Income streams

Two words we hear all the time these days. The more you have the better. So the advice goes.

The thing is though, not everyone wants to, or can. Pick up a business or side hustle outside of their job. Whether its time constraints or it's banned by their employer. This is not a route everyone can use.

So how to build another income stream?

One of the other options, in this case, is to make the money you already have work for you.

• This information is not financial advice. Remember to seek the advice of a professional financial advisor before investing. Also, remember that investments can go down in value as well as up*

Now that we have that out of the way. How can we make money work for us?

By investing it in something worth something more in the future than we paid for it today. Or something that pays us for the money we invested.

Savings accounts used to be an example of something that paid us for the money we invested in them. In that case, interest payments on our savings. Today with interest rates at all-time lows, that's not the case. Savings are important for many reasons. Just don't consider them something which will make you money over time.

So what can we make money from investing in?

Well, there are many options, but rather than go through them all. Let's focus on the big building blocks, stocks, real estate, and assets.

You can, of course, invest in private business as well, but that's a topic on its own. So today we won't cover it.

Please also remember that anything you make a profit on, you pay tax on.

Stocks

There are a few different ways to get into stocks and shares. The most common ways are through either an investment fund or through a stockbroker account.

The investment fund model is where you buy a mix of shares. So for example, if you invest $100 per month, your not buying $100 of one stock. You are buying a mix of different stocks for you $100. You pay a monthly or annual fee to the fund looking after your investment, and it is completely passive. Once you select the fund then its hand's off. They pick the stocks and over time, your investment should be worth more than you paid into the fund.

A stockbroker buys and sells the stock for their clients. In this case, you set up a trading account, and then you can buy and sell stocks through the broker. The fee you pay will either be a flat annual charge or a percentage charge on each sale you make.

There are 2 simple ways to make money from stocks. Investing to see the stock price up, and making a profit. Or investing to earn dividend income. You can do both at the same time.

Investing in the stock for the price means buying at price A and selling at price B. That could mean you have the stock for days, weeks, months, or years. But at some point, you're going to sell it for more than you paid for it.

Investing to earn a dividend is slightly different. In this case, you might still decide to sell in the long term. But you buy the stock because it pays you every quarter. This is known as a dividend payment. For each share, you hold in the company they pay you x amount of cents each quarter. Over time this can build up and its also a stream of income that repeats.

As with all things investment-related the stock price and the dividends being paid. Will go up and down over time, This is a more hands-on way to invest as you have to make all of the decisions yourself.

Real estate

Generally, people invest in real estate to make money through rental income. This more complicated because you have mortgage costs, bills, and insurance. Which all compete with the rental rate you can get for your property.

Then you have tax on top of that. While it is possible to make money renting a property, its also high risk.

This is not a beginner level investment, it requires a good understanding of the market. But many people do make a successful living from it.

Assets

The last one I want to talk about is assets. A bit like shares these are things you buy today at price A intending to sell in the future at price B for a profit.

This can be anything from gold, through cars, motorcycles, stamps, old toys. The list is endless.

Like real estate though, these need you to know a lot about each asset, the market, etc. You may also have to pay for the storage or maintenance of that asset while you own it.

That makes assets a little trickier. But in the end, they can be worth it. As an example, I make a good income from buying and selling vintage fountain pens. Random yes, but it makes money, and over time I have learned that market.

If you can think of it, then there are assets people invest in, which are worth buying. You need to do a lot of homework first, and accept that this is going to be a lot harder than simple investing.

Final thoughts

Investing is a great way to open up a new income stream. Just be aware that it does come with risk. As with anything in life if it sounds too good to be true it probably is.

It's best to start small and build up as you gain knowledge.

What we are all told is true, multiple income streams build financial wealth. But for those who won't or can't do that through starting a business. There is another way.