- Small business owners should invest their income or business profit to generate multiple income streams.
- Forex trading is becoming popular nowadays or you can try investing in other businesses and startups.
- Other tried and tested methods are dividend-generating stocks and real estate.
Editor's Update 07/07/20:
There are three types of income: active income, passive income and portfolio income.
1. Active income - income generated from active involvement in work, e.g. wages, tips, commission, etc
2. Passive income - income generated without being actively involved and with no additional effort, e.g. bank deposits, rental income, dividends, etc
3. Portfolio income - income generated from investments, e.g. capital gINA ns interest
An income stream is simply a regular channel which provides you with a regular income. There are several types of passive income streams, i.e. income that does not require you to be actively involved. Some examples of passive income streams include:
- Real estate
- Capital gains
Earning a little bit of extra money can change your life as an entrepreneur. Smart investing allows you to expand business operations, boosts your borrowing power, and attract foreign investors.
How to diversify your income streams
You should always be seeking to diversify your income stream, even if your business isn't going through tough economic times. Consider these low-investment options to boost your income.
1. Invest in startups
When you invest in a startup business, you buy a piece of the company with your own money and become a shareholder. In the past, only well-connected people with significant venture capital could invest in newly established businesses. Now, it’s a completely different story. Even average people can do it.
Should you even consider investing in startup companies given how risky it may be? Yes.
While you won’t become a billionaire, you can diversify your investment portfolio, and you’ll have the satisfaction of supporting your peers. If your small business is in a good position, think about acquiring other companies, and you may make big money.
It’s possible to make the investment in person or via an online platform, and receive stock. After making sure that you have access to sufficient capital, investigate the risks involved. Not all newly established businesses will be successful. Some of them fail during their first year.
Be picky when choosing companies to invest in. Focus your attention on successful organisations that require additional financing. If you can afford to, diversify your investments across industries. Don’t put your capital into too many firms. Stick to a small and manageable number.
2. Dabble in stocks and shares
Your profit and income may be sitting in a passive investment account, which doesn’t grow your money by much. Have you ever thought about investing in the stock market? If no, you should. Thanks to the stock market, you can create a viable passive income source.
To build enough passive income to survive, it’s necessary to invest in dividend-generating stocks.
You’ll be rewarded for putting your money into successful ventures. Companies will make dividend payments even if they don’t make significant profits. Why? Because they don’t want to let down investors. Here are a few simple tips for investing in stocks that pay good dividends:
- Identify a good dividend-paying stock
- Evaluate the company
- Figure out how much stock you want to buy
Let’s not forget about how lucrative and versatile shares can be. People have been buying shares as a proven way to diversify their income streams. The crazy stuff started when the New York Stock Exchange first opened its doors back in 1817. The rich and the ruthless viewed shares as the main investment destination.
What about now? Unsurprisingly, many people have followed suit.
In Australia, for instance, it’s simple and convenient to start investing in the stock market. If you wish to buy and sell shares in listed companies, you have to set up an account with a broker or use an online brokerage. The broker will place the trades on your behalf.
Shares provide long-term capital growth, which is why they are great financial investments. Attention and care need to be paid to the fact that share values fluctuate based on the supply and demand. This volatility may make the journey a little bit more difficult or uneasy for you, but there is nothing to worry about. As long as you have a diversified investment portfolio, you’re covered in the case of a losing stock.
3. Forex trading
Many people confuse forex with stocks, although they couldn’t be more different. When you trade in forex, you’re able to buy one currency and sell the other at the same time. It’s completely different from the way you trade stocks.
You have two options. You can buy the shares in a stock or sell the shares in the stock. You can’t have it both ways. What is important is that you have the opportunity to earn passive income in the forex market. With minimal effort on your part, of course. Financial institutions, commercial companies, and even investment firms participate in the foreign exchange market.
There are many reasons why you should consider foreign exchange trading. Anyone can enter start forex trading. This type of investment is easy to comprehend even if you don’t have a degree in finance and economics. All you need to start buying and selling currency is an Internet connection and a smart device. You can finalise financial transactions from the comfort of your home or at the office, if you have time to spare, of course.
The good news is that you don’t need a lot of money to start trading in the FX market. Minimum capital is required, so you don’t have to dig deep into your pockets. Finally, and importantly, you’ll be able to earn important bonuses. Trading platforms offer rewards, such as deposit bonuses or bonuses for loyal clients.
So, what are you waiting for? According to the experts at FX-List, it’s best to do your homework before investing money in the forex market. Buying and selling currencies isn’t an activity that carries a high risk.
However, you can lose a lot of money if you’re not educated. Find as many resources as you can online or take courses. You’re bound to come across websites that provide insight into foreign exchange markets and share tips for beginners
Build a strong foundation in the knowledge and understanding of forex trading. Most importantly, create an action plan. To be successful in your efforts, and control your losses, you need a great trading plan. Put in as many hours as you can. As a trader, you will trade real money and the last thing you want is to lose all your hard-earned money.
4. Invest in real estate
Did you know that you can realise attractive returns from multiple income streams? It’s true. Make sure to include real estate investing on your list. Properties tend to be less volatile than stocks, so you can count on higher returns. With real estate, you can earn passive income for life.
However, you should understand that not all property investments are created equal. This basically means that you should be very careful when selecting an investment property. Take into account the location and see whether the property is close to public transportation. Noise or traffic can possibly deter buyers and renters.
Real estate markets that are great for capital growth are typically expensive to buy in. Take Sydney, for example. Median house prices won’t fall any time soon. To reduce the overall risk of your investment portfolio, try investing in various assets.
As a precaution, stay away from the most expensive real estate markets. Most importantly, always research for investments and monitor what your assets are worth and where the markets are going in this fluctuating economy.
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