THE IMPORTANCE OF MULTIPLE INCOME STREAMS.
Ever wondered how to get rich without becoming a stock broker? For most people, one income is simply not enough in order to reach financial freedom.
Multiple income streams can help you build wealth, provide you with greater financial options, and complement your primary source of income.
DEVELOPING RICH HABITS.
Author Thomas C. Corley knows what it is like to be poor.
He also knows what it takes to become rich.
As a child, the best-selling author of Rich Habits was plunged into a life of financial difficulty after his father’s business was destroyed by a fire.
As an adult, Corley decided to undertake a study that compared the daily activities of the rich and the poor.
He found that out of the 177 self-made millionaires he interviewed, 65 per cent had three or more income streams.
Those with four or more income streams made up 45 per cent of the participants, while 29 per cent had five or more.
Corley now has seven streams of income – a diversification his father regretted not doing himself when he had the chance.
WHY IT IS IMPORTANT TO HAVE MULTIPLE INCOME STREAMS.
Corley’s father had all his eggs in one basket. After his main warehouse burned to the ground, the $3 million family business (worth US$20 million in today’s money) was lost for good.
They spent the next 15 years trying to make ends meet. Corley says, his father later told him he wished he hadn’t invested all his money into one business.
“Diversifying your sources of income enables you to weather the economic downturns that always occur,” Corley says.
The poor put ‘one pole in one pond’ and when that single income stream is impacted by an economic downturn, the poor suffer financially.”
Conversely, the rich have ‘several poles in many ponds’ and are able to draw income from other sources when one source is temporarily impaired.”
MULTIPLE INCOME STREAMS PROVIDE MORE OPTIONS.
You will rely less and less on your employment income as your other financial streams become stronger, says Corley.
Eventually, you may decide to exit the workforce and employ people to look after your passive income.
WHY PASSIVE INCOME IS THE BEST.
Corley is not suggesting that you work three or more jobs when he talks about having multiple income streams.
According to Rich Habits, most self-made millionaires had a few different streams of passive income.
Passive income, also known as automatic income, is not earned by working.
“Think of passive income as any investment that generates income down the road,” says Corley.
Some examples of passive income are annuities, book or music royalties, advertising revenue and rental income.
“If you’re not making money when you sleep, on the weekends or on vacations, it will be very difficult for you to become financially independent,” he says.
WHY PASSIVE INCOME FROM PROPERTY IS THE BEST.
Nathan Birch quit his job in order to live off his passive income streams at the age of 24.
Now, at 32, the self-made millionaire and co-founder of Binvested earns more than $2 million in passive income every year – after expenses.
Nathan gets his passive income from a portfolio of more than 200 properties. Over the years he has purchased different types of properties from different markets. This has given him a strong diversification and more than 200 streams of income.
In comparison to other streams, passive income from property has three major things going for it:
1) Unlike royalty income or advertising revenue, rental income will keep coming in – week after week, year after year, decade after decade. Unless your properties are vacant for a while, you will get a regular amount of income each year. This can continue for decades, or even generations. After all – there will always be a need for accommodation.
2) Rent is charged in line with inflation. This means that as time goes by and the price of things go up, rents will rise too. Being a landlord also allows you to decide how much to charge, and when to increase this. Depending on market trends, investing in properties enables you to dictate your own pay rise.
3) Passive income is just one type of gain from an investment property. As time goes on, properties tend to gain in capital value. This enables you to sell for profit, grow equity and hedge yourself against inflation.
Having a portfolio of assets that will always be in demand, that increase in value against inflation and pay a steadily rising passive income – does it get much better than this?