Dr. Stephen Akintayo, one of Africa’s most influential investment coaches, Lead Consultant/Founder, Stephen Akintayo Consulting.
Let’s start with a story, shall we?
Ronald James Read, an American philanthropist, investor, janitor and gas station attendant was the first in his family to graduate from high school. He was a low-key kind of person. He fixed cars at a gas station for 25 years and swept floors for 17 years. At age 38, he bought a two-bedroom home for 12,000 dollars and stayed there for the rest of his life. At his death at 92, he made international headlines. Why? After he passed on, his net worth was about $8 million.
You may ask, where did an ordinary janitor and gas station attendant get all that money from? It is important to note that for you to sustain and enter into a level of wealth and stay in the circle of millionaires, one stream of income can never produce that result. This is a mindset that we need to be realistic about, especially in this economic drain the whole world is experiencing.
It will also interest you to know and understand that there are multiple ways one can attain or sustain the level of wealth that transcends generations. That’s what the story of Ronald Read tells us. A janitor and gas station attendant turned investor and philanthropist.
There was no secret, no lottery win or big inheritance. So how did he do it? By investing his savings in what he understood and diversifying class assets of blue chip stocks. Note the words, “diversified” and “understanding.”
This leaves us with two big thoughts: Your knowledge can be tied to how much you make and how successful you become. You can’t attain financial independence with multiple struggles and a single source of income.
Sadly, the world we live in today has been describes as the word “VUCA”—volatile, uncertain, complex, ambiguous. So, as an investment coach and consultant, I’d like to help you break out of this VUCA mindset by digging deeper into the seven streams of income every millionaire should have and how you can get started diversifying. Some even say there’s an eighth, which I believe is the most important of them all.
1. The Active Income: The most basic of the seven—where your income is the reward of your service. You work, they pay. But unlike the other six, your risk can be low, and so can your reward.
2. The Profit Income: This is derived from buying products and then selling them for more than their cost.
3. The Interest Income: The money you make from lending yours to others. This is the double-edged sword that can bring more, but can also allow you to lose all.
4. The Royalty Income: This allows your previous labor to bring you reward and ensures others reward you for them. It can include any payment you get from a patent, intellectual property or natural resource you own.
5. The Capital Income: This is the money you make from buying and selling assets.
6. The Rental Income: Similar to capital income, it is the money you gain from owning property and charging people to use it.
7. The Dividend Income: The money received from investing in companies. This practice has been around for a long time and has led many to the realm of wealth.
8. Curiousity: Finally, I believe the eighth source of income—which I sadlly find some people lack—is inquisitiveness and curiosity. Arkad, of The Richest Man In Babylon, was curious, and hence his greatness. Your inquisitiveness can help you access the realm of wealth.
What you need to do now is put your inquisitiveness, thirst and hunger for a better financial position into use. You can diversify your income in many ways: fractional ownership of real estate, land banking, property flipping, shortlet apartments, rental income, e-commerce, dropshipping, mini-importation, stocks, shares, selling of intellectual property, etc.
How To Prepare
The following are some crucial details you should be aware of when thinking about expanding into different sources of income:
Thorough Research And Understanding: Before beginning a new source of income, it’s essential to fully grasp the market, the competition and any potential hazards. Learn more about the area of study to see if it fits with your abilities, interests and long-term objectives.
Financial Preparedness: Assess your financial condition to see if you have the funds to invest in a new source of income. Take into account the initial outlay, recurring costs and the length of time it would take to start seeing a profit. Make sure you have a sound financial strategy in place as well as a reserve fund to handle any unanticipated events.
Networking And Collaboration: Your new business might gain a lot by creating a network of connections and cooperating with others in the industry. Find mentors, business experts and others who share your interests in order to receive advice, assistance and prospective business prospects.
Potential Risks
Among the many advantages of income diversification are risk reduction and improved financial stability. It does, however, also have its own unique set of difficulties. The following are some typical difficulties that may come up with diversifying income:
Time And Resource Limitations: Managing various sources of income demands careful attention and resource management. Effectively juggling many tasks, businesses or investments can be difficult.
Skill Development: Different revenue streams could call for different knowledge and abilities. Often, increasing one’s revenue sources requires learning new things, honing existing abilities or even launching new businesses. The requirement for constant development and the learning curve might be difficult.
Time Management And Focus: Diversification can divert your attention from one area to another, thus impairing your capacity to concentrate on specific tasks or businesses. In order to ensure productivity and success, it is imperative to maintain discipline and prioritize work wisely.
Remember that diversification is the key to building trangenerational wealth. It can reduce your chances of experiencing large losses and having your wealth portfolio wiped out due to financial crises.
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