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Reader Comments: Multiple Streams of Income

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 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?

I was so impressed by the quality of the reader comments that I thought I would dedicate a blog post to some of them. Here are some responses to my question "Multiple streams of income, or not?"

The Financial Blogger says: .. keep all your income streams while your young, then weed out the ones that you don't enjoy as you get older..

Glblguy says: .. Making money while you sleep is key. If you are passionate about something, you'll attract money like bees to honey.

Investoid believes: .. you are likely leaving money on the table on each stream if you don't specialize…

Brip Blap concludes: …I think your best bet is to view the 9-to-5 as a ‘base’ that provides a salary and benefits, and concentrate on other income flows that can work ‘while you sleep..’

Halotis warns:   ..you have to be careful not to become irreplaceable. If you’re irreplaceable in your current position then you also can’t be easily moved up…

Financial Jungle believes:  ..I agree to use my '10-to-6' :D job as a stepping stone to earn passive income from stocks..

Canadian Money Blog Reviewers explains:  ..I personally try to climb the job ladder and keep having fun in the process..

Q Cash thinks the ideal situation would be to have multiple streams of income, but all passive.  Good advice from the 37 year old millionaire

FourPillars and Bootsie both think that I should concentrate on my career since it provides the bulk of the income.  Maybe they're right, maybe the grass isn't greener on the other side?

Dennis says: … I think the key determinant for how you can diversify your income stream is time.  

GatesVP gives some great advice: ..concentrate on the income that makes you happiest.  Perhaps I should turn to full time blogging. :)

As you can see, lots of different opinions as to whether or not to keep multiple streams of income.  For now,  I'm going to keep doing what I'm doing and increase my assets whatever way that I can. 

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FT About the author: FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 36 comments… add one }
  • icedragon August 29, 2007, 5:24 am

    You can make your way through multiple income sources, if they make you happy, keep them; if they get you bored easy, check if someone else can do it while you making some profit anyway

    An easier approach can be that you low your financial goals expectations, for example, to live the life I want, I need at least a $3,000 dollar per month of recurrent income, but actually if I make $1,000 dollar per month I can quit my job and invest those hours to produce more passive streams of cash

  • The Financial Blogger August 29, 2007, 8:02 am

    FT, maybe you can try to make more money out of your blog. I know that you are putting a lot of effort into it and some bloggers in the blogosphere are making a killing. As it figures as your lowest source of income, it should be the easiest one to improve.

  • FourPillars August 29, 2007, 9:17 am

    Thanks for the link!

    I still like Qcash’s suggestion the best :)

    FB – who is making a killing? I read recently on Get Rich Slowly that JD makes 30k/yr on his blog – it’s incredibly successful and he practically works full time on it. That might lead to bigger things for him – or he might be better off just getting a second job (and make more $$).

    Mike

  • Telly August 29, 2007, 9:24 am

    How ironic…I was just thinking of this post last night and planned to take another look at it this morning!

    I’m deliberating the same thing now. I’m rethinking my career path (i.e. stop taking the lazy one) and realizing that I have neglected it far too long. Every once in awhile I go through this exercise and then take the path of least resistence anyway! :O

    Maybe this time will be different.

    $30k for a blog doens’t seem 1/2 bad, but then again, I’ve never written one and it does seem like it takes quite a bit of effort. I guess as long as you’re enjoying yourself…

  • The Financial Blogger August 29, 2007, 9:27 am

    FP, maybe I exaggerated by using the expression “making a killing”. I meant, make a killing for a blog ;-)
    But still, if you can generate $500 a month from your website, it is still pretty good. Lazymanandmoney is a good example (for $500/month). I am quite surprise to find out that JD makes so little from his blog. Where did you get that information from?

  • FourPillars August 29, 2007, 10:16 am

    Actually he said he “expects” to make 30k in the upcoming year:

    http://www.getrichslowly.org/blog/2007/05/09/coping-with-unemployment-blogging-is-not-the-answer/

  • The Financial Blogger August 29, 2007, 12:26 pm

    FP, very interesting post!
    I don’t think you can live from blogging either. However, keeping in mind that FT is an engineer and he doesn’t need extra money to pay his bills, I think his blog can provide him enough to make his next car payments.

  • FourPillars August 29, 2007, 2:25 pm

    Well, my point is that I think blogging is a tough way to make a living. I’m not suggesting that $30k isn’t good money – it’s pretty good. However how many blogs can make even that kind of money? I think it’s kind of like the music industry – most players are starving, and only a few stars make the big bucks.

    Admittedly it would be nice to be able to do a part-time job (such as blogging) that you love and make some money, but at some point you have to look at the time put it, and the payoff (in cash and enjoyment) and decide if it’s worth it to you.

    As far as Frugal Trader goes, I think he would be better off to put extra time and effort into his career. If he is successful at getting better jobs, promotions, education etc then the income increases from those will be far more than the total income from a blog (most blogs at least). I’m not saying don’t spend your spare time working on the blog, but if you want to make more money then direct your effort where the payoff is the greatest.

    Think of it this way – the more income you make, the more $$ you can save, and the more dividend stocks you can buy :)

    Mike

  • FrugalTrader August 29, 2007, 3:33 pm

    Thanks for the comments fellas and Telly. :)

    As far as the blog goes, it’s more of a hobby right now that provides some “fun money”.

    But in terms of blogging, there are some blogs out there that do make a lot of cash, John Chow for instance makes at least $10k /month. Problogger probably makes more, and Shoemoney makes obscene amounts.

  • The Financial Blogger August 29, 2007, 3:56 pm

    In regards to John Chow, it is not what he writes but really how he monetize and promote his blog that makes him rich. Imagine, johnchow.com is not is main source of income!

  • FourPillars August 29, 2007, 4:14 pm

    Personally I like to take any successful blogger’s “income” with a huge grain of salt.

    Mike

  • FrugalTrader August 29, 2007, 4:31 pm

    Why is that FP? Because of the stability of online income? Or you think that they inflate their numbers?

  • FourPillars August 29, 2007, 4:51 pm

    I think there is a definite possibility that they inflate their numbers.

    Keep in mind this is not exclusive to bloggers – many businesses of all types try to make themselves look as successful as possible for various reasons.

    A simple example – if you are interviewing a real estate agent to sell your house, they might have quite a bit of incentive to pump up their sales numbers so that you will have more confidence in their ability to sell your house.

    That’s my theory, for what it’s worth.

    Mike

  • The Financial Blogger August 29, 2007, 9:46 pm

    FP, I agree with your point and I am pretty sure that some bloggers do inflate their stats or income.

    However, in regards to Johnchow.com, it is pretty easy to do the math. He has 8 spots of ad (125X125) that he sales for $500/month. On top of that, his previous google spot that his merge within his post was sold for 1K/month. That alone makes 3K/month and I am not counting Kontera, Reviewme (400$ per review) and other affiliate website. We can easily get to 6K/month without inflating anything (in fact, that is the bare minimum).

    FT, I don’t know up to how much you can get as an engineer. Is there any maximum? I mean, unless you shift for another company, I guess there is a cap that you will reach at one point, right?

  • FrugalTrader August 29, 2007, 10:21 pm

    FB, Yes, I think that with any career there is a maximum. I personally like diversifying my income streams because it makes me less dependent on my 9-5 job. Do you plan to monetize your blog?

  • The Financial Blogger August 29, 2007, 11:13 pm

    I wanted the build a decent readership first and then I will try to make my way throughout the obscure way of monetization ;-)

    How many readers/day or /month do you suggest before I start monetizing my blog?

  • FinancialJungle.com August 29, 2007, 11:44 pm

    Nice post. Wish I said something bright that day :P

    With regards to diversifying our incomes, we’re there already: banks, pipelines, insurance, royalties, fund co, media, and etc… Oh, and our salaries. Dividend stocks have the best of all worlds. You concentrate at becoming the best dividend investor you can be and still archieve diversified income sources. Once you’re familiar with your core holdings, it’s pretty much a passive approach.

  • Canadian Money Blogs Reviewer August 29, 2007, 11:56 pm

    Here’s my counter point to passive income: it takes a very long time (or excellent skills or luck) to build a decent passive income stream. Yes you can point to some cases of great success but that’s like looking at rich and successful CEOs: yes everybody can get there in theory, but not everybody will. All that time and energy is wasted diversifying for small returns when specializing on your job would bring big returns (how many bloggers can beat an annual performance bonus at the job for example?) I went through a period of dissatisfaction at my work where I started trying to make more money quickly in stocks and building dividend based income only to realize I was playing with fire and neglecting the real problem: I was not happy at work. I changed position and things started to be much better. I then sold all non-RRSP stocks to pay my mortgage faster. Now I’m happy at work, less in debt and still investing in good old index ETFs (always maxing out the RRSP as well). So I’m trying to generate a higher revenue now with focus in order to have more to invest. Ultimately, I believe that this will lead to earlier retirement (compounding a bigger amount for a longer time with less risk). And as a conclusion: isn’t being happy at work the ultimate form of passive income? :-)

    That said, I completely understand that for some people, life balance will be found in seeking multiple income streams. I still blog once in a while but I do it only as a hobby and I find that has made it much more enjoyable. I also don’t expect everybody to agree with me and please bear in mind that I respect your point of view.

  • FinancialJungle.com August 30, 2007, 12:29 am

    Very good insights, CMBR. The problem for me is that all my dream jobs add to my financial stress because none of them pay very well. I can imagine liking work, but once home, I’d lament over how to pay the bills.

    However, I’d to retire as a dividend investor, and my current job will help me achieve that dream in the next few years. I don’t want to risk it by jumping ship now. It’s not worth it. And besides, my current job isn’t so bad. As you said, if you’re happy with your work, then it’s the ultimate form of passive income. That’s what dividend investing means to me. The time spent is fun, not wasted energy.

    I personally know someone who refuses to accept a job unless it’s his dream job. He’s not a young man anymore. For the past 7 years since he graduated, he drifted from one job to the next with not much to show for in his bank account. Luckily, he’s debt-free because he’s living with his parents.

    I guess what I’m trying to say is not every is as lucky as you to find a high paying dream job.

  • Canadian Money Blogs Reviewer August 30, 2007, 12:41 am

    FJ: you’re point is well taken. One distinction that I’d make is that I don’t think I have a ‘dream’ job but I’ve spent a lot of time and energy finding one where I can be happy and do creative work. There’s also often steps one can take to be happier at his/her current job.

  • The Financial Blogger August 30, 2007, 1:25 am

    FJ, CMBR,
    there are no dream jobs, it’s like the dream wife, it’s only a myth LOL!
    At least, I consider that if I wake up in the morning and my first thought of the day is not :”Damn, I have to go to work”, it’s a good start.

    You definitely need to be able to have a good laugh where you work once in a while. If not, working to get more money in order to invest in dividend stock will become a sure way to (create wealth) dig a hole so you can jump in and pass away.

  • FourPillars August 30, 2007, 1:53 am

    I agree with FB – there’s a reason they call it “work”.

    I used to have a dream job – only problem is that 10 years later I still have that same job…needless to say the novelty has worn off.

    Mike

  • The Financial Blogger August 30, 2007, 10:09 am

    Another example of somebody that will be able to pay his bmer in a couple of months by blogging:
    http://geniustypes.com/blog_income_report_july_2007/
    cheers,

    FB

  • Telly August 30, 2007, 11:34 am

    Great post CMBR, and that’s exactly the stage I’m at in my career. Your post was a bit inspirational.

    Although I also agree with Mike, I used to have a dream job as well. It’s only 7 years but the novelty has worn off for me too. Thanks for the good laugh.

    Guess I better go job hunting! ;)

  • Rod Payne August 30, 2007, 1:32 pm

    Not having multiple streams of income seems dumb to me. Sure, concentrating on one source of income is great when things are going well. But, I’m much happier knowing that if, for any reason, I don’t have my job next month, that there is other cash coming in to help pay the bills.

    Single stream income lives confine you to your job; multiple income streams allow you flexibility and provide a safety net. Just ask the call centre employees in New Brunswick who went to work Monday to find the doors locked – I’ll do what I can to avoid that stress.

  • Telly August 30, 2007, 1:49 pm

    Rod,

    Whether one has multiple streams of income or just one, an emergency fund or line of credit is still a must. I don’t think receiving $20/mth in dividends is going to help people that unexpectantly lose their jobs.

    I know if I were laid off tomorrow my rental property income wouldn’t cover my home mortgage but thankfully our plan has that covered.

  • Rod Payne August 30, 2007, 1:54 pm

    Telly,

    I agree with you wholeheartedly about the emergency fund and line of credit. My problem with the whole scenario is that relying on one stream of income leaves one too open to catastrophe. I also believe that relying on one stream of income makes it too easy to live on a cash in/cash out basis where people don’t put aside an EF. Encouraging people to have diversified income streams encourages them to build savings/investments/etc.

    I’m not able to depend upon my secondary streams of income (yet), but my financial plan has me working toward a 50/50 split between work and non-work sources of income by the time I’m 45.

  • Gates VP August 30, 2007, 2:29 pm

    Hey FT… when I wrote the original post I had no idea that you’re an engineer! Look, you may have a professional maximum, but right now that max is into the 100k+ as a senior project manager, 200k+ if you can hack private consulting, and maybe even better if you can find a consulting firm with stock options (like another stream that you get to build, with a giant list of caveats). I personally know engineers in Winnipeg and Edmonton making both of those numbers.

    I’d change what I said, but I mean it even more now, most engineers really like their jobs, despite all of the annoying parts. I’m in computer consulting (we’re like engineers but with software and computer hardware :) and the people I deal with, generally, really like their job. Personally, I love this stuff, I’m at my “dream job” right now, but I spent two years working for a tyrant when I started. The only thing that could make me show up at work was the fact that I loved what I was doing, just not who I was doing it for. I just held out until I found something better.

    The truth is, if you’re under 30, the time you apply to anything will be amplified over the coming years. Everything that you learn today simply has more years to mature and grow. So if you magically have extra time (who knows how between work, the blog, the wife and the properties/stocks?), then focus on the stuff that’s going to give you the most long-term benefit.

    Personally, I think that’s you! You already know lots and lots about money and how it works. If you’re a consulting engineer, that puts you steps ahead of most, who simply don’t understand. But there’s always a ton more stuff that can be learned for work:
    – Management (you’ll be one sooner or later)
    Sales (priceless, you’re always selling)
    – Advanced computer usage (Excel programming, professional document creation, web work, 101 programming)
    – Read a small business kit, know what’s involved.
    – Professional Development training in your field

    BTW FT, these are not specific to you, they’re just general advice. The truth is, the more you know about “all” of this stuff, the better you can become at any career or job.

    Engineers have a pretty fixed corporate ladder, so if you show up every day and deliver, you’ll be managing people in 10 years. But if you can talk business with the bosses, they’re going to put you at the front of the line, b/c they know that you’re savvy and that you understand what it means to “make more money”. (either that or you’ll discover that they don’t have clue and you’ll start your own business, take half their staff and half their clients and triple your salary :)

    All of the stuff I list above is about “talking money” or being better at delivering on-time and under budget. (man I feel another blog post coming on: Essential Life Talents) We talked about this in “When are you not frugal?”. But spending money on you is the number one way to increase your income streams. If you’re going to show up from 9-5 anyways, why not make the most of it? At some point you’ll do something different with your life (not engineering), but talking numbers and understanding sales is just going to make you a better blogger or being a better blogger will make you a better writer when get to publishing your book, of course, being a better sales person will help you turn over that book that much quicker… and so on :)

    Nothing more valuable than being really smart, that will generate all of the income streams you really need :)

  • FourPillars August 30, 2007, 3:58 pm

    Great comment Gates…you’re almost at the point of actually inspiring me!

    Rod – since I’m so dumb for only having one stream of income, can you please explain how I can obtain these additional streams without having to get a second or third full-time job? And I don’t want to hear about dividend income or blogging – that won’t pay my cable bill.

    Mike

  • Rod Payne August 30, 2007, 4:04 pm

    Mike:

    Savings.

    Having a second stream of income to pay the cable bill is the exact opposite of where I’m going with this. Having a second stream of income growing over time so that it can replace your primary source of income is the goal.

    There’s no need to get a second or third job (unless one wants to). However, you should be striving to increase your income from your job and sacking some of that away each paycheque.

    About ten years ago, I read how one in 4 people will have a serious illness or injury that requires a lengthy time off work. Ever since, I’ve asked people what they plan to do if they had a heart attack tomorrow. The answers are positively frightening.

    So, let me ask you. If you had a heart attack tomorrow, what have you done to ensure you won’t be financially ruined?

  • FrugalTrader August 30, 2007, 4:13 pm

    Gates, another great comment. Thanks for the inspiring words. Yes, Engineering is ok, but it’s not exactly what I want to do. Perhaps if I reach the management side of things i’ll start to like it better.

    Mike, it’s not that it’s dumb for having a single source of income, that’s what most people have. Just that having multiple sources provides a safety net. With your blog, if you wanted to monetize, you could pay for way more than your cable bill.

  • The Financial Blogger August 30, 2007, 4:32 pm

    Mike, Maybe your cable bill and a bag of chips ;-)
    the problem with the regular job is that there are so much you can do to get a promotion. At one point, even if you are better than anybody else, you can’t just get a 20% raise or a promotion every year. However, if you focus on being good at your job (enough to get promotions/raises/bonuses, etc.) you will probably still have some time free to think about something else.

    It can be investing (the more time you spend on the market, the better are your chances of making money), part time consulting in your field of study, starting a side company, buying a rental property… As you can see the list can become exhaustive.

    It is safer to derive income from several sources. But it takes time and efforts. Unfortunately, time is something that nobody can’t buy :-(

  • FourPillars August 30, 2007, 5:49 pm

    FT – I think you overestimate the number of hits I get by quite a bit!

    FB – I’d rather have a beer than a bag of potato chips…

    Rod – I guess I mis-understood your comment.

    In terms of what I’m doing financially:

    I contribute quite a bit to my rrsp which I could live off of for quite a while if necessary. I’m working on paying down the mortgage would will result in a lower minimum payment (if necessary). I have disability insurance through work which pays 85% of my net pay tax free, so that should cover the heart attack situation. I have critical illness insurance which may or may not cover any actual illness I might get. I also have adequate life insurance which won’t do me much good but my family would benefit from it.

    Losing my job would be a problem although I would get approx 9 months pay if that happened.

    Mike

  • Rod Payne August 30, 2007, 6:03 pm

    Mike:

    That’s exactly what I’m talking about.

    The health insurance is a big one that I don’t think we think of in the classical sense, but it is a valid stream for a specific purpose. I’m covered, as well, and I’m happy enough to pay for something that I may never use.

    I’ve got a small stream now from investment income, and I’m soon going to pick up a few rentals (hoping for 3-5 over the next 4-6 years).

  • glblguy August 30, 2007, 10:47 pm

    Thanks! Lots of great suggestions! I really enjoyed reading all of the comments.

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