In today’s economy, there has been a wide gap between wages and expenses, making it challenging for most of the workforce to meet their financial needs with just their regular employment earnings. Inflation is on the rise and there is a growing sense of urgency among consumers to find alternative avenues for generating additional sources of income. Most self- made millionaires generate their wealth from multiple income sources. For example, Tom Corley, a financial planner and CNBC contributor, conducted a survey and found that out of 233 high income earners, 65% of them had at least three streams of income (Corley, 2018).
Income generating assets are investments that produce recurring and consistent cash flow overtime with minimal active effort. Some common assets include real estate, entrepreneurial investments, and dividend-paying stocks. By obtaining a diverse portfolio, you can protect your assets in case one fails while also receiving several different sources of passive income.
Dividend stocks can help grow your money long term. Typically, dividend growth rates are more stable than stock market growth. In fact, “from 1927 to 2014, dividend stocks saw annual growth rates of 10.4%, while growth stocks that did not pay dividends only saw a growth rate of about 8.5%” (Smith,2023). A dividend is the percentage of money the company pays to its shareholders from the company's profits.
Real estate can be another lucrative income strategy. Investing in properties with the intention of renting them out can offer a steady income stream, especially in areas with a strong rental demand. It can be rewarding, however it requires careful planning and due diligence to ensure a healthy return on your investment. Kristi Knapp, a real estate investor, says that if you decide to be a landlord, it’s important to have “an emergency fund to cover maintenance issues and unexpected repair costs and to also carefully vet any tenants to make sure their credit is good.” Because this is a large investment, it is always smart to have an emergency plan in place.
Entrepreneurship, while often associated with active involvement and hard work, can also be leveraged to create passive income. “Passive entrepreneurship” involves setting up business ventures that require less recurring effort once established. Some examples of this could be vending machine sales, affiliate marketing, drop shipping or online reselling. Ernesto Rosales, a sneaker reseller, was able to make “an extra $300 a month on return investments”.
As with any business endeavor, those interested in investing in different income streams should research the feasibility of their business model, understand the current market and potential risks, and be prepared to refine their strategies as needed.
Works Cited
Ernesto Rosales
Kristi Knapp