4 Streams on Income I’m working on right now!

What is your Financial Independence number?

From some of my followers on twitter this number ranged from $900 Thousand to $5 million.

Many factors will change for each person such as location cost of living and the lifestyle they want to achieve. But it is interesting to see how wide this range is between different people.

For transparency my figure is €1.8 million. I got to this figure by simply calculating how much I spend each month on bills and food and multiplied this number by 40.

Yes I know i am not including inflation and yes I know by the time i get to this figure it may not be enough. But it is a figure that is out there and helps me stay focused on reaching my goals.

If I was to save half of my current income from my 9 to 5, it would take me 66 years to reach my goal. By which time I will be 100. That’s no use to me.

If I was to invest it and earn 5% a year after Tax it would only take me 30 years.

Retire Earlier?

What if I want to retire earlier!

Well the answer here is to Earn more money and put that extra money to work for you!

There are a couple of ways to do this and below are listed all of the ways that are working for me right now.

Firstly and I highly recommend this, is to ask your boss for a payrise. Just make sure you offer enough value to your company to justify the payrise.

The second way is to build another source of income!

Why Multiple Sources of Income

For me multiple sources of income makes sense. When I started my working career, I worked in a factory where the money was good and the job was perceived as a job for life.

Boom… the financial crisis happened and I was out on my behind, in debt and broke.

That made me realize, no job is ever safe. They tell you to diversify your investments. Well you should apply the same principals to your income.

Do I have to work more!

In a perfect world, the answer would be no!

You want streams of income that are “passive.”

Passive income is where you earn income without doing any work. Of course, there is no such thing as 100% passive, there is always some work that needs to be done.

My definition of passive income, is money that is working harder than I do!

Benefits of multiple streams

Increasing your income is the obvious answer here. But Also diversification. As I alluded to in an earlier paragraph, relying on one source of income is not ideal and could put your lifestyle at risk if something happens. (hint it has happened to me)

In fact, at this moment I currently work my 9-5 engineering job and I also run a cafe with my sister in law. There was a short battle for a while if I should concentrate fully on one or the other but the workload is manageable so I have kept both.

I am glad I did. Covid19 meant we have had to shut our cafe since March. If I had given up my engineering job a few years ago, I would fill a bit more pressure right now. As luck would have it, my engineering job is in medical devices so iv still had plenty of work to do.

For me diversifying my income is just as important as diversifying my assets.

Examples of Income Streams

Regular job

Let’s start with the ones that I have been using successfully for some time. The First stream for most people will be a steady 9-5 job. While in the early phases of diversifying your income, I would suggest holding on to your job. It has a dual benefit of providing some security but can provide the funding to get started in your “Side Hustles”.

It is also an added benefit if you work somewhere that you enjoy.

Start a Bricks and Mortar Business

Before we opened our business in 2016 we had all the same fears that anybody starting out would have. Will it cost a lot of money to start up. Do we think anybody come to our shop? Can we make money?

The good news is that you do not need a lot of money to start and it can be as passive or as hands-on as you want. For example my sister in laws runs the shop on a day to day basis whereas I look after the financials, HR duties and vendors. If you really want passive income you can obviously hire someone to run the whole business but I am a huge believer in getting your hands dirty and knowing your business inside out.

Investing

Investing in individual stocks that pay dividends is another good way to build your cash flow. This blog outlines how I choose companies each month which doesn’t take me more than a couple of hours a month. For those who are interested you can find my portfolio here!

Of course there are other ways to invest, such as ETFs or Bonds but for the moment dividend investing is my bread and butter.

Real estate

Typically I always thought that Real Estate had a high barrier entry due to the fact that you need to take out a substantial loan to buy a second property. But there are so many ways you can get involved. There are REITs, Crowdfunding, and Rent to Rents.

I personally use two sites. The first is called Property Partner which is a crowdfunding platform where I yield just over 6% a year after tax and the second site I use is Property Bridges which is a peer to peer lending platform. I have only signed up to this so I have no data on returns yet.

Side Hustles

Side hustles are a term that you will find no shortage of with a simple google. There are a ton of examples but the ones that I am actively trying are Affiliate marketing with Amazon and Google Adsense on this blog.

From my point of view, side hustles are great but the reward should match the effort I put in. With my job,cafe, dividend portfolio and property investments I am guaranteed some sort of Income so I focus on them more.

I am not as successful with side hustles as say Chris Johnson on twitter. or Chris over at Money Savvy Mindset on Zazzle But maybe that is because they do not get much of my time.

Would love to hear some of your side hustles. What is working for you and why! Does it take up more time than it is worth or have you found the secret to true passive income!

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