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Here is February's issue of Ultimate Wealth Tips
March 06, 2011
In This Issue
I re examine some basic information about Passive Multiple Streams of Income. It is easy to become wealthy with this simple system however there are pitfalls.
Passive Multiple Streams of IncomeThe world we live in is changing fast. The reason it is changing is purely a function of the increased consciousness and awareness of the people living on this planet. People are starting to realise that they can be in control of their own lives and don't need any authority outside of their own to create an abundant and purposeful life. As people no longer remain in one job all their lives or even one country there are increasing opportunities to diversify in all areas of life and to experience new people, ideas and ways of living and so on. One of the areas I want to talk about in this newsletter is the very real and practical idea of having passive multiple streams of income.
What do I mean by passive multiple streams of income?
They are just several ways of producing income from different sources which in the long term are self sustaining and require less and less of your valuable time and energy. This is not a new idea but there are correct ways to implement them and also ways to avoid. By avoiding the pitfalls you can be assured of a very lucrative and secure financial future, and of course the joy and freedom that comes with doing what you want when you want.
Having been through the whole multiple streams of income scenario myself doing it both the wrong way and the right way I feel that I am an authority on this method of income generation. Let's start by asking ourselves why we need to generate multiple streams of income. Here are a few reasons. I'm sure you can identify with most of them.
1. Security and financial flow - as more and more people waken up to the reality that their career/job could be axed at any particular moment it seems prudent and wise not to have to rely on someone else or that particular income stream.
2. Peace of mind and freedom - as I mentioned above people are becoming more conscious and aware and are finding it increasingly difficult to put up with the 'daily grind' of their 9-5 job. Why should they?
Remember there has been a concerted effort and conditioning program in place for many decades by the powers that be or should I say the powers that were to make you feel you have to go to school, become 'educated' within certain carefully manipulated parameters, get a good job and pay your taxes like good little citizens. This 'work ethic' has been carefully conditioned into the population by religion, education, government and the media.
You are not on this planet to work (like a slave) you are here to experience all aspects of life. This is very difficult to do when you are plugged into The System and feel you can't leave because of financial commitments. Passive multiple streams of income will allow you become free;
3. Passion - many people are not following their passion or even if they are they are doing so under someone elses rules. Following your own passions and under your own rules are just two of the great advantages of multiple streams of income;
4. Joy and Freedom - when you are following your own passions and rules your joy and freedom know no bounds. When this happens you will find that your level of income will increase exponentially.
These are just a few reasons to think about when contemplating generating your own income streams. I'm sure you can think of more.
So moving on then, let's now consider what areas we have to think about before we consider what income streams are available to us:
1. Flexibility - I can't emphasise this enough. You are calling the shots now and presumably you want to have the maximum amount of leisure time possible. This means picking the right income streams is important. Having been in the scenario where I was holding down a full time job and running two businesses it is not a nice place to be therefore think ahead. Number one on my list is an income stream that is not time consuming or best of all completely passive. In reality there are no income streams that are completely passive although there are some eg investments, where apart from the initial due diligence and administration considerations there is nothing to do apart from check how well it is doing once a month or so. These are my favourite and I shall talk more about these further down.
2. Long Term Viability - although opportunities come and go and sometimes there is short term gains to be made, starting a business or time consuming project only to find out a short time later that it is not going to be a long term income generator, is not nice to have to come to terms with. You will have to assess if spending lots of time in the short term is worth it for a product or service that will be obsolete very quickly. Having a long term view is best;
3. Reward/Effort - try and choose income streams that give a reasonable reward for the effort required. Some do not and are completely out of balance. I can think of a few jobs like this where the boss expects you to be at his beck and call 24/7 but pays you peanuts. Again I'm assuming you want to create a lifestyle where you are not working all the time and have the time and energy to have new experiences and spend quality time with friends and family. The only exception to this would be when you are giving of yourself eg charities. In this case the reward may be of a non financial nature;
4. Passive Income/Long Term Considerations - although it is reasonable to assume you will spend quite a few hours setting up an income stream eg a business, you need to ask yourself if you will always have to spend the same amount of hours running it. The more hours spent on one income stream the less hours you are able to spend on others. Of course if the long term rewards are considerable then perhaps you are happy with this. Just be aware of the implications at the outset and constantly monitor the situation. Having a large income but also having to spend 100 hours/week earning it is not my idea of fun. Having said that if it is an interest you are very passionate about it's your call. So ideally you want an income stream that, in the long term, is as near to passive as possible.
5. Passion - it is very difficult to make a long term commitment to something that you are not able to become passionate about or enjoy. Many years ago I more or less 'fell into' a business like this and it became a real daily grind. When I sold it, my outlook and attitude to life improved 100%.
6. Initial Investment - be very careful with setting up businesses that have large up front costs. Getting it right seems to be even more important and the fear factor may be tremendous. Also it is harder to 'get out' of such businesses psychologically because you have invested so much of your money already. This is why I find internet businesses to be an excellent area to investigate.
So now that we know roughly what to look for, expect and strive towards what income streams are available to us. There is of course a huge and diverse list of opportunities and I couldn't possibly name all of them. The following represents major areas to think about and depending on your particular passion, skill or lean, you can further investigate as appropriate. I have invested considerable time and energy in all four of these areas over the years.
1. Property - I have started with this one because this is how I started with multiple streams of income. Contrary to popular belief you do not need alot of money to own property. You can even invest none of your own money and end up with a property with a good rental income or even flip the property to earn a sizeable capital sum which can be invested further. With regard to being passive - although you will always have to spend a little time 'watching' over your portfolio especially if you are simultaneously buying more - it is very easy to streamline the whole business and run it from your laptop. For example, once you have good rental agents and builders looking after your properties you can look towards other income streams;
2. Business - the trick here is to find something that you are interested in or passionate about. Again look long term and see if it could earn you a decent amount with minimum supervision. Remember that it is up to you how much time you spend doing something. If you are passionate about something now and don't mind spending long hours being involved in it fair enough. After all you can always sell up later and make a substantial profit. However if you do spend many hours building a business you are passionate about it will be very difficult to build other income streams. Also do all your due diligence up front. Market test your product/service. Make sure there is a market in the first place and you can sell your product/service at a competitive price(ie mimimum overheads and costs). Furthermore is it something you can put on autopilot or get someone else to supervise/manage so you can concentrate on other income streams later?
3. Internet(business) - I have listed this separately because it is incredibly cheap to set up an internet business and therefore will appeal to those of us who are a little risk averse. Furthermore because it is internet based you can log on and off anytime you want and are completely free to travel or do anything else you desire. Just remember though that just like all businesses you will have to spend a little more time setting up initially. Think it through, how many hours do you want to spend on your internet business in the long term?
4. Investing/Compounding effect - this one is perhaps the most important with reference to passive income streams. Once you are making money you should be filtering a percentage regularly into investments. However note well it should not be filtered into just any investment. There has been a very successful effort by the powers that were to condition people into believing that small, let's say 5-10% simple interest returns per annum on your investments are all that is available. Also that if you could find an investment with higher returns then the risk of losing your money is considerable. Wrong, wrong, wrong. Banks routinely invest your money, which they are only giving you peanuts for, into investments that are producing 30 to 150% per annum and keeping the profits. Furthermore interest is applied daily (compound interest) as opposed to annually (simple interest). One such area that banks invest heavily in is Forex. This is a particular favourite of mine and one which I only check once per month to see how much I have made. For me it is the ultimate passive income.
Whatever decisions you ultimately make about building passive multiple streams of income you will have to focus on one particular area at a time. Although it is best to have an overall picture or blue print before you begin (you can use the 4 areas above as a start) you will need to focus on one business at a time. Having too many ideas/businesses coming and going in your head is a recipe for disaster. Also have a timeline for the whole process, say 5-10 years, and then apportion each of your income streams to a certain length of time to set up, make a profit, and then run passively. In reality you may find that one particular business only takes six months to get going and another 3 years. The important thing is to keep moving forward even if you do make mistakes.
Making mistakes should be invited because that's how you learn. By moving forward even if you don't know what you are doing ensures everything changes around you which invites new opportunities and possibilities into your life. So never ever be afraid to make a mistake! Keep the momentum going. And last but perhaps the most important of all.
Life is all about experience. Don't get too serious about it. Take plenty of time off to recharge your batteries and to have fun!
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