Why do you need to have multiple streams of income?
First, it protects you financially in case you lose your job. Just imagine how you would feel if you lose your job which so happens to be your sole source of income. To prevent ever putting yourself and your family in stressful financial situations, you should start creating diverse streams of income now.
Second, it allows you to grow your wealth faster and achieve early retirement sooner. If you don’t want to work at a job for the next 40 years before retiring, then it’s never too late to start earning more and building your wealth by diversifying your income.
So, here are some of the most common types of income:
- Interest Income
This is pretty straight forward. You park your money in a savings account and the bank pays you an interest rate that is not even helping you keep up with the inflation rate. You should only choose this option when you cannot get better returns on your money from anywhere else.
- Dividends Income
Good dividend stocks can pay you up to 4%. Of course, there are high dividend stocks that offer a yield that is much higher than 4%. But, the yield is high for a reason. It’s not as safe. You should know that it’s never late to start investing in dividend stocks. Because this is one of the best ways to grow your wealth passively.
- Capital Gains
If you invest in stocks, real estate or alternative investments such as commodities and wine, you will make capital gains when you buy low and sell high. There’s always risk in investing your money. So, the question becomes, how do you manage your risk? What is the worst scenario that can happen? When you are fully aware of the risk involved, you will not panic when things don’t go the way you’ve expected.
- Rental Income
Rental income is probably the most common passive income you’ve heard of. You buy a rental property, find tenants to rent it and get paid every month. The best part about rental income is that you get recurring income month after month. It’s predictable. It’s stable. It’s retirees’ best friend.
- Business Income
Personally, I love passive income.
I mean, who doesn’t?
But, I love business income more.
It has much much more upside.
You can build it, grow it and scale it up.
There is also the satisfaction and thrill that you get from building a profitable business. Nothing quite beats that.
If you are working at a full-time job, can you still build a business on the side?
The answer is a definite yes.
Even if you can only put in half a hour a day, you can get a lot done within a couple of months:
- Find a profitable idea
- Test and validate your idea
- Get your first paying clients
Different Types of Side Businesses That You Can Start To Earn Extra Income
- Service Business
Generally speaking, service business is the fastest to get started with almost zero startup cost.
If you have a sell-able skill, you can turn it into a service that people need and are willing to pay for.
For example, if you are good at designing, you can offer graphic design services. A lot of businesses need designers to help create their marketing materials.
If you have a lot of knowledge and experience in SEO, you can offer SEO consulting services on the side. Companies would be happy to pay you good money to get them on the first page of Google for their desired keywords.
However, having a sell-able skill means nothing if you don’t know how to get paying clients.
You see, best-selling authors are NOT the best writers. There are many writers who can write better than them.
But they don’t make as much as the best-selling authors.
They are not good at marketing and selling their work.
To make money, you need to know how to market and how to sell.
This applies to all the businesses.
- Start Online Store
Starting an online store is never easier in this age and time.
You can either sell your products on big e-commerce websites such as Amazon or you can start your own online store.
There are software platforms such as Shopify that let you create your online store with a few simple clicks. You don’t need to have technical knowledge or design skills. It helps cover everything from domain name and store design to payment and shipping.
If you are starting from scratch and have no idea about how to get started, you can get the free 6 day course on how to start a niche online store from Steve of MyWifeQuitHerJob.
He and his wife started their own online store many years ago and made 6 figure in the first 12 months. Now, it’s a 7 figure business.
I always believed that if you want to succeed, you have to find people who have done it and model from them.
- Sell Online Course
If you have knowledge that you can teach to benefit other people, you can package your knowledge into an online course.
For example, if you know how to cook healthy vegan meals in less than 15 mins, you can turn that into an online course and teach people how to do the same.
Or you are very good at Excel, you can create an online course that teaches people how to be proficient at Excel.
Or you have started a profitable Etsy store, you can teach people how to do it in an online course as well.
To have a successful online course, you need to make sure that people are willing to pay for what you are going to teach.
The last thing you want is that you spend months creating the perfect online course but nobody wants to buy.
So, validating your idea is very important before you start.
The most effective way to test if there is demand is to get people to actually pay you before you create the course.
It is never enough if they just say they are interested to buy your course. You can only be sure that there is a market for your product when there is money changing hands.
How many income streams do you have right now? And what other income streams do you want to create for yourself and your family? Let me know in the comments.