7 Types of Income (And How to Use Them to Your Advantage!)

Join the community built to help you master your money, stay accountable, and reach financial freedom. 👉 Join Master Money Academy today! Watch this episode on Youtube. In this episode of The Personal Finance Podcast, Andrew breaks down the seven types of income that separate people living paycheck-to-paycheck from those building real wealth—from earned income where you trade time for money, to royalty income that pays you forever without lifting a finger, showing you exactly how to climb the ladder from working for money to having money work for you. How Andrew Can Help You: Listen to The Business Show here. Don't let another year pass by without making significant strides toward your dreams. "Master Your Money Goals" is your pathway to a future where your aspirations are not just wishes but realities. Enroll now and make this year count! Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! Learn to invest by joining Index Fund Pro! This is Andrew’s course teaching you how to invest! Watch The Master Money Youtube Channel! , Ask Andrew a question on Instagram or TikTok Learn how to get out of Debt by joining our Free Course Leave Feedback or Episode Requests here. Car buying Calculator here Thanks to Our Amazing Sponsors for supporting The Personal Finance Podcast DELL: Get a new Dell AI PC starting at $749.99, at Dell.com/ai-pc Indeed: Start hiring NOW with a SEVENTY-FIVE DOLLAR SPONSORED JOB CREDIT to upgrade your job post at Indeed.com/personalfinance Acorns: Start investing automatically with Acorns and get a $5 bonus at Acorns.com/PFP Chime: Start your credit journey with Chime. Sign-up takes only two minutes and doesn’t affect your credit score. Get started at chime.com/ Thanks to Policy Genius for Sponsoring the show! Go to policygenius.com to get your free life insurance quote. Shopify: Shopify makes it so easy to sell. Sign up for a one-dollar-per-month trial period at shopify.com/pfp Go to https://joindeleteme.com/PFP20/ and Use Promo Code PFP for 20% off! Connect With Andrew on Social Media: Instagram TikTok Twitter Master Money Website Master Money Youtube Channel Free Guides: The Stairway to Wealth: The Order of Operations for your Money How to Negotiate Your Salary The 75 Day Money Challenge Get out Of Debt Fast Take the Money Personality Quiz Learn more about your ad choices. Visit megaphone.fm/adchoices

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• 0:00Andrew Giancola?

  When I started the Personal Finance Podcast, I had no idea how big it could become. I just knew I had something I wanted to share, so I started putting it online. And looking back, I definitely wish I would have started a decade earlier. One of the horror parts about building something online, though, is making it look professional. A website used to mean hiring a developer, figuring out design, and potentially spending thousands of dollars. In fact, on my website, I spent tens of thousands of dollars. That's what impressed me when playing around with Hostinger's AI Website Builder. I told it what kind of website I wanted, and I built the first version in minutes. No coding, no designer or developer needed. And Hostinger doesn't stop at launch.

• 0:44Andrew Giancola?

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• 1:29Andrew Giancola?

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• 2:14Andrew Giancola?

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• 2:28Andrew Giancola?

  On this episode of the Personal Finance Podcast, the seven types of income and how to use them to your advantage.

• 2:51Andrew Giancola?

  What's up everybody and welcome to the Personal Finance Podcast. I'm your host Andrew, founder of mastermoney.co. And today on the Personal Finance Podcast, we're going to be talking through the seven types of income and how to use them to your advantage. If you guys have any questions, make sure you join the Master Money Newsletter by going to mastermoney.co/newsletter. And don't forget to follow us on Spotify, Apple Podcasts, YouTube, or whatever podcast player you love listening to this podcast on. And if you want to help out the show, consider leaving a five star rating and review on Apple Podcasts, Spotify, or your favorite podcast player. Now today, we're going to be diving into the seven types of income that are out there. And what I want to do is I want to show you how to use these different types of income to your advantage.

• 3:36Andrew Giancola?

  See, most people, they rely on one income their entire life. They rely on their W2 income or the income from their job their entire life. And it is one that can, if you do not use it properly, be one of the worst for building wealth. Now, a lot of people who listen to this podcast and what we teach you is how to use it properly to build wealth. But a lot of people out there do not use it the right way. Now, the wealthy, they have a few different streams of income. Now, I've heard five, I've heard six, I've heard seven. Honestly, I think those are just clickbait titles. For a lot of you out there, just having a few streams of income can be a really, really helpful thing to help you build wealth over time. Why? Because we want financial freedom. You want to stop relying on your paycheck every single month. You want to stop having to rely on going every single day

• 4:20Andrew Giancola?

  into your job, fighting through traffic, getting to that cubicle, that job you hate. If you want to stop doing that, then we need to make sure that we can find other ways to earn income outside of just our day job. So today, we're going to be breaking down those seven types of income, what they are, how they work, and how You can climb the ladder from trading time for money to being able to actually find different ways to earn more. Now, for those who understand wealth, they understand this simple concept that wealth isn't built by working harder. It's built by learning how money works for you. And so getting your dollars to work for you day in and day out is one of the most important things. Your money can work way harder than you ever can. And so, once you understand this concept, then you can see that your money is going to outperform

• 5:04Andrew Giancola?

  anything that you ever do. Now, each income type gets more leveraged, more tax efficient, and more passive as you go. And the goal is to stack some of these income types over time. Now, most of us are never going to have all these different income types. And so here's my goal today. I'm going to walk through the seven different types of income. And my goal is for you to be inspired. My goal is for you to have some ideas of maybe ways that you can earn more income, and how they can help pay you for decades so that you can stop working. In addition, I'm going to show you how everyday people can realistically move from one level to the next. Then I'm going to teach you what each type is, and how you can actually build that type of income if you are interested in it. And then lastly, by the end of the episode, you'll know where you are today, and where you want to go, what you want to do next, because we're going to spark some ideas with this show. So this is going to be an episode

• 5:49Andrew Giancola?

  that I hope inspires you. I hope you learn a ton. I hope it brings you a ton of value. So without further ado, let's get into it. Now, the first type of income is the starting line. And this is your earned income. This is where you're trading time for money. Everybody has to start here. This is where everybody begins, unless you have really wealthy parents that are just handing you cash. We all have to start here, and this is a great starting point. Now, one thing I want people to note is before we even dive into all these other income streams, you can become tremendously wealthy just with earned income. If you know where to put those dollars, if you know how to manage that money, you can become very wealthy. Don't ever let anybody out there tell you that you cannot become financially independent if you have

• 6:31Andrew Giancola?

  a day job. That is absolutely hogwash. It is absolutely ridiculous. I can't believe I just used the word hogwash. But it is absolutely ridiculous that anybody would ever say that you cannot build wealth based on earned income, because you absolutely can't. Now, what is earned income? Earn by exchanging time for money. So maybe when you first get started, you work at your local grocery store, or you look at a restaurant, maybe you're a waiter or a waitress, and you go out and you earn some money, you trade time for money. Then eventually, maybe you go to college, graduate from college, go get your first job, and you are trading time for money. So this is the income that you get from a job, a salary, work, or even self-employment. A lot of people who are self-employed actually still have to trade time for money. And so examples of this would be salary from a W2 job,

• 7:16Andrew Giancola?

  or an hourly wage from a part-time gig, or freelance writing, design, consulting, those types of things, or even a side hustle like Uber or DoorDash. Those are all earned income where you are trading time for money. Now, this is almost where every single person starts, and it builds your foundational cash flow so that you can get your savings and investments going. It teaches you how to manage your money, and you need this stage, but you don't need to stay here forever. Now, for most of you, I want you to have some earned income. I think it is beneficial and positive to have earned income in your life. Now, but just noting that if you don't want to do this forever, you don't have to, and there are other solutions. So how do you grow this earned income? Because most of us need to make sure that we are focusing our time and energy on growing this earned income to start.

• 8:00Andrew Giancola?

  This is going to help us find other ways to earn income in the future. And so because of this, number one is we need to focus on skill stacking. I say this over and over and over again. The number one investment that you can make in yourself is learning skills that can create value. Why? Because value means that you're going to earn a lot more money the more value you possess. If you can help somebody become more efficient with their time, if you can help somebody make more money and increase their bottom line, if you can help somebody reduce costs, all of those are tremendous value to businesses. So learning skills like sales, learning skills like project management, learning skills like how to use specific tools,

• 8:43Andrew Giancola?

  maybe AI tools, or financial tools, or other tools that are out there are going to help businesses tremendously. And so skill stacking is the biggest thing that you can do. Also, in some industries, certifications show that you have those skills. So if you're in construction, for example, there's a lot of different certifications based on different construction segments. So my in-laws own a bridge painting company. Okay. So in this bridge painting company, you can make a lot more money if you have different certifications. So in the painting world, there's something called like a NACE one certification, a NACE two certification. And each time you get one of those certifications, all of a sudden your hourly pay goes up because you have that. There's a lot of industries like that where when you have additional certifications, you can earn more. Maybe it

• 9:26Andrew Giancola?

  is getting a graduate degree. Maybe it is having additional degrees out there. You just got to weigh the opportunity costs of each of these different things. And so first, having those skills that are going to go a long way that nobody can take away from you is number one. And number two is getting those certifications that can help you with your day job to earn more. Now, the second way to grow this income level is to learn how to negotiate your salary. Negotiation is one of the first things that you should go through. So if you've never read the book, Never Split the Difference, great, great negotiation book. And I highly recommend everybody listening, read that book. It's by Chris Boss, who was an FBI negotiator. So he would do these high stakes hostage negotiations for the FBI. And it is fascinating, some of the tools and things that he teaches you

• 10:09Andrew Giancola?

  in that book. But really, what he's doing is teaching you how to collaborate with someone else. He's teaching you how to communicate with someone else. And that's what a negotiation is. You need to communicate with your boss and say, hey, this is what I'm doing. I'm being upfront with you right now. I want to earn more money. I want to make more money at this company. And what I want to do is I want to take this company further. And so in order to do that, I want to bring value to this department. What can I do in this department over the course of the next six months in order to earn more money? You're going to have a conversation about this. Maybe they give you three, four, five things. Maybe it's taking on more projects. Maybe it's speaking publicly within the company. Maybe there's all these different things that you can do. Then, at that point in time,

• 10:52Andrew Giancola?

  you go out and start communicating with your boss every single month and updating them on the projects that you're working on and updating him on all the things that you talked about. And then by the time six months down the line, you go into your boss's office and you say, hey, we had this conversation. I did all the things that we discussed and we told you, hey, Doing these so that I can earn more money or get a promotion. Let's talk about it. And so that is where you come up with a collaboration to negotiate your raise. And so we have an ebook called How to Get a Raise. If you go to mastermoney.co/resources, it's free, you can check it out. It goes through this exact system also in Master Money Academy. We are currently right now building out an entire course surrounding this on how to negotiate your salary. So really, really excited for that. Next is building multiple earned streams. So maybe you don't earn enough at your day job.

• 11:37Andrew Giancola?

  Maybe you're a teacher or you're capped at how much income you can make. So you can go out and do some freelance work or a side hustle. Maybe you can tutor, do things like that where you could earn more on the side. So maybe you have multiple earned income streams. That's fantastic. People who are married, you most likely, if you both work, have two income streams within that household. And so these are just different ways that you can grow those earned income streams. Now, skill stacking by far is the highest leverage point that you can have. And negotiating your salary is number two, because when you have those skills and you learn how to negotiate your salary, those two things are infinite to how much you can earn all the way up until you get capped. So your W2 income can get capped at some point in time. Most people aren't earning multimillion dollars of the W2 income, unless they're the CEO of a company or something along those lines. And so for this, you get capped at some point in time.

• 12:22Andrew Giancola?

  And so these other levels of income that we're going to talk about today, help you remove that cap and blow the doors wide open so that you can earn an infinite amount if you want to. It just depends on what lifestyle you want and how much you actually want to earn. So we're going to jump into number two next. Now, number two is one of my favorite ways to earn an income. And this is profit income, meaning it is business ownership, where you can use time plus systems and utilize leverage to earn more income. So profit is what is left after expenses when you run a business and/or sell a product or service. And it's how entrepreneurs turn their efforts into scalable income. Now, there's a beautiful thing about this, because what's going to happen is when it comes to profit income,

• 13:06Andrew Giancola?

  at the beginning, a lot of people are still trading time for money. They're still doing things where they have to trade time for money before they can actually earn that profit and utilize leverage. So what are some examples? This one could be something like an online business that sells digital products. One could be you have a consulting firm or maybe you have an agency, meaning you consult other businesses on how to solve certain problems. Or you have an agency like a Facebook ads agency, or you have an agency that helps dentists increase their profit margins. Or you have an agency that goes out and helps implement AI in different businesses. There's so many different types of agencies out there. It is a very, very high profit business. Also, brick and mortar businesses, maybe you own a gym, or maybe you own a restaurant, or you own a storefront.

• 13:50Andrew Giancola?

  And so those brick and mortar businesses are another way that you can use this, or maybe you own a subscription, a SaaS subscription that you sell to other people. There's so many different ways that you can earn profit income, and this is something I think a lot of people should focus on. So when we talk about the side hustles that can turn into a full-time income, those are some great options for people out there where some of those are profit income. And then some of them are earned income. So number one and number two combined. And the bridge between active and leveraged income starts here with this profit. Cause at first, profit income may be tied to your time. But the cool thing about this is with systems, people and processes, this can become reliable where wealth creation accelerates dramatically.

• 14:31Andrew Giancola?

  Now, here's the thing that happens is when you have this money, you have the opportunity to be able to build out systems that are going to help you leverage your time, energy and money. And so here's how to grow it. Let's talk about this. Okay. So first, you want to solve a real problem that people are going to pay for. Solving problems is how businesses thrive. And if you can learn a specific problem that other people are struggling with and/or that businesses are struggling with, you can make a lot of money. And if it's a real bad problem, you can make a tremendous amount of money. There's a bunch of different examples out there. What is a problem that is out there? Let's start with a dirty job. Okay. A lot of people in this country have a septic tank. And so they have a problem. Eventually that septic tank is going to fill up.

• 15:14Andrew Giancola?

  Most people don't want to solve that problem. Why? It's a dirty job. But if you decide that you want to solve that problem, you can make a tremendous amount of money by pumping out a septic tank. What is another problem? Well, a lot of people want to figure out, okay, how do I implement AI into my? Business. We've talked about this in past episodes. And so they don't know what to do. And if you know how AI works, you can help solve that problem. Think about the biggest companies in the world. What problems do they solve? And that, my friends, is where I want you to start. Okay, so if you solve real problems that people will pay for, that is number one. Then here is how you increase your profits. Okay, you build systems so the business can run without you. So at the beginning, you're trading your time for money. The business can't run without you. You have to be in the business.

• 15:58Andrew Giancola?

  But eventually you can hire people and you can build out systems that help businesses run without you. So two great books on this topic. Number one is a book called The E-Myth. And The E-Myth uses the example of a bakery where there is a woman who owns a bakery and she's baking all the pies and she spends all of her time and her energy at this bakery. She wakes up super early. She goes and bakes the pies. She leaves really late. She does all the books at the end of the night and it feels like she never has any free time. Because what happened is she started herself a job. And so what she needs is leverage and systems. And so she decides one day, well, I'm going to create standard operating procedures. Meaning I am going to create procedures that someone else can follow so they can do exactly what I am doing, but I don't have to be here anymore.

• 16:42Andrew Giancola?

  And so you create these standard operating procedures and now you can hire someone else to come into the business to do what you do. Well, now you can A, bake twice as many pies if you need to. Or B, you can take some time off and get a little rest for the once in your life. So those two things are very powerful. So The E-Myth goes into that and then goes on how to scale. Second one is called Traction. Traction is typically behind me. It's right there on the bookshelf. It is typically behind me there because it is a very, very powerful book that changed a lot of my businesses. What Traction is, is it is a book talking about the same thing, standard operating procedures and how to create them. But also you are going and moving towards a vision, a vision that is in place that you have set up and you are going to have a mission statement. You are going to have core values. There were so many different things that it goes into.

• 17:27Andrew Giancola?

  But this is going to help you leverage your time to increase your income. And then, once you have these profits coming in, you can reinvest those profits into growth. So more people are going to help you gain leverage. Efficient processes are going to help you gain leverage. Better equipment can help you gain leverage. There's a lot of different ways to reinvest those profits so that you can earn even more. There's also things like recurring revenue that you can build in. So you can build in subscriptions or memberships or retainers. There's so many different things that you can do. See, most millionaires didn't earn their way to wealth. They built out businesses and utilized leverage so that they can have ownership and that profit can turn into income for them later on in the line. And so this is something that you definitely want to look into if you are interested in business. Now, business is not for everybody.

• 18:10Andrew Giancola?

  Your W2 income is completely fine, but it is a great, great option for some people out there who really are passionate about business. Now, number three is one a lot of us should be doing, and this is interest income. So we really want to make some money while we're sleeping. So this can be from a number of different ways, but it is income generated from lending money to someone else. Now, whether you know this or not, you are actually currently doing this right now because it could be a bank, it could be a government, it could be an individual, and you're collecting interest in return. So this is interest income, okay? So examples of this would be your savings account. So a high-yield savings account would be a great one, or your money market account. Those are examples of lending money to a bank. You lend your money to a bank, your bank will pay you interest back. Now, if you do this at Chase Bank or Bank of America or Wells Fargo, think about that.

• 18:54Andrew Giancola?

  Your savings account at these big brick and mortar banks pay you back hardly anything. So getting a high-yield savings account, at least you're getting 3%, 4% interest back on your money. If you think about it, a traditional brick and mortar bank savings account that does not have high interest is a terrible deal. You're literally lending them money that they go and use and they send out for mortgages and all these different things, but instead you get nothing back while they make a ton of money back. So making sure you leverage through a high-yield savings account is really important. Another one is treasury bills or bonds. So with treasury bills, you are lending money to the US government and they are paying back interest. With bonds, you are lending money to the US government or a state government or a municipal government or a company, and they are paying you back for lending them that money. That is what the interest rate comes from. You can also think of this as CDs.

• 19:39Andrew Giancola?

  You're lending more money to a bank and they utilize those CDs, lock those rates in, and then they pay you interest. Or there's things like private lending, so real estate loans or small business loans. Or all these different ways to earn some extra income coming back. Now, why does this matter? Because this could be your first taste of making money outside of your day job, outside of your earned income. And so while it's usually a lower yield, it usually doesn't pay as much as some of these other things. It is predictably passive. And so having some passive income sources can be a very powerful thing. And it's how the wealthy preserve wealth and generate cash flow. So a couple of cool things about this type of income is typically you can outpace inflation at least. So you're trying to at least outpace inflation is the number one goal. When you have this type of income, some interest income and/or if you are lending money to private people,

• 20:24Andrew Giancola?

  you want to at least get market rate of return. So you want to match the S and P 500. So let's say, for example, your friend comes to you and says, hey, can you give me a hundred thousand dollars? So I can go buy a rental property. If you have a hundred thousand dollars, you want to lend it to them? Fine, but the interest rate needs to be high enough where it makes sense. Because the trade off is you could put this into the S and P 500 or a total stock market index fund and not have to worry about it, not have to worry if your friend is going to collapse, all those different things. So you need to get a high enough rate of return that makes sense for you. Now, how do you grow this level of income? One is you start with those high yield savings accounts, those bonds, just get the ball rolling. Start to earn some extra cash on your cash. Two is you can do things like laddering CDs or you can do treasuries for consistent payouts. Both of those are great. Three is you can explore private lending.

• 21:07Andrew Giancola?

  Like if you're really interested in private lending, I know some of you are, you have sent in emails based on being interested in that. We've done an entire episode on notes, by the way, real estate notes. And if you are interested in private lending, that could be an option for some of you. For me, I am not super interested in it right now. It is not something, a risk I want to take because there are better places to put your capital, unless the interest rate is really, really high. And so that is where I would think through that a little more. Also, you can use tax advantage accounts like IRAs or HSAs to grow interest tax deferred. So you can think of interest income as kind of the base layer of passive income. It is low risk, low reward, but a steady stream that requires no effort to really set up. And so it's very, very passive and at least every single person out there should be doing this in their high yield savings account.

• 21:51Andrew Giancola?

  So that is at least something that everybody should have. So most of you should have some interest income getting started here. We're going to dive into number four next. All right. One thing I've learned from running multiple businesses is there's usually a gap between how you think work is getting done and how it's actually getting done. And we've had times where we thought we knew the bottleneck, only to realize later, the real issue was somewhere completely different. That's exactly what today's sponsor, Scribe, helps solve. Scribe is a workflow AI platform trusted by 94% of the Fortune 500. And Scribe Optimize turns real workflow data into decisions your AI strategy actually needs, automatically capturing how work happens across approved apps, surfacing inefficiency

• 22:36Andrew Giancola?

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• 23:20Andrew Giancola?

  That's S C R I B E dot H O W slash P F P. It's kind of amazing how much can change in just a single year. Every summer, the kids are a little bigger, a little more independent, and life looks a little different than it did the year before. And it reminds me that while we can't predict the future, we can prepare for it. That's one of the reasons I like PolicyGenius. See, PolicyGenius isn't an insurance company. They're an online marketplace that lets you compare life insurance quotes from some of America's top insurers, side by side, for free. And their licensed team helps you compare coverage, prices, and terms, answers your questions, and even handles the paperwork so you can get the right policy without the hassle.

• 24:04Andrew Giancola?

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• 24:45Andrew Giancola?

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• 25:30Andrew Giancola?

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• 26:14Andrew Giancola?

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• 26:59Andrew Giancola?

  Indeed.com/podcast. Terms and conditions apply. Need to hire? This is a job for Indeed sponsored jobs. Number four is dividend income. So getting paid to own certain things. Okay? So income paid to shareholders from company profits is what dividend income is. Now it's the reward for owning equity and you literally get paid for being an owner. So some examples of this would be dividend paying stocks and ETFs. It could be REITs, like real estate investment trusts would be another great example of this. Mutual funds distributing dividends and dividend focused portfolios. So a lot of you out there may own dividend stocks or you may own a dividend ETF. Or you may own an index fund which pays a dividend. Well, if you do that, you have a dividend coming in where you are making an income.

• 27:43Andrew Giancola?

  Now, there are people out there who focus all their time and energy on dividend investing, meaning they're buying dividend stocks. Dividend aristocrats, for example, are companies that have been paying out a dividend for over 50 years. And if you are someone who is interested in dividend investing or dividend growth investing, that could be an option where you are trying to replace your income with dividends from different stocks. And so I know a lot of people who became financially independent from doing that. Now, is it the focus for me? No, because you can get a higher rate of return, I think, in other areas than you would with some of these dividend stocks. But there are some great options to do that. Now, if you're interested in dividend investing, there is a book that I absolutely love on it called The Single Best Investment. And in that book, he talks about dividend growth investing and how powerful that can actually be.

• 28:25Andrew Giancola?

  So if you are interested in it, that is a great one. Another great blog. On this is the dividend diplomats are these two guys who basically are trying to replace their income with dividends. Another great place to look for that. Now dividends are a cornerstone for wealth building and they provide cash flow. That can be reinvested to supercharge compounding. The cool thing about dividend investing is that you receive a dividend. You can put it back into the stock, the amount of dividends that you get grows and it just continues to compound over time until that snowball grows more and more and more. So if you were interested in something like this, you could start with things like low cost index funds and ETFs. Always, always, always, if you're in the accumulation stage, I would always highly recommend you reinvest your dividends. So there's a button you just click like in fidelity or Vanguard.

• 29:08Andrew Giancola?

  And when you click that button, it's going to reinvest your dividends back into your fund every single month or every single time you get a dividend to me. And so a lot of people call this drip or dividend reinvestment plans. And that is what I do for all of my index funds and ETFs. But you can also buy individual stocks. Like if you're interested in reading, you know, all the financial reports and the quarterly reports, you can buy individual stocks and do it that way too. And you want to focus on companies with long dividend histories like the dividend aristocrats. Those are going to be really important. So you get to get companies like Johnson and Johnson or companies like Lowe's or Target. These are all dividend aristocrats that have been paying a dividend for a long time. And then balancing that dividend yield with growth potential is also important because higher yield isn't always better.

• 29:50Andrew Giancola?

  In fact, if a yield is too high, that stock I would consider to be risky and there's a high risk that dividend is going to get cut. A lot of oil companies have been paying dividends for a long time. And my friend Brian Feroldi says if a company is a dividend aristocrat, that means it used to be a good company. And now it is not as good of a company anymore, which could be true. But if you just want steady stated returns and you're just trying to focus on dividends, that is something that you can definitely look at. So dividends are where you start to feel the power of ownership. You can feel how there is a change in how you make money. And so a lot of you out there, if you're investing in index funds and ETFs, you probably didn't even know it, but you are earning a very small amount of dividends. And so interest income, dividends and maybe earned income could be part of what you're earning.

• 30:30Andrew Giancola?

  Now number five is rental income. So this is owning hard assets, assets that you could physically touch or that you can see. And so income earned from renting out physical property. Or tangible assets is going to be what this is. Now, real estate is the most common example, but this applies to anything that is rentable. So you could think of like, single family or multifamily properties. You could think of short-term rentals. You could think of commercial real estate, renting out vehicles, storage areas, maybe land where you store different trailers, things like that. Renting out equipment, even renting out vending machines or ATM machines or renting out ice machines. All these different things are different ways that you can earn based on rental income. So rental income is one of the most tax-advantaged, inflation-resistant income streams that are available.

• 31:15Andrew Giancola?

  You're leveraging either debt or equity and using other people's money to help you build wealth. So this is something that you can also get paid monthly while you're doing it. So this is a very powerful strategy for a lot of people. A lot of millionaires became millionaires because they utilize rental income. So you can start, if you wanted to go step-by-step here on how to grow this income, you can start with something like a house hack. So a house hack is where you either rent out rooms in your house and/or you buy something like a duplex or you buy a house, the in-law suite, and you live in one unit and then you rent out to the other to reduce either your housing costs or you might even make some money based on doing that. And so overall, that is one way. Another way is to buy your first rental. You can do it with 20, 25% down, depending on the lender, and you can go out and buy your first rented property and kind of go from there.

• 32:00Andrew Giancola?

  If you're interested in building a real estate portfolio, there's a ton of great books. We just had a Q and A where we talked about some of the great books. One of my favorites is by my friend Chad Carson, who has a book called The Small and Mighty Real Estate Investor. That's a good starting point to think through. Then reinvesting your cash flow into more properties and paying down debt. So one decision that you have to make is that as you start to get cash flow coming in, what do I do with this cash flow? Do I buy more property or do I pay down the debts on the current property? And between those two things, both of those are going to help you use leverage to grow your portfolio over time. And then building the proper systems so that you can take yourself out of the equation as much as possible, getting property managers and automation to make it more passive than it already is. It is never passive, ever, when it comes to rental income.

• 32:44Andrew Giancola?

  You're always going to be actively doing something. It's not as passive as index funds. It's not a passive. As dividends, it's not as passive as interest income. All those are way more passive than rental income would be. But rental income has the power of leverage. And that is something I think most people know can really help you get there. Number six is capital gains. This is what we call the wealth multiplier for a lot of people. So this is profit that you earn when you sell an asset for more than you paid. Now, this isn't recurring income, but it's a powerful wealth builder that you can utilize strategically. So maybe you're selling stocks or ETFs. And a lot of you are going to do this when you get to retirement age, meaning you're going to be utilizing something like the 4% rule or the 5% rule. And you're going to get to retirement age and start to sell part of your portfolio. And you're selling those stocks or ETFs for more than you bought them for.

• 33:29Andrew Giancola?

  That's how your portfolio grew. Another one would be selling real estate. You could be selling a business or startup for equity. Maybe you are, I'm selling a business right now. And maybe you're selling a business and startup for equity. Or you're selling collectible or artwork is another thing. So like, let's say, for example, you bought a painting. All of a sudden that artist got famous, that painting tripled in value. You go sell that painting. Well, then there you are making some capital gains. So capital gains are how often how people make life changing money. Maybe you built up a business, you worked all your time and energy into an agency, for example. And then all of a sudden, someone is willing to pay you five to 10 times one year earnings on that business. Well, if that's the case, then you sell that business and you make a lot of money based on that. And you can either use that money to fund new ventures, invest in larger investments

• 34:14Andrew Giancola?

  and/or go towards financial independence. And so this is a great way to earn some income. And most of you will do this in your lifetime at some point in time. So buy and hold quality assets long term is the number one way to grow this is to buy something, hold it long term and watch it grow and compound over time. This could be your business, this could be real estate. Number two, another way to grow this, though, is to time the sale strategically for tax purposes. So making sure you have the right CPA, making sure you have the right attorneys in your corner and making sure you're structured properly is really important. Utilizing tax advantage accounts is another great way to do this. So with your Roths or your traditional retirement accounts, those are going to be really important. And reinvesting those profits into new opportunities or higher yield assets, if you're still in the accumulation stage, is very important. It's all about multiplication.

• 34:59Andrew Giancola?

  When it comes to capital gains, it's not about cash flow. It's all about multiplying some of these numbers so that you can increase the amount that you're making really quickly. The last one is royalty and licensing income. So this has infinite leverage and this is something I think a lot of you could do and you don't, you haven't thought about it yet. So you earn this income when others pay you to use your intellectual property or creations. So once built, this income can continue for decades, if not forever. So I'm going to give you a bunch of examples on this. One would be writing a book. If you wrote a book, people can buy this book and they can read and they can use your intellectual property. Or maybe the most common one that people think about is with music. If you're an artist and you go out there, or if you're a comedian, then you can leverage some of your content in order and people will pay for that.

• 35:44Andrew Giancola?

  Some other things though are licensing software or patents or inventions. But here's another example, franchising a business. That is earning a royalty income, meaning that you're earning a specific amount of income for all these other franchises that take on what you're doing. And they start to grow and expand or licensing your brand and your content. So if you license your brand, your content, there's a number of different things that you can do there. Now, this is the ultimate form of leverage, meaning you are utilizing leverage with your ideas that are earning money on autopilot. And they can scale infinitely if you do this the right way. So from one person or one million people, it doesn't matter how many people want this product. It can scale infinitely if you have the demand. So how do you grow this? One is you can create once, sell forever.

• 36:27Andrew Giancola?

  So this would be books or courses or apps or content, those types of things. Protect your IP legally with trademarks and copyrights and patents. That's another way that you want to make sure that it is all protected. And then license or franchise existing assets to expand reach and then build a brand that people pay to use. So what is a great example of this? A great example would be J K Rawlings in the Harry Potter series. I think she was the first billionaire author ever to become a billionaire based on writing a book. And she did this by creating a book that people wanted and then creating a series that people wanted. And people paid over and over and over again for those books and she became a billionaire. So really, really powerful way to also increase your income. So these are the Types of income that I want you to think about and I want you to think through well,

• 37:12Andrew Giancola?

  how can I do this for myself? So here's an example timeline. Let's say for the first five years, you decide I'm going to master earned income plus start a side hustle to try to earn some profit. Okay. So you're going to do your earned income, increase that earned income, then have a side hustle that makes some profit. Then years five to 10, you can build a business and also have some freelance income. So you start investing some extra income towards maybe, you know, getting some dividend income coming in. Maybe you want to get some rental income coming in, something like that. Then in years 10 to 15, you decide, okay, I'm actually going to acquire a rental property. And so you get a rental property, then you're adding in interest income. Then you reinvest those profits into growth. And so you get some capital gains. And then after that, you can license your ideas, your brands and your products and royalties.

• 37:56Andrew Giancola?

  So there is a timeline where you can do all of this if you wanted to. But a lot of this, if you can think about other ways to earn income, you could definitely take advantage of a bunch of these. Now, most people never get past level two. This is a great thing that I want you to think about is a lot of people get comfortable with their salary. And so they don't go any further, or they spread all their income instead of reinvesting it, or they fear risk and avoid ownership, or they don't understand the tax advantages of some of these different types of incomes, where I think for most of you, you need to understand that some of the most favorable types of income, when it comes to tax advantages, or that dividend income and rental income are really, really favorable. And then capital gains is also low. So those are the three that are

• 38:39Andrew Giancola?

  favorable when it comes to tax advantages. And there is a lot to think about there. So listen, I hope you enjoyed this episode about the seven types of income, and I hope you use these to your advantage. If you come up with ideas, leave them down in the comments below on Spotify or YouTube, or let me know via email, what kind of ideas that you have would love to hear some of the ways that you are going to expand these types of income. I truly appreciate each and every single one of you being here. And I hope you got a tremendous value out of this episode. And again, if you want to transform your finances, please consider joining Master Money Academy. We'll have the link up down below. Thank you guys so much for being here. We'll see you on the next episode.

• 39:29Speaker 01

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