To have multiple sources of Income: A necessity rather than a luxury
“In today’s uncertain economy, the safest solution to be wealthy, be in total control, and enjoy freedom for you and your family is to have multiple streams of income.” — Robert G. Allen
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It is not wise to have only one single source of Income, considering the risks involved in the volatile and dynamic economic conditions prevailing today. Financial crises can hit in any form like a lay-off from a job, business loss due to a pandemic or natural calamity, or things going out of your control with an unstable market. These things are bound to happen and the earlier we stay prepared, the better. Having multiple sources of income helps you to cash-in in the time of need but also gives you peace of mind.
There are basically 3 types of Income: Active, passive, and Portfolio. Let me explain how to develop each of these.
Active Income
Active Income or earned income is that income that comes from your full-time job. It requires your man-hours and efforts on a daily basis. Examples are a job where you work from 9 to 5 or a profession where you charge a fee for your consultation services or a business where you are involved in production or sales single-handedly every day. Though it looks easy and reliable, the financial growth here is very slow.
If you wish to increase the income from this source, you may ask for a pay hike, you may increase the fee you are charging or you may increase the price of your product or service. You can also consider taking up a part-time job or side hustle, or a business with full-time employment to increase total income.
Passive income
Passive income is that income that requires an investment and effort in the beginning but
does not require your day-to-day intervention. Examples:
- Setting up an E-learning course in Education portals like Udemy, Thinkific, or Skillshare.
- Publishing a book. You may continue to earn your income in the form of fees or royalties for a
long period.
- Real Estate: Rent coming from a housing property or commercial property.
- A limited partnership is where you have invested in the business but are not an Active Partner.
Unlike Active Income, all the above can be grown magnificently and without limitation.
Portfolio income
The third one is the portfolio income. It is that income from any investment that you have made.
Example:
- Interest income from Bank Fixed Deposits, Mutual Funds, Stocks, etc.
- Dividend income from the Shares you had bought
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In order to increase the return on your portfolio you should gain knowledge and keep updating yourself and watch the market trends.
A careful mix of these sources not just helps you to achieve your financial goals but helps you to create wealth by growing the money faster.
Sandhya Naren is a versatile professional, serving as a Branch Manager in a Public Sector Bank while also being a writer, storyteller, and Certified Women-Coach in Personal Finance. She is the co-founder of Manasa Learning Solutions, an academy providing life skills training for women and children.
