How Millionaires Construct Passive Income

Being a millionaire has never been a walk in the park for most people. Many people dream of being millionaires, but just a few manage to achieve this dream. This is because it is a journey that requires patience, dedication, and good strategic planning. Relying on salary alone is not enough to make one a millionaire. You will have to strategize other avenues through which you will earn income.

According to the Internal Revenue Service(IRS), the two main passive income sources are rental property and businesses where one is not participating actively. There are many ways through which millionaires construct passive income.

This article highlights some of the ways through which millionaires construct passive income. Here are how millionaires construct their passive income:

Rental Income

Rental properties are common features the world over. Investing in rentals is one of the most effective ways through which one can earn passive income. According to John H. Graves, an Accredible Investment Fiduciary(AIF) in Los Angeles and author of ‘The 7% Solution:

You Can Afford a Comfortable Retirement, one should always have time to understand how to make rental properties a profitable venture. He says you must determine the following three things:

  • The investment return you want
  • The total expenses and cost of the property
  • Financial risks of the rental property

Affiliate Marketing

Affiliate marketing helps promote a third party’s product by social media influencers, bloggers, and website owners. Some of the common affiliate partners include Amazon, ShareAShare, eBay, and Awin. You can also bring attention to your blog by growing an email list.

A site owner will earn a commission when a visitor clicks and makes a purchase through a third-party affiliate link. The commission mostly ranges from 3% to 7%. Thus you can generate good incomes as a marketing affiliate. You can increase your earning by owning a lucrative niche such as financial services or software.

Selling Information Products

The establishment of an information product is another popular way through which one can make passive income. These products include audio/video courses or e-book. You can also sell courses through sites like Skillshare, Coursera, and Udemy. Information products enable one to make money after the initial time outlay easily.

Flip retail products

Many people have become millionaires by taking advantage of online platforms such as Amazon and eBay and selling the products which they find elsewhere at cut-rate prices. You can take advantage of the differences in price between what an average consumer can find and what you can find. You can improve this by hiring a contact who can assist you get discounted merchandise which very few people can find. For success in this, you will have to be familiar with the market to avoid buying goods at a higher price.

Dividend Stocks

Companies that have dividend-yielding stocks pay shareholders at regular intervals. You only need to own the stock and start receiving cash dividends from the company on a quarterly basis from their profits.

Dividends are usually paid per stock share; thus, the more stocks you own, the higher the payout you will receive. It is one of the best passive income-generating avenues as money will just be credited into your brokerage account without you struggling.


REIT refers to a real estate investment trust. It is a name for a company owning and managing real estate. They have a unique structure that enables them not to pay or pay little income tax. You can purchase it on the stock market, and you will earn dividends paid by the REITs.

Most of the REITs increase their dividends annually. This guarantees you a growing stream in dividends with time. To maximize your passive income and avoid losses, you will have to choose a more reliable REIT.

Final Words

Earning money from scratch to become a millionaire can be quite challenging. However, it is not an impossible feat with a steady stream of revenues from passive income. Hopefully, you get a better idea of how millionaires build theirs so that you can follow suit in the future.