10 Ideas for Multiple Cash Flow Streams
Financial planners often talk about the importance of having multiple cash flow streams and not relying solely on one (such as your job). It's important because in the event you do lose your job - which seems likely in the current recession, you can still rely somewhat on the other cash flow streams to cover your expenses while you are looking for another job. Also, when you are employed, those multiple cash flow streams can be invested to generate more income if not needed to cover living expenses.Â
Here are ten ideas for creating multiple cash flow streams:
Invest in Bitcoin / Crypto interest-bearing accounts - Most crypto exchanges today offer interest-bearing investments to deposit your cryptocurrencies in; for example Crypto.com offers 6.5% interest on Bitcoin deposits and 18% interest on their CRO coin and varying rates on many other coins; if you plan to hold your coins for the long haul, why not earn some interest on them?
Invest in dividend-paying stocks - Buying high-quality "blue chip" companies that pay a good dividend is always a great way to generate passive income; as a buy and hold investor, you shouldn't worry about temporary fluctuations in the stock price and just collect the quarterly dividend in cash, while the best companies raise the dividend over time which increases your yield on investment as well; last week I wrote about AT&T (T); there are also riskier, higher yielding stocks that pay dividends monthly - some that I own include Broadmark Realty Capital and Prospect Capital
Invest in real estate - Owning a residential income property that cash flows positive is the best way to develop passive income as well as long-term capital growth, but if you don't have enough money for a down payment you can also buy shares in a residential real estate investment trust - currently largest ones are paying about a 4% yield; these include Avalon Bay, Essex and Equity Residential. Even in a recession, residential tends to outperform most of the other real estate property types, so it is a relatively "safe" real estate sector to invest in.
Emergency fund - Your emergency fund should be invested in low-risk Treasury bills or savings accounts, which don't earn much interest now, but no matter how small the earnings are these represent an additional source of cash flow
Invest in music royalties - While the pandemic and related shutdown of live entertainment venues has impacted this asset class somewhat, streaming music and radio play continue to be strong sources of royalty income and music royalties generally don't tend to be correlated at all with the stock market and therefore provide some diversity to your investments. Royalty.com is a great site to buy and sell music royalties that I have used in the past.
Self-publish books on Amazon - If you are experienced in a particular area, it's fairly easy to write and self publish a book on Amazon and create multiple formats including audio, Kindle and paperback; promotion can be challenging and expensive if you decide to advertise, but you do earn royalties for every copy sold which can add up over time
Options Investing  - I have found a couple of relatively low-risk strategies to generate extra cash flow in options trading, which include selling covered calls (selling call options against stocks you already own in your portfolio at strike prices above what you paid for the stock so you will always make money) and selling put credit spreads (selling "out of the money" put and buying a put at a lower value as "insurance" in case the stock goes down); I have found the key to selling put spreads is making sure the stock you buy is a "household name" like Coke, McDonalds, Visa, Walmart, Target, etc. and has shown either a flat or upward trend in its recent stock price action, always sell "out of the money" and also keep the time-frame to between one week and five weeks while managing the size of each position to manage risk; I have learned that buying options is really a lot like gambling where you can have huge 10x gains or lose everything, but selling options is how the professionals make consistent returns
Sell items on EBay - If you have things laying around the house you don't need, especially popular tech items, listing and selling on EBay can be a great way to generate extra cash and declutter your house; see my post on this topic where I share what I have learned over many years selling on the site here.
Cut household expenses - A penny saved is a penny earned they say, so take some time to go over your household expenses and see if there's anywhere to trim back - start with your biggest expenses and work your way down the list (maybe you can refinance your mortgage or move to where the rent is lower or reduce your car insurance premium by switching to another company, as examples)
Open an online store - I'll say I have not done this yet, but I always read about how many people are so successful in doing this; honestly the thought of having to deal with the customer service aspect isn't appealing to me nor the prospect of having to compete with the likes of Amazon, but the growth of online websites like Shopify would tell you there's obviously something there.
Of course, you will need to do your own homework and invest where you feel comfortable. I'm not recommending any particular stock or strategy and full disclosure, I do own / manage positions in the stocks mentioned above.  Stay safe, healthy and positive. Â
I hope you find this post useful as you chart your personal financial course and Build a Financial Fortress in 2020.
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