Income Streams

Let’s have the talk.  No, not that one.  Your parents should have already taken care of that.  I want to have an honest discussion with you about your income situation.  Is it diverse?  Is it growing each year?  Is it robust or recession-proof?  Are you finding it easy or difficult to improve it?  Or perhaps you haven’t started yet and don’t know where to begin?  If your honest answers to any of the above questions are concerning or disappointing, then this article may be for you.

First step, goals:

My over-arching financial goal is to own as many cash-generating assets as possible (also known as “income streams”).

Repeat after me.  I want to own as many cash-generating assets as possible.  Keep repeating it until it you turn it into a song or jingle you’ll never forget.  This is now your goal.  Simple.  You need to accumulate or create more assets.  These assets need to generate regular and reliable cash payments directly to you.  Badabim badaboom!  Get it?  Good.  These cash-generating assets, when looked at individually, or looked at over a short period of time, may not seem very impressive (especially when you first start investing or creating them).  But when combined, and when they’ve had the chance to grow and develop over long periods of time, they will provide indefinite support and stability to you and your family, thus allowing you to pursue your dreams, projects, and hobbies.

Next step, vision:

My vision is to spend more of my {limited} time on projects that make me happy, and less time earning {limitless} money.

Now, repeat after me… the vision behind my goal is to…  Hold on there buster!  That’s MY vision.  With MY own wording.  Notice how I use the word “project”.  That means something to me, and likely means NOTHING to you.  So, while everyone’s goals are mostly the same*, a vision is inherently very personal because it is charged with emotion.  So it’ll only really work if you create your own and “envisage the experience” in your imagination.  This is key to it working.  Then, you MUST find and cultivate a desire, on a daily basis, which says “no matter what, one day I will achieve my vision!”  Ultimately, I believe that everyone’s vision should be based on freedom and having more time to pursue and experience the wonders of this world.  At first glance, my vision may seem a bit “high-level” or even cliche to you, but it works for me and importantly, while the things that make me happy may change over time, my vision is not likely to as it is robust and simple.

Final step, strategy:

I shall adhere to proven, fundamental principles of wealth-building while leaving room for self-expression and experimentation through taking calculated risks.

Let’s break that down a bit and be more specific:

A) Fundamental principles

First off the bat, and most importantly, you need to save and invest more than you spend.  Now, I want to be crystal clear about this principle, because if you can’t get your savings right, then you’re “wasting” a ton of compounding potential down the track.   So, if you spent $2,500 last month then you should have saved at least $2,501.  To put it another way, your savings rate should be above 50%.  And I’m talking about after-tax income here, which is all that matters.  Secondly, your savings should be consistently invested in the stock market: preferably into low-cost, well-diversified Exchange Traded Funds (ETF’s).  Finally, your investing mindset should be based on caution and patience.  You should be fully confident in your long-term strategy because you’ve done your own research and “put it into your own words.”  This means that your investments complement your life, your dreams, and your plans today and into the future.

B) Calculated risks

The internet has removed barriers to starting and conducting a business like no other thing has in the past.  If you are not leveraging the internet to make money, you are choosing to leave yourself out of the greatest risk-to-reward opportunity ever.  This could include completing online education to further your career, online advertising for an existing bricks and mortar business, scaling your brand through opening an online store, doing research to find better suppliers or manufacturers, creating a website that offers high-quality information and earns revenue from ads or affiliate marketing, or trying out some of the endless options for selling online.  Too many people nowadays see the internet simply as a vehicle for fulfilling their immediate pleasures and not for what it is and could be: cheap and targeted access to millions of potential customers.  To me, a calculated risk has at its core a plan and timeline for which to execute this plan.  A calculated business risk at its core must have organic growth.  In other words, you need to have customers who are excited about your product or service.  You need to manage risks by minimizing your investment to get to an MVP (“minimum viable product”) and ensuring you learn quickly whether your idea will actually be profitable or if there are no buyers.  Some people say you need to get paying customers even before the final version of your product or service is complete.  There are many books and – surprise – online resources that can help you with this.  Start doing research, start writing down your ideas; your outcomes are only bound by your creativity and efforts.