We live in an exciting time. You can literally make money while you sleep. As an entrepreneur, you don’t get a steady paycheck. You can create financial stability when you create multiple streams of income and make some of them passive. Use these steps and tools. Don’t just run towards the online because these are still a lot of opportunities offline. Create systems and don’t try to do it all alone.
I run several online businesses now (all it takes to start one is a domain, hosting, and maybe incorporation). There are two notable ones. The first is meal plan membership site called $5 Meal Plan that I co-founded with Erin Chase of $5 Dinners. The second is the umbrella of blogs I run, including this one and Scotch Addict. They pay me ordinary income as well as qualified distributions since I'm a partner.
Generating multiple streams of income can have a major impact on your finances. Even an extra income of $500 each month could go a long way towards paying down debt or increasing your investments. We often hear about the importance of diversifying our investments, but diversifying our income streams is just as important, particularly in difficult economic times.
Multiple streams of Income covers this strategy. I highly recomend you read it if for that reason alone. Beats the typcial buy and hold (or is that buy and hope), dollar cost averaging and other so called sensible stategies which don't work unless you have a 20-30 year time horizon. Ask anyone who saw their investments plumet during the Jimmy Carter years back in the 70's how long they had to wait to get their investments back up to break even level. Want to take a guess? Would you believe 15 years? That is close.
The business process outsourcing services in the outsourcing industry in India caters mainly to Western operations of multinational corporations. As of 2012, around 2.8 million people work in the outsourcing sector. Annual revenues are around $11 billion, around 1% of GDP. Around 2.5 million people graduate in India every year. Wages are rising by 10–15 percent as a result of skill shortages.
You might be thinking one job makes you exhausted by the time you come home from work, how can you create second, third, fourth one and work so efficiently for them. You have to find out ways of creating multiple sources that are suitable for you and can add steady flow of income in your monthly salary basket. It could be as low as INR. 100/- per month but has to be steady.
AbigailP That’s a really valid point, and I totally understand that piling more work on top of your day job isn’t for everyone. Before I started freelancing, I relied only on my day job because I was too drained to focus on other things by the time I got home. I think I’m used to it now, but it’s not easy, especially with chronic fatigue. Having a network to fall back on, or having a Plan B, is still very valuable.
So one thing I have to disagree with after having done hours and hours of research from Multiple CPA’s is “Dividends – 21% (passive)”. Thats actually not right. Thats actually “active”. I actually paid 2 different CPA’s to do research on this topic. One of them I paid 500 dollars to actually dig out the IRS tax code and “prove” it. If you are active in a business and the business pays you dividends its still active income (not passive).
In 2017, I ended up deploying roughly $611,000 into stocks and $604,327 into municipal bonds. The stock allocation should boost dividend income by about $12,500 a year, and the municipal-bond portion should boost income by about $18,000 a year after tax ($26,000 pre-tax). Therefore, total passive income gets an about $38,500 lift, which recovers over half of my $60,000 loss from selling the house.
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3) Create A Plan. Mark Spitz once said, “If you fail to prepare, you’re prepared to fail.” You must create a system where you are saving X amount of money every month, investing Y amount every month, and working on Z project until completion. Things will be slow going at first, but once you save a little bit of money you will start to build momentum. Eventually you will find synergies between your work, your hobbies, and your skills which will translate into viable income streams.
I also like the distinctions you make about the illusion of influence. I have control over most of my investments (real estate related) and have 10% in passive index funds. But I think as I continue to diversify, I like putting it into the two buckets of (1) I control (2) no control (stock market). I like that clarity. The illusion of control does add stress and hassle that detract from enjoying your life. Not worth extra returns to me.
6) Always Remember That Everything Is Relative. The best way to determine worthwhile passive income streams is by comparing the likely return (IRR) with the current risk-free rate of return. If I round up, the 10 year bond yield is at 3%. Any new venture should thoroughly beat 3% otherwise you are wasting your efforts since you can earn 3% doing nothing.
However, when you lack the money, you need time. You'll need to invest the upfront time now in order to reap the benefits of automatic income later. It just doesn't happen overnight. So don't expect it to. However, you can do this without quitting your day job. All it takes is some sincere effort over a consistent period, and voila! But, to get there, you'll need to consistently burn the midnight oil or get up at the crack of dawn. Your choice.
Most of us think of investment income as just the cash flow we get from bank interest, bonds, share dividends and property rents, some of which comes via a super pension. But a more complete view is to also consider how growing the value of your investments can add to your spending potential. This total return approach generates income from both income and growth to optimise spending from your portfolio across all market cycles, aligning cheap and expensive investments to your goals.