Part 1: Make Money From Multiple Sources
Before you can make money or create an income, you need to understand income.
For most of us, we have been taught that the only sure way of making money is by getting a job and building a career. Anything that does not sound like a job is immediately relegated to the back of our minds as risky, dodgy or unreliable. Factually though this is far from the truth. In addition, in the 21st Century, we are now well into a global economic shift that is witnessing the death of the traditional job/career and the birth of the social entrepreneur. Social Entrepreneurs are just men on the street building their own income through numerous innovative and entrepreneurial sources, leveraging their limited time and resource by building teams of like-minded individuals. Similar to the old adage: “The King is Dead. Long Live the King”, “The Job is dead, Long live independent wealth creation.”
It is of utmost importance then that we outline for you all the ways to make money that are available to you rather than just “The Job” that we have been so powerfully indoctrinated to pursue. Every form of legal income falls into one of these three categories of income:
(1) Active Income
Active income includes all forms of money making where you have to work to earn them. However, the amount of income is largely predetermined by a 3rd party and remains largely out of your control throughout your activities. These include:
- Employment (“The job”)
- SME Businesses
Pros to Employment include:
- Puts food on the table – Well barely. In most people’s cases, it fails to pay all their expenses.
- Jobs and labour have been, until recently, the working cogs of global economies. This is changing rapidly at present.
- Your salary comes in each month dependably. Again, well to a point. With receding economies globally, millions of employees are waking up to retrenchment and unemployment on a daily basis.
Cons to Employment include:
- Limited income offering.
- Out of your control. Someone else decides how much money you can earn.
- Tracks behind inflation.
- Slow and steady walk to poverty.
- Leads to and creates a survival rather than wealth creation mindset.
Pros to Commission include:
- Immediate Income. For those with low skill levels, sales are often the go-to opportunity. Income can be earned within a week or month, even though it is often once off.
- Low barrier to entry. Usually does not require high skill or experience levels.
Cons to Commission include:
- Requires selling. This is a personal fear for many people.
- With product-based opportunities, they often require upfront capital to buy the stock and then the investment of extensive and ongoing to time, travel and stock storage to make the sales and distribute the stock to the customers.
- Creates “Transactional cash”. This is cash that is only there when a sale is made and does not recur without further sales being made.
- You start at zero every month. No matter how good any previous month has been, no matter how much time and effort you may previously have put in, your income starts from nil every month.
- The immense pressure of sales targets. Set by those who do not sell and increased every time you achieve them.
Pros to SME Business Opportunities include:
- Success pays off. Your small business can turn into a giant business that makes you large sums of money, and you become extremely rich and successful. It can, of course, also not…
- Allows you to pursue something you may always have been passionate about or just wanted to try.
Cons to SME Business Opportunities include:
- You need a usable idea.
- 70 – 80% of businesses fail in the first 5 years!
- Requires large amounts of money and often continuous supplies of capital.
- Requires business knowledge. Most businesses fail as a result of bad ideas being implemented badly. Few have the required experience of business to successfully navigate the minefield of regulation, competition and market behaviours required to succeed in business.
- Profitability time frame. Most budding entrepreneurs believe their business will turn a profit from day one or within 6 months. The reality is that most major successes in history have taken 10 to 20 years before turning a profit. Can you fund your business that long?!
- Impossible to run an SME and still hold down a day job. This is a common mistake made. The belief that while the business is starting, I’ll keep my day job to fund it. It is the early days of any business that requires the most time and input rendering day jobs impossible.
- Customers delaying payment can cause havoc with your business, particularly if you’re short on cash reserves or have a little or no access to credit.
(2) Investment Income
Investment Income straddles both Active and Passive income and has therefore been placed in its own category for the purposes of this article. Investment Income includes income and gains generated from investments in:
- Stock Markets (Including FOREX, Crypto Currencies, and share dividends).
- High-value items, such as rare cars, art, and other luxury items.
Pros of Stock Market Type Investments include:
- Capital and dividend growth potential. In growing economies or during times of bullish market behaviour, growth can be substantial.
- It offsets inflation. Over extended periods of time e.g. 25 – 50 years, stock market type investments have in general outperformed inflation. Even after tax.
- Where successfully invested over time. Investments can create passive income.
Cons of Stock Market Type Investments include:
- Requires money to make money. Too few people have spare money to speculate on the stock markets.
- Requires a tremendous amount of experience and time to make and maintain gains. Any experienced trader will tell you that this is not a hobby.
- This is a largely speculative environment with no guarantees at all.
- To the inexperienced gains made can be lost to fees.
- There is a relatively high risk of loss in the short term. This often spooks new or amateur traders and causes them to pull out what little money they have left before any longer-term gains can be made.
Pros of Property include:
- Property generally increases in value over time. It does take time though and patience during downswings.
- The gains are automatic and do not require any input from yourself.
- Gains can also create further debt leverage for you allowing for growing portfolios of property over the long term.
Cons of Property include:
- The last two decades have seen unprecedented swings in property prices globally from incredible highs to incredible lows. This remains a significant risk for those with limited resources.
- Currently property globally is in a downward period with a number of countries even threatening to expropriate land without compensation. For all intents and purposes, this renders land worthless in those countries.
- To purchase property requires a large amount of capital. To many, this is just not available to them.
Pros of investment in High-Value items include:
- Significant gains can be made over the long term.
- Can be highly entertaining.
Cons of investment in High-Value items include:
- Purely for the rich and famous!
- Requires large amounts of excess capital.
- Highly speculative.
- Again, it requires extensive experience to know what to buy and when.
- Requires costly, safe, secure and environmentally controlled storage.
- Often yields gains decades after being purchased.
(3) Passive Income
Passive Income is income that is produced whether you are working or not at any given time. Earning money this way is therefore not dependent on input at a specific point in time and is not controlled or limited by a 3rd party. It is often considered the greatest financial freedom to be in the position of receiving passive income.
Passive Income includes:
- Rental income (From fixed or moveable property).
- Annuity Income. This is income that is earned on a recurring basis with little to no input from yourself. It is created from an asset you create, control, can price and sell and is transferable upon your death as part of your estate. It is usually created out of something as simple as your own contact list and does not include the purchase, distribution or sale of products by yourself but leverages your own circles of influence to create a recurring passive income.
Pros of Rental Income include:
- Money is received without work or time input.
- Can be established contractually for extended periods of time.
Cons of Rental Income include:
- See “Cons of Property above” and add:
- Requires constant administration.
- Requires constant property maintenance.
- Can be costly.
- Can be time-consuming on large portfolios.
- Risk of default payments resulting in further legal and other costs.
Pros of Interest income include:
- Compounds on itself over time! This is the most powerful attribute of interest income but only where it is left to accumulate. Drawing down on it defeats its compounding feature completely.
Cons of Interest income include:
- Requires cash in the bank to start with.
- Must be left untouched.
- Can be crippling if you have borrowed money and the interest is being charged and compounded against you.
Pros of Annuity Income include:
- Extremely low risk.
- Little to no capital required to start.
- Little to no administration required.
- Does not require the purchase, distribution, storage or sale of physical products by you.
- Creates a recurring income that is available no matter your current circumstances.
- Creates an asset that can be priced and sold.
- Creates an asset that is inter-generational and forms part of your estate upon your passing.
- Grants you the power to leverage what little time and money you have in the creation of potentially limitless money earning potential.
- Does not require staff, offices, etc.
- Fastest growing and most consistently growing industry in the world for the last two decades.
- Recognised as the new form of “traditional” employment in the 21st
Cons of Annuity Income include:
- Requires the application of your time over extended periods of time (5 to 10 years).
- Requires persistence and determination (although one could argue that this applies to all described categories above).
- May trample on your ego in the beginning. Mainly because it does not look like a traditional job and remember you have been trained to automatically reject anything that does not look like a job!
All forms of income, no matter their description fall into the above categories. It is now merely a matter of deciding what form of income to pursue. Here is an easy decision tree to follow in establishing what form of money earning would be best suited for you to pursue. The decision tree is not designed for the rich. For the rich, the world is your oyster. Pursue any form of income you feel best equipped to. The decision tree is designed for the rest of us. Those who are either employed or unemployed, those who do not have cash in the bank to spend on anything other than day to day survival, and those of us who have extremely limited time and experience as a result of the years of constraint our traditional jobs have put on us. For these, 99,5% of the world’s people, this is our decision tree to creating multiple sources of income for ourselves and creating proper financial freedom for ourselves.
Work your way through the tree by answering the following questions?
- Do you have large amounts of cash personally or available through debt from your financier?
If Yes, move on to question 4.
If No, move to question 2 below.
- Do you have at least a moderate amount of experience in running your own business, property or speculative investment?
If Yes, move to question 5.
If No, move to question 3 below.
- The above two answers eliminate the following forms of income creation for you:
- Start your own SME business.
- Investment income – all sub-categories.
- Interest income.
- Rental income.
- A traditional job – It is assumed that you either have one already or are unable to. get one and hence your completion of this decision tree.
Remaining options include:
- Become a product sales person and earn transactional cash.
- Start building your own network, leveraging your time and resources to create a permanent annuity income.
Therefore, would you consider yourself a sales person who has proven this through actual prior sale experience?
If yes, move to question 6.
If no, your only choice, as it is with 99% of people across the globe, is the creation of your own, controlled and permanent income through a non-product based annuity type business. Peruse the pages of this website as an example of such an opportunity.
- You are amongst the top 1% of the world’s population and considered rich by most definitions. You may choose from any category of income to pursue.
- You are likely then already involved in running your own business or reading in speculative investments. If this is the case, then focus is critical. A dilution of your efforts with any one of those categories of income will spell financial disaster for you. Do not, therefore, add any additional forms of income to your portfolio but remained focused on what you are currently doing until you succeed.
If however, you do not wish to continue working in these categories but would like to abandon them to pursue alternative forms of income move back to question 3 above.
- If you are not already involved in commission type sales work then you could at this stage consider adding this form of income to your portfolio. It is important to note though that if you do not have suitable amounts of free time you will not be able to fully maximise this category of income. It is time intensive and usually requires upfront cash investment in the items you will be selling.
If however, you do not have time or cash to invest or simply do not wish to pursue this category of income move to question 3 above.
It may be easy for you to dismiss this article as biased or favouring annuity income type businesses. However, if you do a proper analysis both of what is contained in this article and what is truly available in the 21st-century global economy, it is likely you will return the same result as we have. The ability to make extra money has become the single most important factor of financially surviving this century. It is no longer up for educated debate, the traditional job is dead, it is time now to take back control of our income.