The multi-billionaire Warren Buffet advises investors to “Never put all [your] eggs in one basket”
In a real life risk is something that accompanies endeavors; the higher the risk the higher the profit. Thus, one needs to consider diversifying her/his investments to generate income so that if one investment portfolio fails then you have a plan B.
Experienced and successful entrepreneurs such Robert Kiyosaki, American businessman and founder of Rich Dad Company and author of many business mindset books, including the most famous Rich Dad Poor Dad series of books; recommends ensuring second source of income. Particularly for salaries earner, salary is believed to be a seed for investment to create wealth and subsequently own a business.
Develop a sound financial management skills.
The objective of developing multiple streams of income is to have not just one, but a number of lifetime income streams flowing into your cash flow pool. Ideally, you want to get to the stage where you have 10 separate streams flowing of all in the time (start with 1 each year).
Do you need a business idea?
Thompson Meyer, proposes the following business ideas for those who need a second source of income:
- Trade or business income with respect to trading financial instruments or commodities
- Trade business income that is passive activity with respect to the taxpayer
- Capital gains other than derived from a trade or business
- Income from interest, dividends, annuities and royalties, and
However, these listed investments ideas are capital-demanding. One would wonder how to accumulate all the amount of money required to start that type of investment.
Here are steps to generating a lifetime of unlimited wealth as suggested by Robert C. Allen:
Now let’s start with the very first step, which is saving and investment.
This graphs shows that of the amount you decided to save, mostly 20% of your income; use 10% in sort of saving such as life insurance and 90% in diverse investments. These include low to high risk investments, and remember the more high risk the more high return investments are.
So, put 50% of the investment budget into long-term low risk investments such as assets that gains value with time, 30% in the moderate risk investment including traditional store based businesses and network marketing, and the remaining 20% in short-term high risk investments.
The later include hot business deals that bear high profits but not sustainable; these include online and digital business, and crypto-currencies portfolios. And experts recommend that you invest here what you can afford to loose.
Briefly, now that we have gone through ways to generate the capital for investment, let’s start taking action; start small and the time will come to make it big.
In our next topic we will dive into how to make multiple streams of income, and we will explore opportunities out there that one can try. I will give you real example of successful investors who went through the same ways and became a self-made millionaire.
If it is possible to some individuals to start small and become a millionaire, why not you!?