How You Can Also Create a Multi-Variate Portfolio of Investments Like Rich People

Create a Multi-Variate Portfolio of Investments Like Rich People

Lately, in online culture and the real-life work world, there’s been this idea of hustling touted by entrepreneurs and growth hackers.

A lot of people have woken up to the fact that depending financially on your day job is akin to committing harakiri. That’s why, everybody seems to have an increasing awareness to develop a second stream of income.

I understand the temptation of monthly salary is hard to resist. But the idea of your monthly salary being the only income route is a dangerous one.

The central idea behind this article is to figure out and build different ways of alternate income that when combined could replace your monthly salary, if such circustances ever arise.

While it sounds attractive to have an alternate income stream, developing it requires hard work. And, before you come down to developing it, you must know what kind of income options there are.

It’s an established fact that rich people don’t rely on a single revenue source. Take any business, any industry, any promoter – if you deep dive into their modus operandi, you’d find more than one source of income.

I am not saying you can be that rich person tomorrow. But you certainly can simulate what they have done, that is, curate and cultivate the alternate income streams.

Many people expand their hobbies or interests into their side hustles, many choose the more passive route and invest in fixed income instruments.

These are healthy options to consider to supplement your monthly income, but let there be no confusion, none of them is a risk-free option. Ideally, you should have at least three of the following in your portfolio.

So before I explain the six different ways of creating an alternate income stream, please assume hard work as an underlying factor in all of them:

1. Side Hustle Income

You may already be familiar with this type of income. For the uninitiated, it is the income you get when you engage in part-time jobs or take up freelancing gigs while keeping your day job.

A lot of people have started online businesses capitalizing on their experience of working in a domain for a long time. I know someone who was a copywriter for an ad agency for a long time.

A couple of years ago, he started a blogging website and slowly got into making short videos. Once he got the response, he expanded into teaching copywriting. He built digital products, got an initial set of subscribers, reinvested the money from those subscribers into improving the products and just kept the cycle going.

Don’t be dismayed if you don’t have a blog. Creating one is easy, you can find the details here. However, turning it into a money-making machine needs consistent efforts and perseverance.

If your blog can generate 25000+ pageviews every month, you can turn on the ad income faucet. The monies may not be huge, but the recurring consistency could alleviate your stress.

As your blog grows, you can add affiliate income and income from selling digital products to the list. Not just that, slowly, your currency amongst your community would also grow. You would attract right kind of people. This could be your ticket to speaking opportunities. More opportunities, more side income.

2. Fixed Interest Income

The fixed interest income is reliable and boring. Yes. It guarrantees peace of mind, but not the excitement that could make you jump in your bed.

If your risk appetite is thin, you are better off investing in the PPF (public providend fund) – a small savings instrument. It can give you a passive income (as I write, interest rate stands at 7.1% per annum) without you taking a massive risk.

Keep adding small amounts to your PPF account and watch it grow into a reliable source of income. The bigger your corpus gets, the fatter your yearly interest gets.

Even if you are unable to add more money after a time, the annual compounding will keep working in the background, inflating your purse.

The best part is that both partial and complete withdrawls are tax-free. For more about PPF, read here.

3. Rental Income

Rents can give you a steady, income stream while your property appreciates in value. Rental income is also a great instrument for passive investors. You can reap sustainable income at much lesser risk.

In India, you can claim a deduction of 30% towards home repairs and improvements from the gross rent.

While an investment in real estate is a solid idea, it does have a few pitfalls. As a landlord, you can unwittingly become host to a whimsical tenant. This can hamper monthly cashflows and create other issues especially if you are dependent only on rental income.

4. Dividend Income

They say, if you want to be rich, invest for capital gains and if you want to be free, invest for income. This is where dividend income becomes focal to your future plans.

Dividend income comes from the distribution of company earnings to stock owners and shareholders.

Unlike rental income, however, dividend income is a slow starter. If you are a small investor or you are new to dividend investing, it will take some perseverance to build it all up.

To create a sound pipeline of regular dividends, you will have to do some digging and look for companies that have a solid track record of giving dividends. If you are in India, you can do you number-crunching at trendlyne.com and if you are in the US, you can deep-dive into dividend.com

Sometimes, however, a company is legally required to pay out the income as dividends to the stockholders. In the US, examples of these include real estate investment trusts (REITs) and business development companies – they are legally required to pay out 90% of their taxable income to shareholders.

As long as you’ve owned the stock for at least 60 days (90 for preferred stock), you are qualified to get yourself some dividend income.

5. Capital gains

When you own an investment or a piece of real estate, you’ll come across the scenario that involves the value of either of these increasing – and many times, it will end up being worth more than what you purchased it for. This is where capital gains come into play.

While you can’t access the capital gain until you sell your investment or real estate, it’s a good idea to keep an eye on the prices as they fluctuate and see if there will be an increase in the future worthy enough of having that investment be sold.

Be cautious – capital gains have to be claimed on income taxes. 

6. Royalties

If you’re looking to literally make money in your sleep, this is definitely the best option for you – as long as you don’t mind putting in work at the forefront.

Royalties are earned when a person or company purchases something you helped create and sells it for profit. Examples of this are if you created a piece of artwork, wrote a book, produced a song, or have a copyright or patent for something.

Owning a franchise is another way to earn royalties – all businesses under your franchise will be giving you a cut of their profits.

Again – a lot of legwork has to be done in the beginning to make that art or build that business, but once you get to the point of success, just sit back and watch the money roll in.

Do you use any of these techniques to give yourself a little extra cash every month? Are there any techniques you use that we may have missed? Let us know in the comments!


Published by Amitesh Jasrotia

Dreamer. Bibliophile. I love to read business books and research papers. Taking notes is a habit and self-improvement is an obsession. I love hanging out at bookshops, libraries, and museums.

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