5 Ways To Generate Different Sources Of Income (2024)

In my role as a financial planner, I serve clients with varying levels of income.But, my goal is the same for everyone I meet. I want to help rich families continue growing wealth while helping young families reach their financial goals.

While a lot of my work revolves around getting clients into the right investments for their needs, I also try to help them understand the point of building multiple income streams.

I do this because, over the years, I’ve noticed that nearly all of my high-income and high net worth clients have several different streams of cash pouring in every month.

Heck, even I have several income streams going on, including my financial planning practice, blogging at Good Financial Cents, my life insurance website, investing income, and my online course for financial advisors. So, there must be something to this idea of having more than one income stream coming in, right?

How to Build DifferentStreams of Income

Simply put, more income streams equals more security. It’s hard to rely on a 9-5 job for your entire livelihood with layoffs and pay cuts always right around the corner. With multiple streams of income, on the other hand, you can avoid putting all your eggs in one basket – and use several streams of cash to grow rich.

If you’re angling for a brighter financial future and think several income streams sounds better than one, here are some strategies to consider:

#1: Diversify your investments.

As an investor, you should always seek to diversify your portfolio as much as you can. Just like you don’t want to bet your future on a single 9-5 job, you don’t want to bet the farm on a single stock, either.

There are a ton of ways to diversify your investments, some of which can send real income your way. By opening a brokerage account and investing in ETFs or mutual funds, you can earn real returns you can use to supplement your income. Of course, the flip side can also happen – as in, you can lose money. So, make sure you understand the risks before you dive in.

In addition to opening a brokerage account, you can also invest in peer-to-peer lending firms like Lending Club. I’ve been using Lending Club for a few years, and my net annualized return was 6.02% percent last year. Picking the right investments is easy since the platform offers automatic investing, but you can also pick your own notes if you're brave and want to learn thebest ways to leverage the Lending Club platform.

A colleague of mine, Long Island financial advisor Joseph Carbone, says one of his favorite strategies is helping his clients purchase High Dividend Blue Chip stock.

“Not only do you get an average yield of 2.5 to 4%, but you also get a growth component as well,” he says. “It works very nicely when you set up a brokerage account and use non-retirement funds.”

Obviously, there are plenty of other stock picks that offer dividends as well. At the end of the day, there are dozens of ways to diversify your investments, and you don’t have to choose just one.

#2: Offer a service or sell something.

Let’s say your investment portfolio is fully diversified, but you’re still aching for more streams of income. You can pick up a part-time job for sure, but there might be a better way to earn cash on the side. By offering a service or selling something, you can create a small side business that you get to control.

When it comes to side businesses, Texas financial planner Matt Adamssays your best strategy is finding something to sell.

“I’ve always been a proponent of families starting a home-based business, even one in the direct selling industry,” says Adams.

If you sell something – specifically through a third-party company - to diversify your income, you may be able to build passive income that builds slowly over the years. Unfortunately, you usually have to recruit people to sell under you to do this, and that is a deal-breaker for many.

And, let’s face it; not everyone wants to sling body wraps or nutrition shakes to their family and friends. That’s why offering a service is often one of the best, and least uncomfortable, ways to earn side income doing something you love. Maybe you want to clean houses or rake leaves or help people file their taxes. It’s totally up to you, and that’s the beauty of this option.

#3: Create a product.

Let’s say you want to sell something but don’t want to join an MLM. That’s perfectly reasonable, but that doesn’t mean you have any idea what to sell.

How about creating your own product? If you’re creative and savvy, you can dream up some new product and promote it Shark Tank-style. Can you think of a product you wish you had but can’t buy? Think outside the box until you come up with a new idea that fills a need.

Digital products are also huge these days. I mentioned already that I have an online course for financial advisors, but you can find courses of all kinds. If you have a specific skill you want to teach other people, setting up a web-based course through a website like Teachable.com is a good way to get started.

You can also write a book, says financial planner Brian Hanks, the author of How to Buy a Dental Practice.

Banks found a niche that wasn’t filled among publishers (books on how to buy a dental practice, obviously) and filled it. He’s been earning extra income ever since.

“You’re better than 99 percent of people at doing something,” he says. “Some of those people want to know what you know. The 1% that are as good as you are probably too lazy to write the book. So, do it!”

Thanks to platforms like CreateSpace, writing a book may not be as difficult as you think, either. You mostly need time and a passion for any topic, then the courage to put your ideas into writing and push forward.

#4: Start a passion project.

Andrew Rafal, Founder and President of Bayntree Wealth Advisors in Arizona, recently told me about his push to get clients to diversify their income streams. The Great Recession feels like an eternity ago now that the economy is looking up, he says. The job market is strong and consumer confidence is through the roof. As a result, it’s possible people are getting a little too comfortable.

But, you really have no control unless you are the boss, he says, and that’s why it’s imperative to find a way to bring in other streams of income.

Rafal says he tells his clients to find something they are passionate about, identify if there is a way to monetize that passion, and start small.

Maybe you’re obsessed with homemade jewelry and want to sell your wares on Etsy. Or, perhaps you’re well-versed on the Amazon reselling game and want to earn extra cash finding unicorns (rare and valuable products) and reselling them for profit. Maybe you’re obsessed with a specific topic and want to start a blog that can one day bring in advertorial and affiliate income.

The options are endless and it’s totally up to you. The most important step to take now is figuring out your passion and not letting fear or anything else stand in your way.

#5: Invest in real estate.

While it’s smart to diversify your investments among different investment classes, real estate is an entirely different animal. Becoming a landlord, for example, involves a lot more than shuffling money around or maintaining an investment account. Not only do you have to manage your property, but you have to deal with tenants and their issues.

But, there are huge benefits to be had, says California financial advisor Anthony Montenegro of The Blackmont Group. “The benefit of diversifying via real estate can include leveraging a bank’s money to buy property, tax deductions, and appreciation,” he says, adding that “the main reason to own real estate is the steady cash flow.”

But, let’s say you don’t want to own physical real estate. In that case, you could always invest in REITs (Real Estate Investment Trusts) or through a real estate crowdfunding website like Fundrise.com.

There are plenty of ways to invest in real estate without ever drafting a lease or shampooing dirty carpets but, like every other strategy on this list, you need to think outside the box.