Irrespective of the industry or sector you’re working in, it will pay to know (pun intended) the various income streams that you can open up. There is a lot you can achieve with diligent planning and a little bit of help from a trustworthy app like Cube Wealth.
In fact, a proper investment strategy and the perfect portfolio can help you set up a combination of one or more of these income streams and build more wealth for the future.
In this blog, we’ll discuss 7 different income streams for investors in more detail so that you can identify the ones that you can conveniently make use of. Let’s start off with the most popular income stream - a salary.
1. Salary Income
You already know what a salary is but, let’s define it anyway! A salary is a fixed amount of money that you can earn as an employee. It’s termed as “active” income because you have to work to earn a salary.
It is the most popular and in most cases, the primary source of income for a majority of people. However, maximizing the potential of earned income is perhaps the most important aspect of generating wealth that is often ignored by a large number of people.
This is where other sources of income or “passive” income, as they’re popularly known, come into the picture.
Read this blog to know how to save money from your salary
2. Interest Income
When you lend money to any entity, you earn interest which is a small amount of money paid in return for the principal amount. This is interest income in a nutshell.
The interest is fixed and is commonly paid monthly or yearly in most cases. Common examples of this include your bank savings account, Fixed Deposit (FD), Recurring Deposit (RD), etc.
Traditional interest income generators have been underperforming over the past few decades. Bank savings accounts may generate 2.5-3% returns while FDs may give 3-5% returns.
As a result, alternative investment options like P2P lending on Cube Wealth have gained popularity due to:
- Better returns than bank savings a/c and FDs
- Recurring interest (9.5-12%)
- Risk-based investment options
Cube Wealth’s P2P partners, LiquiLoans and Faircent, are RBI certified P2P NBFCs. You can learn more about P2P lending by downloading the Cube Wealth app today.
3. Dividend Income
A dividend is a part of the profits that a company may distribute to its shareholders. It is the company’s way of showing gratitude to its investors and is usually paid on a per-share basis.
Stocks are the most popular dividend income-generating option available to retail investors. However, there are certain mutual funds that generate dividends as well.
Dividends are a classic example of passive income and anybody who has invested in stocks or knows somebody who does has heard about its benefits often.
But the secret lies in selecting the right companies with a strong business model and balance sheet. Cube Wealth helps you with this for Indian and US stocks.
Purnartha, Cube’s Indian equities partner, helps you invest in high growth Indian stocks with a long term view. The Purnartha philosophy is tried and tested with a 27.11% CAGR over 5 years.
Cube Wealth also makes it easier for you to invest in dividend-generating US stocks like National Health Investors Inc., Prudential Financial Inc., etc. in 2 ways:
- DIY: Buy US stocks on your own for as little as $1
- Advisory: Buy US stocks with RIA, Rick Holbrook, for as little as $1
Download the Cube Wealth app today to know more about investing in US stocks from India.
4. Capital Gains Income
In simple terms, Capital Gains income is the profit earned after selling an asset like mutual funds. Assume you buy units of a mutual fund for ₹10,000 and sell it for ₹12,000. The ₹2,000 profit is the capital gains.
There are 2 aspects to capital gains income:
- Buying a profit maker
- Selling at the right time
Cube Wealth’s mutual fund advisory partner, Wealth First, helps you do both. To start with, Wealth First curates the best mutual funds from various categories every month for Cube users.
After that, based on the market and fund conditions, Wealth First recommends when to sell. Download the Cube Wealth app to know more about curated mutual funds that can generate capital gains.
Read this blog to know about the types of mutual funds in India
5. Rental Income
Rental income can be generated in the form of rent or lease by a property that you own. It’s one of the go-to passive income-generating options in India but requires a large initial investment.
It also carries liquidity issues and a significant upkeep cost. Moreover, the quality of your investment depends on the desirability of the property in terms of location.
Overall, it may not be an income-generating option for everyone but may still be desirable due to a combination of social factors like status and economic factors like capital appreciation.
Read this blog to know all about alternative investment options
6. Profit Income
Profit income can be earned by selling products or services for more than their manufacturing or production cost. For example, you could become a grocery store owner or build a service and sell it for a profit.
This is perhaps the most difficult and high stakes income-generating option on the list because it may require proper funding and/or sourcing goods and ancillary services.
Explore these high-return options
7. Royalty Income
This is similar to rental income but instead of renting out a house, you rent out a product or service that you built and get a royalty paid in return. Simple examples include royalty payments for published books or music.
How Can Cube Wealth Help You?
The Cube Wealth app simplifies wealth creation by solving the complexities that come along with financial assets. The app has a simple and intuitive interface that has one simple view of all your assets.
Simply put, Cube Wealth helps you build a portfolio of investments that can generate passive income in the form of interest income, dividend income and capital gains income.
Furthermore, Cube has partnered up with leading financial advisors like Wealth First, Purnartha, and RIA, Rick Holbrook, to help you invest in mutual funds, Indian stocks and US stocks.
These advisors weren’t available to common everyday investors in the past. However, Cube has revolutionized the way wealth advisory based investing works in India.
Download the Cube Wealth app today to get started.
Conclusion
Diversification is important and it's the only way to generate wealth via multiple streams of income. But it's important to start investing today to generate wealth through any income source tomorrow.
The Cube Wealth app helps you move beyond a simple savings account or FD to better options like mutual funds, Indian and US stocks, P2P lending, and more. Download the Cube Wealth app to know more.
Watch this video to know more about Cube Wealth
Read more self-help blogs here:
1. All About DIY Investing In India
2. Can You Generate Passive Income With Alternative Investments?
3. How To Manage Your Salary Wisely
4. How Much Money Do You Need To Retire?
5. What Is the F.I.R.E. Movement?
As someone deeply familiar with the intricacies of investment strategies, financial planning, and wealth management, let me provide a comprehensive breakdown of the concepts and topics presented in the article.
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Salary Income:
- Active income earned by providing services as an employee.
- Emphasis on optimizing and maximizing this primary income source.
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Interest Income:
- Returns generated when lending money, typically seen in bank savings accounts, Fixed Deposits (FD), and Recurring Deposits (RD).
- Mention of the shift towards alternative investment options like P2P lending due to potentially higher returns and more flexibility.
- Cube Wealth highlights its P2P partners, LiquiLoans and Faircent, as RBI certified platforms, suggesting credibility and security.
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Dividend Income:
- Returns derived from owning shares of companies that distribute profits to shareholders.
- The importance of selecting companies with robust financial health and business models.
- Cube Wealth’s collaboration with Purnartha and the ability to invest in both Indian and US stocks that offer dividends.
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Capital Gains Income:
- Profits realized from selling assets like mutual funds at a higher price than the purchase cost.
- The necessity of both strategic buying and selling based on market conditions.
- Cube Wealth’s partnership with Wealth First to provide curated mutual fund options and timely recommendations.
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Rental Income:
- Passive income from properties owned and rented out.
- Considerations like initial investment, location desirability, maintenance costs, and liquidity concerns.
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Profit Income:
- Earnings from selling goods or services at a price higher than production or acquisition costs.
- Requires business acumen, investment, and a comprehensive understanding of the market dynamics.
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Royalty Income:
- Payments received for the use of intellectual property, like books, music, or inventions.
Cube Wealth's Role:
- Cube Wealth acts as a comprehensive financial platform that aids users in navigating various investment avenues.
- It offers a consolidated view of assets and collaborates with renowned financial advisors and institutions, providing users with access to previously exclusive financial advisory services.
- The app promotes diversification and offers avenues beyond traditional saving instruments like FDs, encouraging users to explore mutual funds, stocks, P2P lending, and other investment options.
Conclusion:
- The article underscores the importance of diversifying income streams for wealth creation.
- Cube Wealth emerges as a pivotal tool, bridging the gap between everyday investors and sophisticated financial advisory services.
- Emphasis on proactive investing to harness the power of compounding and multiple income streams for future financial security.
The information provided showcases a nuanced understanding of investment strategies, emphasizing the significance of diversification and leveraging various income sources to build sustainable wealth.
