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Another example is Bill Gates, who generated income through 'Profit Income' and 'Royalty Income' streams. He created a company and created an asset called as Windows. He used that to change the way we interacted with computers. He became so good in these 2 income streams that he became one of the richest persons across the world.

There are umpteen examples of millionaires getting created from 'Profit Income' but they had to be really good at what they were doing. You would also find various examples of millionaires from Royalty Income.

These are the seven sources of income and millionaires usually earn from multiple such income streams. Most millionaire won't have all of these 7 income streams - in fact most of them wont even have more than 1 or 2 income streams.

e.g. Warren Buffet is a Billionaire - but he doesn't make most of his money from all 7 of them. In fact he became a millionaire by using income stream 4 and 6 - Capital Gains and Dividend Income.
But he didn't get in to capital gains on everything - but specialized on a very small thing, Capital Gains of companies in the stock market. Then by constantly honing his skills in valuing companies and investing in them - he was able to become a millionaire, and then a billionaire.

7. Royalty Income
This is the money you get as a result of letting someone use your products, ideas, or processes. They make all the revenues, they do all the hard work and you get a small percentage of what ever they earn.If you are a writer, you get paid for every copy of the book sold.

The biggest challenge here is to create something unique and then make it repeatable. This will need special skills to create such an asset but once created, there is virtually no limit to the amount of money you can earn.

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Capital Gains
This is the money that you get as a result of increase in value of an asset that you own. For e.g. when you buy shares at $10 and sell them at $11 - the $1 is capital gains, or if you buy your house for $200,000 and sell it for $220,000 the $20,000 is your capital gain. There are different tax laws in different countries on capital gains. However, there are ways to come around taxes as well.

Rental Income
This is the money that you get as a result of renting out an asset that you have, like a house, or a building. Now, this income is even better but there are inherent drawbacks of this kind of income over the above 4 types of incomes.

One of the biggest drawbacks is the amount of money required to create such an asset which can generate regular rental income. Since the money required is huge, you may not be able to create many such assets in your life time, unless you have other sources of income.

4. Dividend Income
This income gets even better than Interest Income. It is equally passive and not only that, it also makes you a shareholder of a company. This is the money that you get as a return on shares of a company you own. For e.g. the dividend that most companies announce at the year end. The better this stream of income sounds, the more ignored and neglected is this source of income.

If you invest smartly on ex-dividend dates of good blue chip companies, you can far exceed the returns from Dividend Income than what you get from the Interest Income, since you are also a party to the Capital Gains that the share price goes through.

This is one of the key instruments that we recommend for generating adequate Cash Flow and still get very good income.

3. Interest Income
'Interest Income' money is the money you get as a result of lending your money to someone else to use, e.g. putting it in the bank, lending it to the government in the form of buying Treasury Bills etc.

This is a great source of passive income where your active involvement is not needed once the investment is done. Many doubt on the seriousness of wealth 'Interest Income' can generate, but when combined with the power of compounding, and the fact that this is a true passive income with least amount of risk, this can beat any of the first 2 sources of income generation hands down.