Where step 33 described the features, (dis)advantages, and possibilities for change of an earned income, we are now going to look at profit income. A profit income is the money youget when you have a company (which can be anything from an Etsy shop where you sell handmade things to a multinational company) and are able to sell yourproducts or services above the cost price thereby taking (some of) the profits as earnings.
Many people dream about having their own company, and although this can indeed be a lucrative project, being an entrepreneur also requires a lot of hard work, and often at least a few years before a company starts making a profit. It furthermore involvesa lot of new skills, quite a bit of risk and a lot of perseverance, so the life of an entrepreneur isn’t always as rosy and making a profit income isn’t always as straight forward as it might seem. (You can take my work for this, I have some experience..).
If and when you do manage to make your company successful however, it isn’t just a great feeling of achievement, but it might also mean you can take (part of) the profits, and you might even be able to step out a little bit more from the day-to-day functioning of the business, if that is what you want (although you might not want to!), let others do the work for a wage whilst you take a profit income – turning it more into a passive income.
Depending on the type of company you have, how much profit is actually being made and how many owners and employees the company has, this can be more of less straightforward and again isn’t either guaranteed nor easily achieved. But all in all, having your own business is certainly a possible way of making (extra) money however and can give a bigger scope for earnings than a regular job.
Now many people say that they want to have their own business, but is this actually something you might want too? It is beyond the scope of this blog to talk about the ins and outs of setting up and having your own company, but from a practical point of view, is this something that might work for you to supplement or replace your current income?
There are as said many different types of companies one can have and having a bigger company isn’t necessarily better or more effective at giving you a better or more stable income and more satisfaction, so let’s weigh up some of the options.
Step 34 – Income stream 2: Profit Income – in detail:
If youconsider starting your own company and feel that this might be something you want to do, to be your own boss and in control of decisions as well asof your income stream, then think about some of the following:
Do you have any particular skill that you can make profitable? This can be anything from selling your services online, to tutoring, blogging about it, writing a book or designing courses.
Do you like making things and could you potentially open an online shop on Etsy or somewhere else? This could be anything from jewelry, to clothes, dolls, decoration, pet supplies etc.
Do you have a particular interest that you would like to write about or document? Could you start a blog about this and get enough traffic to generate income from adds, affiliate links and other side products? Can you become a freelancer in this field?
Do you have creative skills that you could put to use, making art or other products that you can sell?
Do you want to set up a bigger company that markets a particular service? Think about a small academy to a design company or arestaurant or software company.
Let your creative ideas flow and think of possibilities based on your skills, experience and interest. Is there anything else that you can make or deliver that you can turn into a successful enterprise?
I am not actually saying that setting up your own company is something you should do as this definitely isn’t for everybody and the income might take years to start coming in. I know this first hand from setting up my own company several years ago, and even though I still thoroughly enjoy it, it is incredibly time and energy-consuming and you need to be very VERYdedicated to making it work.
Regardless of the enjoyment of being able to shape the course of your own company and seeing things become successful (hopefully), having your own company can certainly be a good way of making a living, whether that income is coming solely from your company or whether it is to supplement your current income from your paid job.
Read more about my100 steps mission to financial independenceor simply decide to take control today and join us on our step-by-step quest onhow to make your finances work for you, starting with step 1.
Dividends are paid per share of stock, so the more shares you own, the higher your payout. Opportunity: Since the income from the stocks isn't related to any activity other than the initial financial investment, owning dividend-yielding stocks can be one of the most passive forms of making money.
So, if you're aiming for $100,000 a year in retirement and also receiving Social Security checks, you'd need to have this amount in your portfolio: age 62: $2.1 million. age 67: $1.9 million. age 70: $1.8 million.
There is no one-size-fits-all savings guideline for retirees. If you want to replace 75% of your current $50,000 salary, you'll need $420,000 saved. If you want to replace your entire current salary, aim for $750,000.
Making $4,000 a month based on your investments alone is not a small feat. For example, if you have an investment or combination of investments with a 9.5% yield, you would have to invest $500,000 or more potentially. This is a high amount, but could almost guarantee you a $4,000 monthly dividend income.
One of the easiest passive income strategies is dividend investing. By purchasing stocks that pay regular dividends, you can earn $2,500 per month in dividend income. Here's a realistic example: Invest $300,000 into a diversified portfolio of dividend stocks.
After this age group, 401(k) balances can begin to fall, or at least grow at a slower pace, as even more people start tapping their accounts. The average balance for those 65 and older is $232,710; the median falls to $70,620.
According to data from the BLS, average 2022 incomes after taxes were as follows for older households: 65-74 years: $63,187 per year or $5,266 per month. 75 and older: $47,928 per year or $3,994 per month.
Social Security offers a monthly benefit check to many kinds of recipients. As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
Using our portfolio of $400,000 and the 4% withdrawal rate, you could withdraw $16,000 annually from your retirement accounts and expect your money to last for at least 30 years. If, say, your Social Security checks are $2,000 monthly, you'd have a combined annual income in retirement of $40,000.
How long will $1 million in retirement savings last? In more than 20 U.S. states, a million-dollar nest egg can cover retirees' living expenses for at least 20 years, a new analysis shows. It's worth noting that most Americans are nowhere near having that much money socked away.
What do studies say about money and happiness? Purdue University found the ideal average income for people worldwide is $95,000 and $105,000 in the U.S. Beyond that, satisfaction with life deteriorates, it said.
If you had an income of $200,000, that would put you in the top 12% of household incomes or the top 5% of individual incomes in 2022. Though I prefer household income over individual income, no matter how you cut it, $200k a year puts you on the higher end of the income spectrum.
There is no hard and fast dollar amount that defines “enough”, but most people agree that you need to make at least $1,000 per month consistently in order to live a comfortable life with no worries. This is an incredible way to gauge how much money you are bringing in!
Introduction: My name is Pres. Carey Rath, I am a faithful, funny, vast, joyous, lively, brave, glamorous person who loves writing and wants to share my knowledge and understanding with you.
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