[...] an excellent dialogue going on over at Million Dollar Journey that includes a few comments from yours truly. The gist of the comments I’ve been following (and [...]

[...] amAdd comment A couple of weeks ago I wrote an article questioning the effectiveness of multiple streams of income. Here is a snippet from the article: … rentals, businesses, investments, stock trading and my [...]

I think your doing a great job. =o) Of course it’s always going to seem greener on the other side but this is your ingredient for success and it’s working for you. Just stick with your plan.

Kit

[...] Multiple Streams of Income? (33 comments) [...]

after losing my job in 2001 I decided I’d diversify my income sources too.

http://moneyshaker.blogspot.com/2007/06/buying-canadian-income-funds-for.html

As an employee in the top tax bracket, your payout, post CPP etc can be less than 50%. It is likely that corporate longevity and pensions have as much of an impact, as they once did. Hence you have to consider After tax type returns per hour spent, of sorts.

If structured well, write offs including wages, renos can bring down your taxes. Capital gains, of course at 50%. Your overall tax rates drop of course, if you decide to leave the employment world. There’s a lot to be said for Consulting / Small Business, particularly if you love and can get client work easily.

In deciding to leave the corporate world, financial planning, structure and timing are key.

Do you have the experience / financials to weather Rental problems – including maintenance problems (roof) and tenants that can suck up all your time. Is there sufficient lease time, so that you can relatively assure yourself of an income stream, but also not have to deal with change in tenants that can lead to incremental massive problems. Is your property in an area (e.g. Downtown) that makes getting new tenants easy.

Consider approriate financial structuring before leaving. Getting lines of Credits from banks are a lot harder without that stable job. This and other structuring, if desired (Smith manoeuver) are key. How levered are you on the Mortgage, if any?

If the Market takes a nose dive, can you manage. Overall, a portfolio would have to be reviewed if there is a substantial change in cash flows.

Are your personal administrative things completed – Can you get these out of the way while still at work – you don’t want them to be diversions – Wills, Power of Attorneys, addressing family issues; health checks; use of your work benefits, etc. etc.

Last, Can you actually do it? Sounds like a simple enough question, but hardly that easy to answer. Do you have a daily game plan and short term set of objectives that allows you to become a more strategic and versed investor.

You will also have a much smaller network of people to interact with and in some ways, there is a kind of loneliness in INvesting vs office work. Can you stay focused on researching etc. even when things go wrong. Are there other family members etc. that will want you to do many other things, given your newly freed up time. do you have supportive family/friends

I’m not trying to scare you, but I’m a believer in Murphy’s law. And when it rains, it pours. And while not all contingencies can/should be addressed, lots can befall and you should be prepared.

Lots of questions, but my view is that the “war is won, before it is fought (G Gordon Gekko, Sun TSu). Know some of the implications, risks and have good plans. Once you have a certain comfort zone, you’ll know exactly what you want to do for yourself and equally important – When.

Kind regards.

[...] MintCN has hosted the 109th Carnival of Personal Finance.  I submitted my article Multiple Streams of Income. [...]

It’s not quite the same as a “good old boys” club. It wasn’t because we all went to Harvard together, or all were members of the Exchange Club. But being technically tip-top in your field won’t get you far if you don’t know how to play the corporate game.

And seriously, I’m not defending it one tiny bit!! I got sick of it and ducked out into consulting world, too, where I can do the work, move on, and avoid all of this for the most part. But I will tell you, working on Wall Street as I do, the old boys club is alive and well. Not as strong as it was, but it’s there. I think the IT world may be a little bit better – I work in finance, myself – but in investment banking, private equity, brokerages, who you know is still very, very important. That’s just the nature of the beast.

Good discussion, btw, interesting to see the different viewpoints.

Half of my job promotions came from knowing how to talk sports and drink beer with the boss, not my technical knowhow. Sad but oh so true.

I’m 26 and working in the IT world. I’ve never had anyone promoted “ahead of me”, in fact I’ve never seen anyone pushed ahead due to the “buddy system”. So maybe I’m just living in a dream world here, but here’s my perspective.

For a time I was a “full-time” consultant for people that were making more than me (which meant that I was training people making 40-50% more pay than I was). That lasted a few months and I left when the company failed to raise my rate of pay. They weren’t making the billable rates necessary to put me anywhere near that. In fact, nobody in the company was making those numbers. The guys with 10 years experience to my 5 were making 10% more.

So obviously I left. They had a full project cycle to make it worth my time, instead they did a poor job of defending me when the client’s internal staff started smearing me (union business) and they gave all of the workers a low-end X-mas bonus in the company’s best year to date. (the smearing moved to one of the partners after I left, go figure).

I took a 25% pay increase and moved elsewhere. Now people just ask me for direction and I give them direction. I do the things that other people aren’t good at and I make an extra cut for my time. When I move to the next pay grade it will be a direct result of my output for the company. If the people asking for direction start making more than me, then I will either start asking them for direction or I will receive a raise to maintain the balance.

Maybe I’m just dreaming, but this is kind of the way the world works for me.

OK, you know what, I lied, one of my first bosses actually questionably brought in someone of similar experience at a significantly higher number than me. Of course, this boss actually wanted to lay me off, but couldn’t (of course, I was already looking for a job by then). He also couldn’t turn a profit with his company, so there wasn’t much point in being there long-term anyways. The guy he hired “ahead of me” ended up joining me a my next company. The boss burnt through 6 other guys trying to fill the positions and 15 months later he was back at my door offering me double my previous salary to come back. Of course, it turned him down b/c he still couldn’t manage a business :)

Either way, my point is that “the old boys club” seems like a poor way to get pay increases. Promoting friends ahead of quality just sows massive discontent amongst workers, which then leads to income generators leaving, which then lead to loss of income and eventually no need for the new-found manager. People (and Wall Street) have little patience left for money suckers like “the old boys club” (and I’d like to think they’re a dying breed).

Of course, I could be very wrong :(

I also agree with Karl – in my experience having top-notch “buddy” skills is a lot more important than knowing your job. Half of my job promotions came from knowing how to talk sports and drink beer with the boss, not my technical knowhow. Sad but oh so true.

http://gatesvp.blogspot.com/2007/07/multiple-streams-of-income-part-2.html

Suffice to say there a lot of negative emotions here regarding the 9-5 work world.

Also, your statement that the people who are the best in their field get promoted is fallacious — in my experience, not to be a cynic, it’s the people who are the best liked and are moderately good at what they do are promoted the fastest. They’re good, but they’re REALLY good at being likeable. -My- rich dad’s advice was that “it’s better to be liked than to be good.”

[...] Multiple Streams of Income from Million Dollar Journey. FrugalTrader questions the effectiveness of multiple streams of income. First post: 12/07/2006. [...]

[...] Multiple Streams of Income? I?ve thought about having rentals, businesses, investments, stock trading and my regular 9-5 job as sources. My question is, should I be focused on smaller multiple streams of income? Or focus on larger, single projects? … [...]

So, we have the comments about the long working hours to climb the corporate ladder. I think employers are expecting more and more for wages that decreasing relative to costs.

When I was young I think you could have said that people would still do ok picking occupations with lower wages just because they would enjoy the job more, but I think the economy has be come so tight, that to choose them today means certain low standard of living in retirement.

It also means that you never have the opportunity to acquire assets to have either the rental property or investment assets to supplement income.

[...] Multiple Streams of Income? – This is good example, how healthy financial life should look. He uses multiple streams of income to earn money. It is safe and I can recommend it. [...]