Building wealth and creating multiple streams of income is a dream for many, but how do you actually achieve it?

The answer lies in understanding the money-making strategies of the wealthiest individuals.

A close examination of the Forbes 400 richest people reveals a common thread: the establishment of multiple income streams and wise investments, especially in business ventures, and today I am breaking down exactly how they do it!

The Wealth-Building Misconceptions

Many of us have been taught, or have picked up throughout our lifetime, that the pathway to wealth involves earning money, retiring when we're 65, getting a good job, and going to college. However, data shows that these aren't the smartest or fastest ways to build wealth. Instead, minimizing taxes, establishing multiple streams of income, and transforming earned money into investments are the proven ways to build wealth.

Earned Income vs. Passive Income vs. Portfolio Income

Understanding the difference between earned income, passive income, and portfolio income is crucial. Instead of earning money to spend, we should be earning money to save, and saving money only to invest it. The dividends from these investments are what you spend - a complete turnaround from what we've been taught.

The Power of Investments

Earned income, the money you make from your career, job, or even your business, is taxed at the highest rate possible. The two greatest destroyers of wealth are taxes and bad debt (e.g., credit cards, and auto loans). The faster you can convert that earned income into investments, the quicker you can exit the rat race and build true wealth.

Savings: The Fallback Fund

Before you start investing, ensure you have a fallback fund in place. This fund, stored in a high-yield savings account or a super-liquid money market, should cover three to nine months of expenses. This serves as a safety net for any unplanned expenses or loss of income.

The Promise of Passive and Portfolio Income

Passive income is money earned from sources other than employment, which typically includes real estate. The IRS describes it as income you receive with little to no effort. On the other hand, portfolio income is generated from assets that pay dividends or interest - think mutual funds, stocks, bonds, and treasuries.

Creating Wealth with Business Ownership

Business ownership is an investment that can generate income immediately and typically has a low barrier to entry. Research on the Forbes 400 wealthiest people revealed that 75% of them owned a business or had money from their family's businesses.

Building an Asset with a Business

A well-built business is a true wealth builder. It provides cash flow, and tax reductions, and creates an asset. If done right, a business can be an asset that holds value and can be sold at the end to generate more income.

Remember, building wealth and a business you can exit is not complicated. It's quite simple, but that doesn't make it easy.

The key is to start now, stay consistent, and always strive to learn more about creating the financial future and freedom that you and your family deserve.

If you found value in this post and want more FREE content on building a successful business, the best way to reduce your taxes, and how to build sustainable wealth make sure to listen and subscribe to my podcast, Generation Wealth!