If the year 2020 has taught me anything, is that we can’t rely on one source of income to have money to pay for everything we need. If your only source of income is your job, the day you don’t have it anymore, you are out of money.
Ok, if you are lucky, maybe you can have some monthly check while you try to find a new job, but it’s probably not as much as what your job was paying. Plus, it won’t be for life. You have a limited time to find something else.
Being stressed because you need to find a way to get money as fast as possible is not fun. It’s not healthy. It’s eating you alive.
You need multiple streams of income to make sure there is always money coming to you even if you don’t have a full time job or if one of your sources of income disapears or can no longer provide you with an income.
Before the pandemic, I was good with money, but I wasn’t financially literate. I spent some time on Instagram. I wasted time talking to scammers. I didn’t know they were all over Instagram. So I learned that.
Then I open a Tik Tok account. At first it was entertainment. At a certain point, there were people teaching stuff. So I followed them and that’s when I started reading books on money and I started to get financially literate.
What struck me was that I needed to have multiple sources of income. That was a shock and it made sense. You have a job, you have money. You don’t have a job, you don’t have money.
Ok so now what? How to create a multiple stream of income? Of course, in the books, what they mostly talk about is investing in the stock market, buying rental real estate, building a big business where you hire people, private lending and royalties..
Really? That’s it? Well, no, there are other options. They don’t talk about them so much in the books because what they preach is to make money work for you and for you to stop trading your time for money.
There is nothing wrong with trading your time for money. That’s how you get started. That’s how you build a business. In fact, building a business, often you don’t even have money for months!
Since being a big entrepreneur with multiple employees isn’t for everyone, it is always possible to have multiple sources of income.
The goal is to have at least 3 different sources of income. If you read about millionaires, they often have a minimum of 5 streams of income.
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How to Have Multiple Sources of Income?
You want to learn more about each income stream you can create to see which ones suit you the best. You get to choose between investing in the stock market, getting a side hustle, having rental properties, private lending and building a business.
Let’s dive in each stream you can create.
Investing in the Stock Market
Notice that I wrote investing, not trading. These are two different ways to make money. I talk about investing. You buy some stocks, index funds, EFTs and you forget about them for the next 20+ years.
This is the strategy that doesn’t require a big amount of money to get started. You can start investing as little as $10 per month.
The strategy is to invest the same amount of money every time you are getting paid. You reinvest the dividends you get and your investment grows faster. Over time, you could be able to live from the dividends you are receiving. If not, that could still be a source of income, even if it’s $500 per month of dividends.
There are many books on how to invest in the stock market. Again, you don’t want to be trading. You buy and you hold, like Warren Buffet did. Building wealth, building an extra source of income takes time. Be patient, it will pay off later.
What you can do is open a trading account on a trading platform. You want to see what the costs are for using the platform, the cost for buying stocks, index funds or ETFs (it’s called the MER) and the cost for selling. You want those costs to be as low as possible. Make sure the MER is under 1%. The more you pay, the less you have to invest, the less you will have later. That’s why low cost ETFs are an interesting choice.
Take some time to navigate and do your research on which platform would be best for you.
Do your research on how to invest. The easiest way is to take All-in-One ETFs that bundle multiple companies from different industries, like technologie, commodities, big names like McDonald, etc. So if you want to get started right now, you do that.
You can also use a robo-advisor. On many platforms, there are questions on what are your intentions when investing, for what purpose and for how long. It can suggest a portfolio of ETFs that will suit your needs.
Another way to get started is to buy stocks of the big brands you are buying from. You can buy shares from Amazon, Google, Starbucks, Apple, Samsung, etc. You know these brands and you buy from them, why not invest and get paid to have stocks in their companies?
If you want to take your time and do your research, that’s awesome. You will discover many things and you will learn a lot! There are many books, courses, tutorials and blogs on how to invest. The more you know, the easier it will get to trust the process.
The sooner you start investing the better. The interests will have time to compound and it will get to grow faster after 20 years. That’s where the magic of compound interest starts happening. This is why you need patience for that stream of income.
So if you want an easy way out to build a new stream of income, investing in the stock market is for you. Automate everything and just forget about it. As simple as that. That’s the way to create a passive source of income.
Getting a Side Hustle
Depending on what you want to do as a side hustle, it can come with extra costs, like if you are driving for Uber, you will need to spend extra on gas and every expense that comes with a car.
Here is a list of some side hustle to give you some ideas if you don’t know what to do. It can be anything that will bring you some extra cash.
A side hustle is meant to be done part-time. If you are hustling full time, it’s a job.
Since everyone’s situation is different, you get to decide if getting a side hustle is a good way for you to create a new stream of income.
With a full time job and kids to take care of, getting a side hustle can be tricky. The good thing with the pandemic is that there are more opportunities now to work from home, without fixed working hours.
For a healthy single person without kids, you can work 2 full time jobs to generate more streams of income. I mean, everything is possible right? Then you live below your means and you can invest the extra money in real estate or in the stock market.
Popular side hustles nowadays are mostly the ones you can do on the internet. They are great if you are ready to learn new skills. Some don’t require special skills, like proofreading. There are many sites where you can offer your services.
When choosing a side hustle, make sure you are not choosing something you hate doing. If you are not fond of your job and you don’t really enjoy your side hustle, how much time do you have left in your week to enjoy your life?
Find something that you will find somewhat enjoyable to do or something you always wanted to try but wasn’t sure if you could do it or if you would like it.
A side hustle is the perfect place to try new things.
Just like that, with a part of the extra income you have, investing that money to buy stocks or to buy a rental property, you now have 3 sources of income.
Buying Rental Real Estate
That one requires money, more money than investing in the stock market. Depending on where you live, you will need a cashdown that ranges between 5% and 20% of the price of the income property.
Don’t fall for systems that tell you that you can buy real estate using other people’s money. If it’s not your money you are using to buy, the property is not yours.
Know that when buying an income property, you will have expenses like taxes, insurance, mortgage payments and an emergency fund for repairs. You will be responsible for the repairs. The tenants will call you in the middle of the night because the toilet is overflowing.
Unless you have money to pay someone to do that for you, you might be buying yourself a job.
So if, like me, you don’t feel like dealing with tenants in the middle of the night or while on a date, buying a rental property isn’t for you.
If you don’t mind the extra work, know that you don’t want to look at the numbers the real estate agent will give you. They will show you numbers that don’t reflect the reality of the numbers.
So, no matter the price of the property, if the income from the rent is $50,000 a year, at least half of that amount will go towards expenses.
If you are left with $25,000 per year, you want to divide that by the return that you want on your money and this is what you should pay for the property. Let’s see here, for 4% return is a price of $625,000 and a 8% return would be a price around $417,000. That’s how you determine how much you want to pay for an income property.
Don’t pay over 8 times gross annual rent for your rental property, that’s how you buy yourself another job. A property pulls in $100,000 rent per year and you paid over $800,000, you bought yourself another job. You won’t be able to pay someone else to manage the property and you won’t have enough cash coming from that property to be free.
Taking the previous example, the $45,000 gross income, if you don’t want to buy yourself another job, then you shouldn’t pay over $360,000 for that property, 8 times $45,000. If it’s not your first income property and you already have an employee taking care of the properties and repairs, getting an 8% return on your investment isn’t bad.
Choose what you like most as a return on your investment in a rental property.
You need to be prepared when buying real estate. You need an emergency fund so if you have a vacancy, you can still pay the expenses for that property. You need money, you need a good credit score, you need to know how to find a good property.
Again, there are many books and online courses on how to buy rental properties. Do your research and see it that would be a good fit for you.
The good thing about owning rental real estate is that you have a monthly income.
You can start small, buy a duplex and live mortgage free in one of the appartements. The tenants will pay for the mortgage and maybe some other expenses, depending on how much the rent is and how much you paid for the property.
Some people buy big houses and rent the extra rooms. Again, the goal is to live mortgage free. Then you can save money and buy a bigger rental property, or invest that money in the stock market.
Like I said earlier, you want to have a minimum of 3 streams of income.
Private Lending
This is when you already have saved some money and you want to have a good return in investment.
You lend your money to someone who doesn’t qualify for a loan at the bank.
Do you mean I can lend my money to people and there is a chance I won’t get it back? Yes. But normally, you will take a look at the profile of the person who could use your money.
What is their credit score? Why don’t they qualify at the bank? What do they need the money for? What assets do they have as a guarantee for the loan?
You are not doing this on your own. You need a team working with you like a lawyer and an attorney. There are contracts involved.
The money will be locked for the duration of the contract. You won’t be able to access it. If that could be an issue, don’t go with private lending.
Expected returns are mostly between 6% and 15%. The higher the risk, the higher the percentage.
There is a small number of people who don’t pay back. It is small because when you do your research and you carefully choose the person who will get your money, the person is happy to get that money and will do whatever it takes to give it back with the interests.
Who are the great people who could need private lending? A lot of small entrepreneurs that are getting started. Banks don’t like lending their money to them unless they can prove a minimum of income for the past 5 to 10 years!
You get to decide who gets your money, for how long and the percentage of interest you will get back.
Know that there are fees to be covered. The lawyer and the attorney are not working for free.
Private lending is a good option when you have money sleeping in your bank account. Make sure that money isn’t your emergency fund as you won’t be able to access it for the duration of the contract.
Building a Business
There are different ways to build a business and there are different types of businesses.
You can build a brick and mortar business. You could hire people to work for your business and grow from there.
The physical business requires a lot of money upfront. A way to own a business without having to manage everything is you rent your business to someone else. A bit like a franchise.
So instead of working countless hours to keep your business up and running, someone else is doing that for you and you get the same amount of money coming in each month. Just like rental properties.
Another way to build a business is online. You don’t need as much money upfront to get started, but you still need some money since you are building a business. If you haven’t, you can read my article on how much it really cost to become an affiliate marketer. It’s the almost the same as starting an online business.
When building a business, know that you may not have instant results. It can take months, up to a year before you earn money. Depending on the type of business you want, it can take years before you see the return on your investment.
Being an entrepreneur means that you are ready to learn, you have patience and you have focus. If you don’t have that, find another way to create a stream of income.
Choose the kind of business you want to create based on your personality and based on your budget. It is easy to jump into the online business world and you don’t need employees when you are getting started.
As there are different types of brick and mortar businesses, like restaurant, retail, services, there are different types of online businesses.
You can build a website, you can do e-commerce, you can be an influencer, you can be a vlogger, you can be an affiliate marketer, a virtual assistant, etc. There are many possibilities and there are more when you develop essential online skills like copywriting.
One good thing about building an online business is that it can be done part-time as a side hustle. That way, you keep your job and you work on your online business until it makes you earn more money than your job and then you get to decide if you keep your job or if you keep working on your business.
There is no risk when it is done as a side hustle since you are not putting tons of money in to get started. If it flops, keep learning and try again.
An online business can also be seen as an online real estate. If you are building a website, and you start making money but then you have another one you want to keep building, you can sell the one that is making money.
You can sell your website. There are people out there looking to buy websites. Then they revamp them or grow them so they earn more money from them.
That’s something you can take into consideration when building your online business.
There is a way you can diversify your online businesses. You can be an affiliate marketer and create a blog and earn money there, you can then build an online store or you can sell your services to other companies that struggle to get everything done.
Multiple streams of income. Keep that in mind with everything you are doing.
In Conclusion
You can’t rely on one source of income to keep you wealthy for years to come, unless you are a multimillionaire and you live below your means.
Otherwise, you want to diversify your sources of income. The easiest one to get started are investing in the stock market and getting a side hustle, whether you drive for Uber or start an online business.
The only true passive income is in the stock market where you can automate everything and forget about it until you need your money.
The other sources of income require either time or money. Having a side hustle like a part-time job will require your time, investing in rental properties will require money and maybe some time if you can’t afford a building manager.
You need a long term vision and you should not rush into anything that promises you to make money fast. It is often a scam. Stay away from that.
From investing your money in the stock market to building a profitable business, or empire, who knows, what would be the best for you? Let me know in the comment section.
If you want to get started in the online business world, start here for free.
Let’s get started!
Cynthia