An income stream is a source that creates a cash flow that covers any and all expenses derived from it, and leaves you with profit in your pocket. Understanding how cash flows and having the ability to identify the different streams of income you could tap into, is the beginning of building a world of abundance around you. Most people live in a very small “world”, because the only stream of income they can identify with is their job as an employee.
The Employment Stream
A job is indeed one of many ways to create a cash flow from the employment stream, but is limited by the number of hours you can legally work to earn that paycheck. People may get a second job to loophole this obstacle, but when one does that they are not creating a new income stream. When you get a second job you are just branching off the same stream, the Employment Stream. One branch of the stream may be thicker than the other depending on the salary of each, but again you are limited by the number of hours you can physically put in during a work week.
Ideal Use: This stream is best used for supporting a business in your community or one of your own, and/or earning enough income to cover your cost of living expense as well as supplementing investments that build up your other income streams.
The Real Estate Stream
This is a passive stream of income that’s collected in the form of capital gains from short term projects, or long term residuals from rents or leases. Real Estate could be flipping a house, renting space (whether that’s an apartment, commercial space, or just storage/land), land development, and so on. Your home is not a real estate income stream unless it is creating a cash flow in some way. If you turned your two story garage into a “guest home” for rent, then you have just created a potential real estate income stream.
Ideal Use: The number one use for the real estate stream is to supplement or pay for your own home. Other uses for this stream would be to fund other real estate investments, and/or increase the growth of your other income streams.
The Paper & Commodities Stream
The paper & commodities income stream is made of stocks, bonds, 401k & IRA accounts, ETF’s, royalties, licensing, notes, patents, precious metals and other agricultural products (corn, coffee, gas, oil). The paper & commodities stream is a cash investment vehicle used to generate a return or hedge against inflation. It is the best example of your money working for you! If you have ever given someone a loan in exchange for an I.O.U that said they would pay you back with interest, then you have created a paper income stream. You could have kicked back and waited to collect the payments on the loan or you could have turned around and sold that I.O.U to someone else.
Ideal Use: This is a good stream to use towards securing a retirement fund, because your money can compound with each successful investment. Some other uses could be a place to park your money to maintain it's value, supplement living expenses, and/or investing in your other streams.
The Business Stream
The business income stream comes from one or more assets you own that generate a cash flow for exchange of goods or services. If you have monetized a hobby, enrolled with network marketing company, created your own handy man service, or written an e-book to be sold on your blog, then you have created your own business income stream. Now you could be self-employed, working for your own business, in which case that source of income would dovetail with the employment stream. If you are an absentee owner, micromanaging the business, or if it is fully automated then you have created a “purebred” business income stream!
Ideal Use: It’s YOUR business what you do with this income stream! With each one of my successes I have enjoyed the fruits of my labor, and then I figured out a way to give back to those who are less fortunate.
True Diversification
After learning about these four different income streams, you can get a visual of where most of your cash flow is coming from. Being able to identify what stream any future opportunity will fall into, will help you focus on the income streams you would like to strengthen opposed to constantly putting all your eggs in one basket. True diversification isn’t owning multiple stocks, or a bunch of properties, or multiple jobs, or a dozen businesses, true diversification is obtaining a little bit of all the above!
A job is indeed one of many ways to create a cash flow from the employment stream, but is limited by the number of hours you can legally work to earn that paycheck. People may get a second job to loophole this obstacle, but when one does that they are not creating a new income stream. When you get a second job you are just branching off the same stream, the Employment Stream. One branch of the stream may be thicker than the other depending on the salary of each, but again you are limited by the number of hours you can physically put in during a work week.
Ideal Use: This stream is best used for supporting a business in your community or one of your own, and/or earning enough income to cover your cost of living expense as well as supplementing investments that build up your other income streams.
The Real Estate Stream
This is a passive stream of income that’s collected in the form of capital gains from short term projects, or long term residuals from rents or leases. Real Estate could be flipping a house, renting space (whether that’s an apartment, commercial space, or just storage/land), land development, and so on. Your home is not a real estate income stream unless it is creating a cash flow in some way. If you turned your two story garage into a “guest home” for rent, then you have just created a potential real estate income stream.
Ideal Use: The number one use for the real estate stream is to supplement or pay for your own home. Other uses for this stream would be to fund other real estate investments, and/or increase the growth of your other income streams.
The Paper & Commodities Stream
The paper & commodities income stream is made of stocks, bonds, 401k & IRA accounts, ETF’s, royalties, licensing, notes, patents, precious metals and other agricultural products (corn, coffee, gas, oil). The paper & commodities stream is a cash investment vehicle used to generate a return or hedge against inflation. It is the best example of your money working for you! If you have ever given someone a loan in exchange for an I.O.U that said they would pay you back with interest, then you have created a paper income stream. You could have kicked back and waited to collect the payments on the loan or you could have turned around and sold that I.O.U to someone else.
Ideal Use: This is a good stream to use towards securing a retirement fund, because your money can compound with each successful investment. Some other uses could be a place to park your money to maintain it's value, supplement living expenses, and/or investing in your other streams.
The Business Stream
The business income stream comes from one or more assets you own that generate a cash flow for exchange of goods or services. If you have monetized a hobby, enrolled with network marketing company, created your own handy man service, or written an e-book to be sold on your blog, then you have created your own business income stream. Now you could be self-employed, working for your own business, in which case that source of income would dovetail with the employment stream. If you are an absentee owner, micromanaging the business, or if it is fully automated then you have created a “purebred” business income stream!
Ideal Use: It’s YOUR business what you do with this income stream! With each one of my successes I have enjoyed the fruits of my labor, and then I figured out a way to give back to those who are less fortunate.
True Diversification
After learning about these four different income streams, you can get a visual of where most of your cash flow is coming from. Being able to identify what stream any future opportunity will fall into, will help you focus on the income streams you would like to strengthen opposed to constantly putting all your eggs in one basket. True diversification isn’t owning multiple stocks, or a bunch of properties, or multiple jobs, or a dozen businesses, true diversification is obtaining a little bit of all the above!
