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Multiple Streams of Income
Do you rely on one stream of income? What would you do if that income was lost? Having multiple streams of income can benefit anyone. It provides a backup when your main source of income is lost.
Multiple streams of income refers to having more than one income source. Many retirees have multiple income streams. They receive social security, a pension, and have investment income or part-time work.
You can create various sources of income even if you have a full-time job. A second or side job is one example. Just selling off excess possessions on EBay or craigslist is providing another source of money.
Investors have many ways to create multiple income. One of the most effective is owning dividend stocks. Each dividend stock provides a small payout every quarter. Investors can build a portfolio of twenty, thirty, or more stocks. Each quarter each stock will pay out a dividend. Plus, you can let the dividends reinvest until you need to take them in cash. This builds even higher future dividend payments.
Another popular source of income is rental property. Owning a rental house or complex creates monthly streams of rental payments. Some investors own several properties creating even more income sources.
Don't feel comfortable with individual stocks or owning houses? That is okay. You still have options. For dividends you can invest in dividend index funds or ETFs. This way you are diversified over many, many companies and still get quarterly dividend payments.
Real estate investment trusts (REITs) can prove a substitute for rental income. Please understand the REITs are stocks of companies that manage real estate. This is as opposed to actually owning the rental properties yourself. Still they give an individual a chance to be involved in the real estate market and get dividend-like payments. REITs are required to pay out most of their gains to shareholders so they can offer a nice stream of income.
Bonds can provide income streams as well. Most individual bonds pay out twice a year while bond funds pay out monthly. Bond funds allow you to reinvest the payouts until you need to start drawing the money. You can invest in bond ETFs as well.
It pays to have several sources of income. Multiple income streams protect you from being left without income. You can set up streams to pay out immediately or let many of them reinvest for bigger streams in the future.
Are you interested in a simple portfolio to save for retirement? Please check out my book on building a simple retirement portfolio that is available at Amazon.com:
Investing $10K in 2014 (Sandra's Investing Basics)
Content copyright © 2014 by Sandra Baublitz. All rights reserved.
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