It is everyone’s dream to have enough income to no longer have to worry about anything and enjoy life. The best way to achieve this is to have multiple sources of income. This will not only help you achieve your goals and obtain financial freedom faster, but it will give your income more diversity. What does diversification mean? Well, essentially it means that you are not fully reliant on one of your incomes in case one day that income disappears.
- High Yield Savings
I know what you’re thinking – a savings account is not going to make me a ton of money. If you have money sitting in a regular emergency fund savings account that earns .00001% APY return, I suggest putting that cash in a high yield savings account. The one I use is Marcus by Goldman Sachs, which has a 1.55% APY return. A couple of bucks per thousand invested is better than nothing! Marcus isn’t the only option out there, though. There is also Ally bank, Discover bank, American Express, and many more!
- Invest in REITs
Real estate can be a great investment. If you don’t want to do the work, though, and would rather sit back and collect the check then you should look into Real Estate Investment Trusts (REITs). These investments are real estate holdings that pay a large percent of their profits back to the shareholders of the REITs. REITs have returned 11.92% to their investors over the past 30 years. This was not all in dividend payments, but it is still a good return on your money. You can find many good REITs traded in the stock market, but there are also ETFs that hold multiple REITs like VNQ. There is also another option you can look into, such as buying an online private REIT like Fundrise. These can provide you income on a monthly, quarterly, or annual basis.
- Sell Something
Many times, you have stuff hanging around the house instead that you no longer use or maybe never used in the first place. Instead of letting it sit around and go to waste, try selling it! Yeah, it will be a little bit of work, but the pay off of making a little money on something you were going to throw away can be great. You can use sites like Letgo or Ebay to sell your junk. You know the age old saying, “one man’s trash is another man’s treasure.” Sign up on one of these services and start making another income by selling some of your stuff.
- Start a Portfolio
Starting a portfolio doesn’t have the tax advantage you would receive in something like a Roth IRA, but unlike a Roth or any other retirement account you can use that income made in any given year. Starting a portfolio has become so easy with brokerages competing with new online brokers like Robinhood, Acorns, and M1 Finance. Investing has become so easy that you can literally just buy an S&P 500 low cost index fund, which has returned an average of 11.2% over the last 30 years. How does income play into this, you might ask? Well, if you didn’t know, the S&P index does have a dividend yield that is usually paid out on a quarterly basis. In 2020, this was looking like 2.31%. However, with companies slashing dividends this could change. If you are looking to buy fractional shares and get started with an account, I really like M1 Finance’s layout and ease of use. (They don’t sponsor me, but I wish they did!)
- Start a Business
In the new digital age, you can start a business online doing so many things like providing services, coaching, information, and products. Sites like WordPress and Shopify have made it so easy to start. You can get started as soon as you have an idea. Though, I would highly recommend starting with a business plan and figuring out how you want your business to operate first. If you would like to start a physical business, you can do that, too. Obviously, with everything going on right now with COVID-19, that might be tough. Though, you might be able to turn someone’s failing business into a success if you have enough capital to do it. Still, the advice about business plans doesn’t change and you could turn this into a stream of income for you to utilize for the rest of your life if it’s done properly.
The best thing to do is to get started doing something. Once you make that first dollar in your second of third source of income, you’ll get hooked! Make sure you are always making the best financial decisions to ensure that you can live the life you want to lead. Remember these additional income sources require some amount of work – some less than others, but it’s better than having only one income. Having multiple incomes provides you peace of mind and gives you more options in life. So, get out there and make it happen!
This is a matter of opinion and in no way is financial advice.