Multiple Income Streams
Now that we know traditional retirement is shifting to a new definition, how can financial independence be achieved? We believe one of the best ways to achieve financial independence is through multiple income streams.
As the term suggests, multiple income streams means having more money incoming from more sources. This strategy is known as diversification, which serves as a risk-reduction measure when life’s unexpected curve balls come at you. Should the most common form of one’s income be lost for any reason, having another income stream could be the protection you need to maintain your lifestyle.
So, what ways can you diversify and get multiple income streams working for you? We will lay out some of the most common income streams, but it is not an exhaustive list. If you can unlock any new income streams, chances are you could have great success.
Vacation and/or rental properties allow you to collect rent from renters. Rental properties can provide significant cash flow, but may also require significant upkeep. You’ll want to complete the due diligence required to best determine if the income more than offsets the expenses. Also, unpleasant tenants can exacerbate expenses, so you need to keep a close eye on the condition of your property. Finally, your investment risk may increase if you borrowed money to invest in the property. Leveraging the property through a loan may be necessary to close the deal but we recommend having all or a large part of the property paid in cash. This increases cash flow.
Farmland is another great income generating asset with generally a low correlation to the stock market, providing lower volatility and some inflation protection. Many folks can operate a decent farm or ranch in addition to having a full-time job, but it’s a lot of work. Land not intended for farming can still generate income, you just have to get creative. Could it be used for outdoor enthusiast leases? Camping? Hunting or fishing?Does it have any natural resources a large company may be interested in? Again, it may not be ideal, but it may still pay in the long run to get the land generating income.
Investing in small businesses, franchises, and start-ups require a decision on how much free time you have to contribute. If you plan to be more involved in the day-to-day operations you may have to commit full time, however, many small businesses are looking for cash flow and willing to consider ownership deals. With thoughtful analysis and risk consideration, buying a partnership in an existing business could pay big dividends down the road.
Peer-to-peer lending was traditionally exclusive to money but is now shifting to include personal assets. Serviced through social networking sites you can now loan your vehicle, tools, boat, or other gear for hobbies—all for a fee.
Royalties are fees that one party pays to another in exchange for the use of intellectual property. Royalties can now be bought on various items like music, film, and trademarks. In connection with royalties you can consider your own IP. Are you an expert in an industry? Perhaps starting a youtube channel, instagram account, or website could market your expertise and drive service income.
If one of these ideas peaks your interest, find a friend or acquaintance that has experience in it and consult them. Wisdom is often searched for instead of innately given, so why not tap into that database. Getting creative with your areas of expertise, either job or hobby related, can lead to more fulfilling way of generating income. Always analyze the various risks to see if any of these avenues make sense for you. In sum, acting like an entrepreneur begins with thinking like an entrepreneur. We would love to brainstorm with you!
