Multiple Income Streams: Do Not Rely On Your Day Job

Multiple Income streams

Most people will rely on one job or one career path their entire life to pay the bills and get by. However, what if that one source of income goes away? I’m thinking that would not be the best feeling in the world. However, what if you had 5 other sources of income?

Why multiple income streams?

It’s a good question and one I welcome. The argument for one career or job is sound. Why would someone invest time in a second source of income if it might make his or her current work performance suffer? The answer is simple, and it comes down to risk.

By diversifying your income, the risk to your overall income is lower. If you lose one income stream, you still have another, thereby lowering the worry and risk of having no income.

Types of income:

1)         Main career income – its definitely more realistic for the majority of people to have a main “day job”. A few people  will be able to start a business at a young age and succeed, but unless you have a well thought out business idea and plan, it can become very difficult to achieve success. (Not to be discouraging, if you believe you have a strategically thought out business plan that you think can actually materialize, then by all means manage your risk and start your business.)

However, having a job that pays the bills on a daily, monthly, and annual basis is also a very intelligent, less risky strategy.

2)         Second jobs – if you are not working in a job that takes long hours, there is no reason that you shouldn’t have a second or even third job in your free time, part time. People all over the world work several jobs to survive, and thrive.

3)         Investment income – If you manage to save some money from your main source of income, then it makes sense to invest that money in stock and bond portfolios as a third source of income.

For example, if you can save $5000 a year working, you can invest that money in a stock index (S&P 500, Dow Jones), individual stocks (GE, Apple, IBM, Google etc.) or bond funds (U.S. Treasuries for example). Then you can realistically make an extra $100-500 per year through capital appreciation and dividend gains through these investments.

Maybe $100 does not sound like a lot, but picture investing your money over your lifetime. You can eventually gain that interest on $500,000 to $1,000,000, creating annual income of $10,000-20,000 per year, which in addition to a standard job will help a great deal financially.

4)         Real estate – real estate is a great source of income as well. With any investment, risk is inherent, and many discuss real estate as a risk investment, but if proper research and precautions are taken, real estate investment can be very lucrative.

Note: there will be another article on the specific benefits and drawbacks of these investment types, coming soon.

As a final point – this all depends on your particular goals. If you are someone really focused on building your finances, this strategy with several jobs and less free time makes sense. However, if you are someone that simply wants to use your income to enjoy life in the moment as much as possible, then it will make sense to have more free time and simply work a day job. Find out what you want and take action!

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