This is a collaborative post on making money with multiple income streams by Ellie Jo and Greg, CFA.
Do you want to create and maintain reliable income streams? Are you looking for passive income streams? Do you want any active ideas? Income streams allow you to enjoy your retirement.
They may also help you retire early. These ideas can help provide better security for individuals and their families.
Table of Contents
Dividends From Stocks or Mutual Funds.
A dividend is when a stock or mutual fund that you own distributes some of their excess earnings to you instead of reinvesting in themselves. They are dependent on the company issuing them being in a financial position to continue to pay them.
Dividends can be volatile. It’s very important you and your financial advisor get comfortable with the risks of investing in a company seeking dividends.
In general the higher the dividend ratio, the riskier it is that it is sustainable. A dividend ratio is the amount of the dividend (annually) , divided by the price of the stock. For example if a company pays $4 a year, and the stock is trading at $80, then the dividend ratio is 5%
Do your research so you do not face any surprises down the road. Keep an eye on how much value they provide and how often they’re paid out. You should also note if something drastic happens to one company’s business model, such as lower sales numbers than expected.
Many companies cut back on paying their shareholders. This means less money coming into your account each month.
Dividends are a passive income stream, but if done right, you can live off of dividends.
Interest Payments From Certificates of Deposit and Bonds.
Interest payments are another passive income stream. With Certificates of Deposits returns are generally pretty low (but higher than interest on savings accounts). Bonds can offer higher returns. With Bonds and CDs you are lending your money for an agreed upon time.
Do you want to make money online simply by searching, shopping, surveys, or playing games?
- Account creation is free
- Big bonus on sign up
- Many ways to earn free money
- Mobile-friendly rewards site and apps
- Simple to complete tasks
- $10 to sign up
- Not exactly passive income
- Redeeming SB points sometimes takes awhile
- It isn't easy to qualify for all surveys
- Customer service isn't the greatest (or fastest)
CD maturities are generally only for a few years or less. Bonds can be any maturity. There are even 100 year bonds still outstanding. CDs will not offer you much liquidity if you decide to cash out. Bonds will be more liquid than CDs.
Rental Property Income As An Income Stream
Income from rental properties is another great way to ensure that you have a reliable income stream. However, there are quite a few pitfalls when it comes to this type of investment.
One of the most pressing issues would be vacancy rates which mean not being able to rent out your property at all times during the year even if you want to because someone who was supposed to move into your place might end up backing out at the last minute or deciding they no longer need housing for some reason.
Other problems include tenants never paying their rent on time, finding yourself in constant legal battles with your tenant(s), bad timing with renewal terms, etc.
Rental Income is generally an active income stream. You are essentially running a business. You can hire property managers though. Rental income is also one of the few strategies where you don’t need a lot of money to get started since you can take out a mortgage. LoanDepot can help you with your mortgage.
Royalties From Intellectual Property, Such As Patents Or Copyrights.
Royalty payments are another great way to ensure that you have a reliable income stream. The challenge is obviously creating something that has high enough demand for you to receive royalties. You can also buy intellectual property that already receives royalties.
Creating intellectual property is easier now then ever. Checkout platforms like Fiverr. You can hire a freelancer on Fiverr to help develop your idea. Search Fiverr for words like digital product or ebook, You’ll be surprised at how inexpensive and easy it is. The trick is finding a platform to sell it on.
Lending money can also be a great way to make sure that you have reliable income since most loans come with their interest rate. With lending it is possible to have a passive income stream. Lending is obviously dependent on the riskiness of who you lend to.
Selling Products or Services Online.
Income derived from selling products or services online is another excellent way to ensure a reliable income stream. However, there are quite a few pitfalls when it comes to this type of investment. One big issue will be if someone else manages to copy your idea.
They can essentially undercut you on price, which means no more sales for you in the long run unless the demand becomes so high with people wanting what only you offer them instead of getting something similar elsewhere at lower prices etc.
Other problems include dealing with counterfeiters who might try their hardest to ruin your reputation by passing off fake versions of whatever you’re trying out, whether it’s makeup, clothing accessories, electronic gadgets, etc.
Fiverr can also be an excellent resource for you to sell your services. You are good at something. Search for that on Fiverr. It’s easy to create a profile and offer your talents to the world as a free lancer.
Annuity payments are another great way to ensure that you have a reliable income stream.
However, there is one catch with this type of investment, and that would be if your annuity plan provider goes out of business without giving any warning.
This means all the money you paid into them over time evaporates altogether, leaving you high and dry at retirement age or worse because now their going bankrupt has also affected other companies who were supposed to pay out different types of benefits, etc.
It can even work in reverse where someone else decides they no longer want to give anyone an annuity payment ever again, which means people might not take advantage as much as before from getting guaranteed monthly or quarterly payments for life depending on what kind of arrangement was made between them originally.
Pensions and other Government Benefits.
Pensions and other government benefits are another great way to ensure a reliable income stream.
However, there are a few things you need to be aware of when it comes to this type of investment. Pensions depend on the sponsor’s ability to afford to pay them back.
In most cases, it also takes a long time to be eligible for a pension. In general company pensions are being phased out.
Start a Blog and Monetize it.
This is a great way to ensure that you have a reliable income stream. Understand how to monetize your blog. You can also by existing blogs on platforms like Empire Flippers.
In Conclusion: Income Streams
There are several different ways to create and maintain a reliable income stream. It’s essential to research beforehand and ensure that your choice suits you and your situation. Additionally, it’s always a good idea to have multiple sources of income if something happens to one of them.
Also its important to note that no income stream is guaranteed. Each has their own risk profile. You also have your own risk profile. It’s very important that you speak with a professional about your specific situation.
See also 13 Ways To Supplement Your Income From Home and Side Hustle Guide For Beginner’s: How To Earn Money On The Side
Greg is a Chartered Financial Analyst (CFA) with 22+ years experience in Financial Services. He has held numerous FINRA Securities licenses (series 7, 63, 65, and 66), and is an expert on Investment Products and Financial Planning. Greg has 22+ years experience as a real estate investor and degrees in Psychology and Philosophy.
Greg has been quoted/interviewed in Yahoo Money, Yahoo Finance, USA Today, Authority Magazine, Realtor.com, Business Insider, and others.
Greg is an avid runner, and the father to identical twin girls and their awesome brother. His love of budgeting and his kids led him to join The Great Resignation in 2021.
Disclaimer: Any Financial Tips on ChaChingQueen are general and informational. Speak with a professional about your specific situation.