The Importance Of Having Multiple Streams Of Income

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I was listening to an audio seminar sent by Bro. Bo Sanchez to Diamond EntrepCircle Members of the Truly Rich Club while I was on my way to Makati. The topic that I was listening to was to "Create Money Machines."

What Bro. Bo was saying in this audio talk is that it's more important to have multiple money machines or streams of income, instead of having more money. He said that more often than not, people pray to God for more money instead of praying for multiple streams of income.

While having more money is not bad and is a short term solution to financial problems, it is better though to have multiple streams of income instead for your long term financial goals. Having more money but with only one or even two source of income is not a formula to fixing a financial problem or achieving financial freedom. With the uncertainty of job security and the continuing financial influx some countries are experiencing, its never been more important to have multiple streams of income to counter whatever financial problems may arise due to downsizing or the continuous recession of some countries.

If you only have your job or your business as your only source of income, you leave yourself vulnerable to the negative impact of financial problems that the world constantly experiences. But if you have multiple sources of income, you'll be able to weather any financial storms that come your way.

But how do you create multiple streams of income?

In the audio seminar that I was listening, Bro. Bo mentioned two types of money machines, the Manual Money Machine and the Automatic Money Machine.

The Manual Money Machine is a form of money making machine that requires you to be present in order for it to work. These machines are having a job or being self-employed. Having a job or being self-employed requires you to be present in order for your machine to make money. You're trading your own time and talent to make money and without your presence, money won't be coming.

The Automatic Money Machine is a form of money making machine that can be set-up in a way that it makes you money automatically even if you're not present there. This is another term for money working for you and passive income. There are three types of automatic money making machines: paper assets, real estate and business.

Paper assets are stocks, corporate and government bonds and mutual funds. You make money through the high interest rate that it earns when you invest your money in these assets. For example, your money can earn as high as 30% interest annually when you invest it in the stock market (see my article on stock investing vs stock trading to learn more about the stock market). The downside with paper assets is that interest rates are not guaranteed because it depends on a lot of factors.

In real estate you make money when you sell property at a higher value than the value that you've bought it in (similar to the buy low and sell high policy of the stock market) or if you rent you're property out. I prefer the latter method because it puts money in my pocket in a monthly basis whether I work or not and I still get to keep the asset. The downside of real estate is that you need big money to purchase a property, unless you're financially literate and you already know ways to buy property with little to no cost at all to you.

The last type of automatic money making machine is businesses. Having a business is different to being self-employed. A self-employed person needs to work in order to make money, while a businessman can still make money with his business even if he doesn't work for a year or more. For me this is the most financially rewarding asset of the three, but it is also the most difficult asset to set-up. It requires hard work at first and a lot of financial education to ensure that you'll put up a business that will succeed. But once you get over that and you set-up your business successfully, you'll have an asset that can make you a lot of money, even if you're not working in it.

Most people have Manual Money Making machines, working for a company or working on your own, to create money. The problem with this money making machine is that you trade your own time and talent to make money. This leaves you little to no room at all to multiply it to create more money making machines for you. So you work to also create Automatic Money Making machines. The beauty of these money making machines is that, since it's automatic, you don't need to dedicate your attention to them once you've set them up successfully, allowing you to create more of them and in the process create more money for you.

Remember that it's not enough that you aim to just have more money, more money won't make your financial problems go away or help you achieve your financial goals. Instead aim to have multiple streams of income and have money continuously flow to you from different directions.