How do you generate multiple streams of income?
Start building multiple streams of income by investing or creating assets which pay you cash flow. Start by focusing on one stream of income and slowly add new streams over time. Use cash flow to invest or build new streams of income.
Imagine, having money hit your bank account every single day. You wake up and your email is flooded with cash payment notifications.
There is no reason to have a 9 to 5 job when you have enough cash flow.
Luckily for you, I’m going to show you how to generate multiple streams of income. I will help you identify cash flowing assets for you to build or buy. With consistent effort, you will be able to generate enough income to retire early from your job.
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What are multiple streams of income?
Multiple streams of income is when you are paid from more than one source. Most individuals have one source of income, which is their 9 to 5 job. Someone with multiple streams of income might have a 9 to 5 job, dividend payments, and a side hustle income.
A stream of income is any source or asset which pays you for owning or working. Your job is a stream of income which pays you to work. Owning a share of a dividend paying stock pays you for being an owner.
The goal of building multiple streams of income is to get paid with as little effort as possible. Make no mistake, building an income stream does take significant work.
The idea is that you are purchasing assets which require little work to maintain.
So what are some examples of income streams that you can either build or purchase?
- REITs – Real Estate Investment Trusts are traded like a stock, but the asset is Real Estate. REITs pay a portion of their income as a dividend.
- Dividend Stocks – Dividend stocks are shares in a company who have a cash payment. Typically, you can find dividend paying companies with yields between 1-10%.
- Index funds – There are many index funds which pay a dividend. Index funds are a collection of stocks at one low price. For example, VYM is the Vanguard high dividend yield fund.
- Real Estate – Obtain a piece of property and rent it out for cash flow.
- Royalties – Create a piece of work once and earn income from other people using your work.
- Income producing websites – Build websites which make money through advertising and affiliate marketing.
- Salaried job – Show up to work, punch a clock, and get paid.
- Businesses – Buy existing profitable businesses or create your own.
How many streams of income should you have?
At a minimum, you should have two different streams of income for diversification. You can never have too many streams of income, because something could happen to one stream. Therefore, focus on getting two sources of income and slowly add more sources.
Most individuals are perfectly content with having one stream of income. However, having one stream of income is a huge mistake.
People often rely on their job to provide income for their families, pay for the mortgage, and basically live life. Unfortunately, your company couldn’t care less about your job security when profits are on the line.
In my time in the workforce, I’ve seen plenty of layoffs. Unfortunately, most of the individuals who were laid off never had a plan B. They relied too heavily on the company to pay for their living expenses.
Now imagine, having a second source of income which can pay for your lifestyle. Should your company lay you off, you would be just fine.
The more income sources you have, the better diversification and security you will have. Should something happen to one of your income sources, you have another.
How do I generate multiple streams of income?
Generate multiple streams of income by starting with one source and continue to add more. Income sources can either be purchased or built in your spare time. Therefore, you need a plan for how you will build different streams of income.
Have a income stream mindset
The more ambition you have for building an income source, the easier it’s going to be. Your mentality towards building an income stream is very important.
For most individuals, they don’t really care about building an income stream, so they spend money freely. Unfortunately, they are using their money unwisely when it could have gone to building an income stream.
Invest for cash flow
Let’s assume that you have one income stream right now. Your one income stream is your nine-to-five job.
The easiest way for you to build a secondary income stream is investing. Take a portion of your income and invest in dividend paying assets, like dividend stocks, dividend ETFs, or REITs.
For now, let your dividend payments reinvest to continue to build cash flow. Your dividend payments are buying more dividend stocks, which means more dividend payments.
Invest time to build an asset
So you show up to work every single day, get paid, and invest in assets. What are you doing outside of your 9 to 5 job to build an income?
Ideally, you should have at least one side hustle to supplement your income. Your side hustle could one day replace your 9 to 5 job once it produces enough cash flow. At the very least, build a side hustle for the unfortunate event that your job lays you off.
For example, Zach from Four Pillar Freedom quit his job when his blog reached $3,000 in monthly income. $3,000 per month was enough for him to quit his job. A couple years later, that same business is now generating over $14,000 per month.
Zach knew that investing his time outside of his job could one day lead to early retirement. He spent his time building an asset which separated his time from money.
Diversify your income streams
When you start building income streams it can get really exciting very fast. You are still producing your 9 to 5 income. However, you have a nice steady dividend reinvestment plan from investments and a side hustle.
You are fairly well diversified when other income streams can support your lifestyle. It’s a nice feeling when you aren’t reliant on one income stream.
However, you should always be on the lookout to add another income stream. You might decide to start a new business or invest in another company.
Remember, you can never have too many income sources!
How many income streams do millionaires have?
On average, millionaires have 7 different streams of income. Millionaires understand that more income streams working for you helps build wealth better than one income stream. Most millionaires are looking to add income streams rather than replace them.Click to Tweet! Please Share!Click To Tweet
Summary: How to generate multiple streams of income
As you can see, you can generate multiple streams of income by purchasing or building assets that pay you. Having multiple sources of cash flow protects you from unfortunate events like job layoffs. At a minimum, you should have two sources of income that can cover your living expenses.
To build an income stream, you need to have the right mindset. Take your 9 to 5 income and invest in cash pain assets, like dividend stocks or REITs. Invest your time outside of work to build an asset from scratch which can pay an income.
Once you have a few different income streams, look to diversify even further. The more assets which are providing you income, the better. Diversification is key for protecting yourself in case something happens to one income source.