5 Legit Income Streams of Self-Made Millionaires for the 21st Century
By: Christian Soschner
Tags: Self Improvement, Money, Wealth, Entrepreneurship, Mindset

Financial Independence

5 Legit Income Streams of Self-Made Millionaires for the 21st Century

All pictures in the article are Canva Pro Images

A few days ago, I made an article out of a phone call with a friend. He gave me a ring after he read one of my financial literacy texts on Medium. Obviously, he had put some work into following my social media activities, which makes him very likable.

But, the thing was, he wasn’t pleased with my recommendation to talk people into saving money. Peter, the name of my friend, pointed out that inflation eats it all up.

My friend loves spending money, and it comes easy to him as a kid with rich parents. After they passed away, he inherited all and everything. Their wealth is so big that he does not need to work ever again. I would call him a Bruce Wayne without the Batman narrative, just the partying and a bit less money.

His point was, inflation eats it all up; saving makes people poor. As he hung up on me, I finished what I had to say in a second article.

And guess what?

Peter read it and gave me another call, and of course, he played the “I was always rich, I know it better” dude, but it didn’t matter to me after knowing him for 3 decades. In our case, opposites attracted when we were kids.

“Saving and buying ETFs for 37 years is nuts and insane, my friend”, he said.

“People waste all their life saving and investing for nothing. When they hit their 60, they maybe have a million. But, a million in 40 years is what today is a few hundred thousand dollars”, he played the smarty pants on me.

We discussed how to make more money in simple, easy steps and identified 5 legit income streams for future millionaires.

Here they are:

Education aka salary increase

“Education is the most powerful weapon which you can use to change the world” — Nelson Mandela

Yes, you read correctly. My friend Peter and I agreed on that point. Although this income stream is none, my friend has developed in his life.

We were two sides of a coin. He was born into a wealthy family and could live from his family's wealth since he was born. I had to get my act together, and every time I wanted to achieve a goal had to get on the fundraising route.

While we both attended the same university, his daily routine was getting up late, spending a few hours at the Campus, and attending parties all night long. Mine was getting up early, working my a… off, and studying in the night hours.

But still, Peter has made some observations in talks with the managers of his family office that they tend to pay higher salaries to people who take care of accumulating educations. I have experienced that first hand.

Many people like Gary Vaynerchuk and Elon Musk lately tend to downgrade a College or University degree's value. I got it first hand in the 90s.

Before graduating, I made good money working 8 hours per day. One day difference and I almost double my income. Well, I had to flip jobs and move to another city. But my income doubled metaphorically speaking in about one day.

And still, every time I came back from a corporate education, the negotiations for a salary increase went very smoothly.

How to apply it in your life:

In the next feedback meeting with your boss, ask one question: If I would like to have a salary increase by x %, what kind of activities do I need to do that support your goals in such a way that you are happy to increase my salary.

When we are working in a regular job, we need to serve the corporate goals. Whether we like it or not.

Those who understand that being of service is key to success will be successful.

Millionaire Potential:

On the lower end. It’s pure statistics. Selling your time leads to a certain level of income, but we have to bear in mind that less than 10% of American and European households make more than 200,000 USD or EUR.

But still, it is worth looking into growing this income stream even when it has a natural boundary, which with a diligent and frugal lifestyle can also amass 1 million dollars within 30–40 years.

Studies show that 80% of millionaires hit the million-dollar mark after age 50, and I assume most of them did it by just having a regular job and safe money.

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Side hustle aka the second job

“I have not failed. I’ve just found 10,000 ways that won’t work.” — Thomas Edison

The second thing Peter and I could agree on:

If one job has a natural cap of growing the income stream, why not go for a second job, also known these days as a side hustle. It is also something my billionaire friend never had to worry about.

A decade ago, I was heavily involved in building a martial arts organization from scratch. All the legal and commercial work came from my end. Some of the partners were tending to believe they can cash out people. Going for a few thousand euros per seminar and a few hundred as a monthly training fee.

Theoretically, in an Excel sheet, everybody can enter anything, and all calculations work out fine.

My recommendation was to build a larger group. Happy people always attract more people. Thus, the monthly fee was half the price of a regular Gym back then. Extremely cheap.

With ease, we got a few hundred students. Some trainers wanted to talk us in to cash them out and make real money. I could convince them that it is impossible with training fees to make millions.

Many of the students won’t pay it. In my opinion, it is better to charge a small amount to many people than a high amount to a few. A small amount can easily be sold to a few thousand people. At the same time, a 400 or 500 Euros monthly fee is a more difficult sell.

With this approach, the trainers' team didn’t have to pay for their training, and the dojo took over most of their expenses for their hobby. Without being a trainer, martial arts costs about 200–300 Euros or dollars per month.

Training fee, equipment fee, and seminar fees easily sum up to 2,000–3,000 Euros per year, and for those who really feel the spark and a calling in their martial art — 20,000–30,000 Euros is nothing.

Very often, I heard the narrative — “Why should I do that? It only saves so little money. The side hustle isn’t worth the effort”.

It is astounding as those comments come from people with an income of fewer than 2,000 Euros. Saving 10% of the income … is, in my eyes, a significant amount.

When I do the millionaire math again, saving a solid 300 Euros per month over 40 years is 1,65 million.

And how? By just turning your hobby into something that makes you a few bucks a month. The

How can you apply it in your life:

Find something that you love.

Make it your hobby and learn the skills necessary.

Start teaching and charging small amounts.

To teach absolute beginners, you don’t need to be extremely far advanced.

It is much better to be closer to the beginner level as real experts are often bored out with absolute beginners.

The excess money you make — and even it is a 100 or 200 per month I would invest in an S&P 500 ETF

Millionaire Potential:

Average. Adding a few bucks to the main job's savings will help bring down the time to amass 1 million dollars.

Assuming that both side hustle and main job creates a scenario of saving 500 Euros per month — the time to a million with an S&P 500 ETF is less than 30 years.

Great, isn’t it?

S&P 500 ETF capital gains

For most people, the best thing is to do is owning the S&P 500 index fund — Warren Buffett

I have spoken so often about putting the excess money into an S&P 500 ETF. My ego would love to say, and it was me who had this idea first.

But it wasn’t me, especially as I am European. I came across the S&P 500 Index later in life. I read a lot about the European markets in a pre-internet world and not so much the US-based markets.

Commercial schools were focused on promoting the local European financial inventions.

With the internet, I got access to all the great information worldwide. And soon, I discovered the recommendation to buy S&P 500 ETFs.

The internet says the first one was issued in 1993, which basically replicated the S&P 500 ETF. Since the 90s, many more ETFs based on this index exist, ask Dr. Google, and he/she will show you a great selection.

Critics say that when everybody invests in the S&P 500, it becomes crowded and cannot go up indefinitely.

When I look at the historical data, the S&P 500 averages about 8–10 % return per year. Looking at the S&P 500 ETFs' cost, they are fairly cheap with a 0.03% fee per year.

In this year's annual meeting of Berkshire Hathaway himself, Warren Buffett recommends that an S&P 500 ETF is the best investment solution for most people.

How to apply it:

Build an emergency fund

Once the fund has more than 3–6 months of monthly expenses

go for an S&P 500 ETF

It is what I did when I was in my 20s. Well, I invested in other funds than the S&P 500 as I am European. Today, I definitely would go for the S&P 500.

Millionaire potential:

High, when combined with the first two, it shortens the time to the first million significantly. Depending on your discipline and savings, it can probably become less than 30 years.

Just assuming someone saves USD 2,000 every month, a million is reached in less than 18 years with an S&P 500.

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Direct investments in listed companies

I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.” — Warren Buffett

I hear your thoughts — but 18 years…. It is such a long time, and I want to live.

In 2020 I am 46 years old, and 18 years is over quickly, so don’t worry. But I do get your point of wanting to live in luxury.

The reality of rich people is that they don’t spend their money buying stupid things; they love buying assets that make them money.

The best example is Warren Buffett, who lives in the same house since the 50s of the previous century.

For those who want to amass more than 1 million in less than 18 years, such a frugal lifestyle is mandatory on the one hand.

On the other hand, it is necessary to learn how to invest and make money by investing in the stock market or real estate.

I have zero experience in real estate as I spend most of my spare time deciphering the secrets of the stock market.

Especially in the last 5 years, I played around with many many investment theories and models.

My bottom line is:

for those who love spending 10–20 hours per week reading stock market news, it is possible to create a 20–30% return fairly easily. But only if you consider an annual time investment of about 1,000 hours as easy.

This is always the point when I would become doubtful as everybody can write that it is easy to create such annual returns.

Let’s look at the Pros — one of the funds I admire is Ark Invest. All of their funds have created a solid 20–50% return over a minimum of 5 years. Fairly impressive.

My case studies are at Wikifolio. The one that works pretty well is an easy approach of measuring a few trend indicators and investing every 6 months in the best performing 7 companies. But beware, the volatility is killing, and an investor needs fairly stable emotions.

How to apply it:

If you want to have a performance north of 10% per year on your investments …

… you need to sit down and study daily either the stock market…

… or the real estate market…

in my opinion, it is either or as both markets are complex …

… and need time and dedication…

… and then everybody can make a significant return.

Millionaire Potential:

Very high — look at Warren Buffett. The only thing he did was investing in listed companies.

Social Media like Medium and YouTube

“Build it, and they will come” only works in the movies. Social Media is a “build it, nurture it, engage them, and they may come and stay.” — — Seth Godin, sethgodin.com

The last one is for the sake of completeness. No, it is not just adding more words to the article, which already is long enough.

The first 4 strategies are fairly old school, strategies from the old millennium. I was in my 20s when the internet as we know it was born, and I watched it growing up.

For more than 20 years, the internet was a great place as additional marketing and sales channel. Amazon was strong on the eCommerce site, while other brands used it to build great stories — like Red Bull.

And that was it since 1993. Google started changing the game as they added tremendous value for creators with google ads.

In my opinion, it was the first business model designed for creators. You put your content online, and Google selects brands that fit. Every click that converts into something the brand desired as key metrics, google rooted payment to the creator.

Youtube was added to the Google Family, and the Ads program spun out. Since then, creators on YouTube can make significant amounts of money by just posting content. Although YouTube has put a cap on the creators who qualify for the program with a minimum of 1,000 subscribers and 4,000 hours of consumed content, it makes a neat offer to every creator.

Medium is a platform in which avid writers can make money by following their passion. It just needs consistency in writing and posting -a fixed business model delivers the rest. And it works well.

How to apply it:

Just work on learning a skill…

…get a job and gain experience…

… find a hobby …

… and make it a side hustle with a few hundred dollars each month…

… invest in an S&P 500 ETF…

… learn to invest in companies directly…

… and then create videos and articles…

… and I am pretty sure within 10–30 years everybody can hit the million-dollar mark

Millionaire potential:

Medium, as it needs some prerequisite as described above.