  • The government usually raises money in the form of issuing bonds! so when you are buying

  • a bond, you are lending money directly to the government!

  • 7. And finally, business income

  • it's exactly what it means, the income you earn as a result of doing business. either

  • by selling something or providing some kind of service.

  • And this is probably the most important one among them all of these types of income because,

  • with other forms of income, you can expect 5, 10 maybe 15 percent rate of return and

  • the job is to minimize taxes but that only works when you already have some wealth, but

  • with this form of income (business come) you can have a thousand percent return, just

  • with a hundred bucks especially since we have this thing called the internet.

  • Of course, having multiple sources of income is great, if one of them fails, you still

  • have many others running, however, its also a big distraction. Manging one source of income

  • is a full-time job, what do you think happens when you have multiple of them.

  • So do not jump from one income to another. Put all of your efforts into mastering one

  • them first and once you reach a level when you are earning enough to create another source

  • of income with minimum effort, then move on! and if you give it a closer look, that's

  • how people get rich in the first place!

  • Just a little disclaimer, most of these things were oversimplified to make the video as short

  • as possible but I believe it's important to understand the different types of income,

  • this is why the rich get richer while paying minimum taxes while the middle class pays

  • a 40 percent tax rate.

  • give this video a thumbs up if you have found helpful! it helps the channel, and if you

  • are new here, make sure you hit that subscribe button and the bell beside it.

  • Thanks for watching and until next time!

Microsoft, one of the largest tech companies in the world has created 3 billionaires but

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大富豪が持っている7つのタイプの収入 (The 7 Types of Income Millionaires Have)

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    Summer に公開 2021 年 01 月 14 日
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