Want more wealth? One of the best ways to get it is by adding additional income streams.
Most of us earn one income at a time, while others have a handful of sources. Perhaps not surprisingly, multiple income streams are a common characteristic among many high-earners and high-wealth individuals. Rich or poor, however, more income always brings the same thing: better financial security.
Assuming you’re not already blessed with abundant wealth, what can you do to generate additional income and improve your financial position? Here’s a look at three ways to boost your earning power.
Invest in a business through stocks or partnership
If you haven’t done so already, putting your money to work by investing in a diversified portfolio of financial assets is an important first step on the path to increased income and additional wealth.
Needless to say, no stock market investment is ever risk-free, but you can mitigate risk by investing in blue chip companies that routinely pay a dividend (meaning they’re businesses that tend to weather market declines, and also make regular payments to shareholders). Besides providing steady income, this strategy is also likely to deliver long-term growth as the value of each business increases over time.
A far riskier strategy, but one that offers the potential for dramatically higher return on investment, is skipping the stock market to partner with a promising business, either by buying bonds, or becoming a direct investor in the company. Of course, if the company struggles or fails, you risk losing your investment. If they hit it big and go public, you could be in line for a major windfall.
Sell a service or product as a side-hustle
Say you’ve got an employment income, and don’t want a part-time job working for another boss elsewhere. One popular and potentially lucrative option is to set up your own side-business selling a service of some kind. Whether it’s yard work and home repair, portrait photography, or possibly even educational lessons of some kind, services are seen as a growing sector as more people look to outsource tasks they don’t know how to do, don’t have time to do, or simply don’t want to do.
If you’d rather not shovel someone else’s snow, or teach guitar to 10-year-olds, an alternative is selling products via a home-based business. The key is finding an appealing product that catches the eye of notoriously fickle customers, and a platform like Etsy that allows you to easily sell your wares. Come up with a hot-seller, however, and your side-hustle might out-perform your primary source of income.
Generate rental income, or invest in real estate
Real estate is often an effective way to add income to your portfolio, no matter whether you own it yourself and use it to make money, or invest in a broad basket of properties through a real estate trust.
If you’re a homeowner, or have a second property, rental income gives your finances a regular cash injection. Of course, it’s not always one-way traffic, and being a landlord requires significant investment when it comes to purchasing, maintaining, and insuring the property. Still, as owner, you will end up benefiting if the property appreciates in value – you might even consider flipping it and investing the earnings.
If you don’t want to be a landlord, or can’t afford to be, you can still make money by investing in real estate trusts, companies that own and operate income-generating properties such as shopping malls, apartment buildings, office buildings, and hotels. Some such trusts invest in single family homes. Investors can diversify and minimize risk exposure by purchasing real estate ETFs, which piece together different investments into a single asset.
While these kinds of investments all come with some degree of risk, real estate has traditionally delivered both healthy dividend returns and long-term growth as property values keep rising ever higher.