Multiple Incomes- Exactly what is Multiple Income Streams ? Developing multiple income streams is a way to enhance your present income, help save for the future and provide an “insurance policy” to make sure that if the unthinkable happens you will still have income coming in from various sources.
Why everyone should develop multiple sources of Income for personal Safety
Everyone at one point in their lives look for ways to earn a living. We have compiled an ever growing list of ways to make money, some you know, some will shock you.
The best ways I believe are the “Passive Income” Ways. Invest the money, the time or the expertise and for the most part put it on auto pilot and let the money flow in. Even if you are modestly successful you could potentially provide yourself a decent steady income for the rest of your life.
How many Income Streams should you develop? I recommend developing as many as you can until you are confident that no matter what is thrown at you in life you know that you can always provide for you and your family.
Recently I have turned my efforts to just this, discovering as many possible ways to make money as I can. Recent events have shown me that single sources of incomes for almost anyone can spell gloom and doom. Most people in America although in the recent past felt as though they were secure financially if they had a good paying job, a nice house and a decent savings in an IRA or a 401K etc. But the “Great Recession” that started in 2008 and has lasted through the present has dispelled this myth. Many of us followed all the advice of the so called “Financial Experts” and where did that get us? For many it was disastrous, for others it has postponed or perhaps even cancelled our Retirement plans.
The answer – Well everyone might have a different answer but for me the answer is to have as many different sources of incomes as possible, especially from the “Passive Income” sources. Now one note on “Passive Income” as you read on you will see that some familiar types of investments are included in the “Passive Income” category but use extreme caution here, that’s not to say they are not good passive sources of income but as most know these sources can disappear quickly. A good example is CD’s, they were relatively safe and providing a great source of income for many Americans. As many discovered though the CD rates can go from a great return of say 10% to 1% almost overnight. When we discuss CD’s later on we will explore strategies to help mitigate this radical loss of income.
Why should you actively cultivate multiple sources of income? As explained previously there are many unexpected pitfalls that just beyond your control. Will you wake up one morning with the value of your home cut in half? Will the next economic bubble burst and take you with it? Will the bank or financial institution you entrusted your life savings to suddenly be declared a Ponzi scheme? Who knows but you owe it to yourself to be prepared. Not so much by saving your way to retirement but by ensuring that you have multiple incomes for life. Does this mean you should stop saving for Retirement and personal goals?, absolutely not. Everything the “financial Experts” have taught are true for the most part it’s just that they have left out one of the most important aspects of ensuring your personal financial welfare – your income. Traditional wisdom teaches us to get a good education or to obtain a skill that will get us a great job and provide the income we need. But, Traditional Wisdom is only half the equation in today’s environment. You must go beyond the traditional good job and savings route.
I saw my father work his whole life and save every penny he could only to see it all disappear when my mother fell ill. Now of course he did the right thing and so will the majority of us when face with tragic circumstances , but what if he had cultivated multiple sources of income so that when tragedy fell he not only had the savings to cover the tragedy but the income to keep up his lifestyle?
The whole goal is to never have to worry about the loss of a source of income. After all when it comes to investing all the experts say the key to safety is DIVERSITY and why shouldn’t the same hold true with the most important aspect of your life, your income sources? The idea is to have MULTIPLE sources of income coming in at all times. Doesn’t it make sense to help insure the safety of your family by simply taking the time to set up easy sources of income? No one is asking you to quit your job or to radically change your life just to take a little energy now and devote it to setting up Multiple Income Sources!
I categorize income into three types
- Active Income – Active income requires you to show up to work each day and actively participate to earn a salary or income.
- Investment Income – Investment Income is a type of Passive Income with a few exceptions like that of Day Traders or active Stock Traders etc. Investment Income can require very little effort on your part but you can devote as little or as much effort into as you wish.
- Passive Income – Passive Income requires very little effort on your part once you have set up your business or income system. Passive Income is the Holy Grail of the Multiple Income Sources. A great source of passive income has been made possible by the internet. There are a great number of people making thousands and even millions from things like Blogging, Niche Websites and posting how to or entertaining videos on You Tube. There is no reason why you can’t join in and be a part of it.
The Pitfalls of “ Financial Advisors”
First let me say there are a few great Financial Advisors. These are the exceptions however and while most talk a good talk for the most part they fail to deliver. Financial Advisors basically earn their money in one of two ways and even in both ways in most cases. The first way is they earn commissions from the Funds they steer you to invest in. Now usually they have some really good funds to invest in but I personally am not a big fan of Mutual Funds. Mutual Funds charge you to invest in their portfolios, there can be penalties for withdrawing money too soon, they have requirements that they must meet as directed by their charters such as they have to invest in certain percentages of a certain type of stock or have to hold so much in cash and so on. Mutual Funds rarely beat the overall market on a consistent basis.
The second way is that they charge a fee or percentage of your portfolio for actively managing your account. This can be good as the more your account grows the more money they make. But they can also earn a percentage of your portfolio even when your money drops, so either way they are making money off of yours.
Another way of Investing in Mutual Funds is to buy them directly from a Fund Company like Fidelity. Cut out the middle man so to speak. This can be good for those that don’t mind doing a little homework.
My favorite way to invest in the Stock Market is to buy the funds directly through a company like Charles Schwab. I only buy Dividend paying name brand stocks, that is they must pay a dividend and they must be a company that has a long history of dividends and must be a name I recognize. Examples are Coca Cola, IBM, 3-M, Exxon Mobile, Proctor & Gamble etc.
I buy these stocks ( I recommend at least 15 to start and a goal of 30 stocks in differing sectors like Tech, Communications, Energy, Utilities, etc for safe diversity ) and except for a quarterly review hold them forever. The only way I sell is if I believe that something major will negatively affect the company for a long time or if the products they sell are no longer relevant. An example of a company that has failed to adapt to modern technology for example would be Kodak – once a dominate force in cameras – that has now become obsolete and failed to quickly adapt.
Some potential Income Sources :
- Internet Store Sales
- Internet revenue from blogs of informational websites
- Dividend Stock Income
- Investing in Real Estate
- Part Time Jobs
- Turn your hobby into an income
- Trading Stocks
- Become a “Wheeler & Dealer” bargain, trade and sell for profit
- Open a business on the side of your regular job, example : a food or service Franchise ( I do Not recommend retail businesses )
- Become a Real Estate agent on the side.
- Flip Houses
- Weekly or monthly yard sales
- open an Ebay or Etsy business
- Become a Handyman
- Write and sell books/e-books
- Teach others how to do what you are an expert at.
As you can see there are many ways to earn extra income but the important thing here is to develop the income sources now before you actually need them. By doing this now you give yourself peace of mind, it will serve as an insurance policy for you and you family and can help you save more money for your future through the extra income generated.
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