Multiple Streams of Income is a necessity
One of the best analogies about money I have ever heard was to look at your savings pile as an army. You are the commander of that army and every dollar you have represents a soldier in your army which you need to put to work. Once deployed, each soldier should return with new recruits. The visual representation of this analogy is so simple, yet so powerful. In essence, your money should be working for you.
I'm sure most of you have seen the memes or heard the saying about the average millionaire having 7 sources of income etc. Well newsflash, in this day and age multiple sources of income applies to everyone. It is no longer even an option or something used only by the affluent. Everyone needs to be living by this standard right now.
I like to classify income streams into 2 distinct categories, Active and Passive Income. Active income is something you have to put constant time into i.e. your 9 to 5. Passive income is something that you generate while you are sleeping, because it multiplies itself. The idea is to get to the point where your Passive Income far exceeds your Active Income. Personally, I would say you probably want to have your Passive income generating at least 2-3x of your Active income before you can even think of easing off the gas.
Below are 7 income generating ideas I came up with. Some I've done and some I haven't. There is no rhyme or reason to this list. There are plenty of income generating avenues to choose from. I just picked these since they are areas I'm mostly interested in, so this is all my personal opinion:
1. Earn a Base Income – Start with a 9 to 5. I don't get the bashing of a 9 to 5 that some folks scorn at. In fact, I think a 9 to 5 is a smart idea. You want to have some kind of guaranteed income than can float you regardless of what you have going on. Depending on your industry, some 9 to 5's are making solid income. My consulting career has been my 9 to 5er.
2. Have a Side Hustle – A side hustle is something you do off-hours after your 9 to 5. I look at a side hustle as something that could potentially turn into a full-time business to replace your 9 to 5. But more importantly it is a way to make additional active income. A few years ago I did things like website design, logo design and iOS Apps for small businesses. I didn't make anything earth shattering from it, but that didn't matter because the little I made from it was all extra anyway. Something is better than zero.
3. Start a Business – This is something I am very interested in and looking forward to at some point in my future. It will be something in technology for sure. But for now, I've been fortunate enough to be involved in the opening up of other small businesses for friends in my network, so I've definitely learned a lot through the process. I'm like the go-to person for technology/automation help in my network of friends. Every successful person I know has either started or owns a business. This is an avenue to be able to be a master of your own destiny. That being said, it is not for everyone and everyone can't be a business owner.
4. Invest in Equities – When I started my journey into Personal Finance. Equities was something I spent a lot of time on. Equities can be both active and passive. They can be active if you do Swing, Options or High Frequency Stock Trading etc. They can be passive if you are more of a Short Term or Long Term Investor in Stocks. I play both active and passive strategies, although I will say during these times of high volatility is the best time for highly profitable swing trades.
5. Dividend Payments – Dividends are another area I'm very interested in. Dividends are parts of profit that a company pays out to its shareholders. Dividends are a great source of passive income. What's also great about dividend paying stocks is that if you are holding a stock that goes up long term, you are making gains in 2 ways. There are some stocks in the 3-6% dividend yield range, which is better than what your bank is giving you in your savings account, so it's all a personal choice. This is more of a buy it, forget it and let it compound type of approach if that is what you are looking for. Personally, I'm on the sidelines for now, but if we ever have another massive correction in the markets soon, that will be the best time to jump into dividend paying stocks for the long term.
6. Real Estate – I didn't understand the power of real estate until I bought my first property. It is a very smart way to park your money if you don't want it to lose value. Again, this is not for everybody. Also, timing and location matter a lot. If you play your cards right, your Real Estate should appreciate because land is a limited resource. Over a long period of time, it will only go up. I had a mentor, so this area was easier to navigate with guidance. You should always do your due diligence or else you could also get really screwed. You don't need anything big either, start with a small condo or townhouse. I started with a townhouse.
7. Publication – This is the last area I have my sights set on at some point in my life. Content Publishing is the next wave. You can say in a way this blog in itself is content too. But specifically publication channels like Online Courses, YouTube Videos, [e]Books, Sales + Affiliate Marketing, Ad Revenue etc. There are so many ways to make money through online content these days. Technology has made things so much easier, that anyone can self-publish their own content. I've met at least 2 self-published authors who made millions from an eBook. There are no limits to the imagination of what you can do. Simply put, any digital item that can resonate with the masses is the best form of passive income.
So there you have it, I've shared some gems to anyone looking for that little extra guidance. Now get to work and plan for your future.