Are you tired of relying on a single source of income?
Are you looking to increase your earnings and achieve greater financial stability?
Creating multiple streams of income can help you do just that. By diversifying your income sources, you can reduce your risk and increase your overall earning potential and provide greater financial stability.
Multiple income streams refer to having more than one source of income. It is a strategy for diversifying your income and reducing your reliance on a single source of income. This can include both active and passive income sources and in some cases, portfolio income.
Active income is like a treadmill – you’ve got to keep running to keep earning. It’s the kind of income you earn when you trade your time and effort for money. This includes things like your salary from your job or the money you make from your own business. Examples of active income include things like wages, salaries, tips, and commissions.
Passive income, on the other hand, is like a money tree – it keeps on growing, even when you’re not actively working. It’s the type of income that requires upfront effort to create or invest in, but once established, they can continue to generate income with little ongoing effort.
Portfolio income is like a tree that bears fruit in different seasons. Each fruit represents a different investment, such as stocks, bonds, and mutual funds. As the tree grows, it produces more fruit and becomes stronger, just like your portfolio income. With careful cultivation, you can enjoy the fruits of your labour and create a bountiful and fruitful financial future.
By having multiple income streams from active, passive and portfolio sources, you can increase your earning potential and financial security.
Let’s kick things off by exploring 6 common sources for income that you can take advantage of.
Investing in Australian property can generate great rental income and increase in value over time. With record low interest rates and the assurance of the Reserve Bank of Australia that they won’t rise until at least 2024, it is an ideal time to invest, but don’t forget to factor in the tax implications and expenses involved in maintaining an investment property. Luckily, the Australian Taxation Office offers tax incentives such as interest deductions, insurance deductions, and property maintenance deductions to help investors save money.
Tax Incentives- The ATO has many different tax incentives that you can take advantage of to maximise your bottom line. Take advantage of the ATO’s tax incentives for investors, such as deductions on loan interest, real estate fees, insurance, and maintenance, and learn how to minimise capital gains tax when you buy or sell a property or shares.
Capital Gains Tax (CGT)- Capital gains tax is a tax that you pay when you sell an asset, such as a property or a stock, for a profit. There are multiple ways that you can save on your CGT, read on here to learn how to minimise your CGT with our legal strategies.
Property Gearing- Investing in property through borrowing is called Property Gearing. It can result in either positive or negative gearing depending on whether you are making or losing money from that investment.
Make sure you weigh the benefits and drawbacks of each investment type and seek professional advice.
P2P lending refers to the practice of earning interest on money that you lend to others. This requires a bit of an investment but can pay off significantly if done correctly and cautiously.
Through an online platform that connects borrowers directly with investors who are willing to lend money, P2P lending eliminates the need for traditional financial institutions such as banks as the loans are funded by individual investors. The borrowers typically have lower credit scores and are seeking smaller loans, while the investors can earn returns on their investment by providing the funds.
Affiliate marketing is a performance-based marketing strategy in which an affiliate earns a commission for promoting another company’s product or service. This can be done through various channels such as a website, social media, or email marketing. The affiliate will receive a unique affiliate link to share, and if someone clicks on the link and makes a purchase, the affiliate earns a percentage of the sale.
It’s a win-win situation where the merchant gets more sales and the affiliate earns money without having to create their own product. One real-life example of affiliate marketing is Amazon Associates, where affiliates earn a commission by promoting Amazon products on their website or social media.
Freelancing consulting work is a great way to turn your expertise into a source of income. As a consultant, you can offer specialised services such as market research, project management, or training to clients in need of your skills. You can work with clients on a short-term or long-term basis, depending on their needs and your availability. Consulting work generates income by charging clients a fee for your services, which can be based on an hourly rate or a fixed project fee. By building a reputation for providing high-quality consulting services, you can attract more clients and increase your income over time.
This type of work is popular among professionals who have experience in areas such as marketing, accounting, graphic design, and IT. Freelancing consulting work can generate income by charging clients an hourly rate, fixed project fees, or a retainer fee for ongoing work.
Investing in stocks and other assets can be a great way to earn passive income and build wealth over time. By purchasing shares in a company, you become a part owner of that company and can earn a share of its profits through dividends. Additionally, the value of the shares can increase over time, allowing you to sell them at a profit. Investing in other assets, such as real estate or commodities, can also be a way to generate income through rental income or appreciation in value.
However, it’s important to remember that investing always comes with risks, and it’s crucial to have a solid understanding of the market and your investment goals before diving in.
Creating and selling a product or service is a great way to turn your passions into a sustainable income stream. One popular example of creating and selling a product is to start an ecommerce business. This can involve creating a unique product, such as handmade jewellery or artisanal soap, and selling it through an online store on platforms like Etsy, Amazon. Another option for creating a product is to develop a digital product, such as an ebook, online course, or software program. Alternatively, you could source existing products from wholesalers and resell them for a profit.
Whether it’s baking and selling your famous cookies, offering coaching services, or developing software, there are many ways to monetize your skills and expertise. The key is to identify a niche market and offer a unique value proposition that sets you apart from your competitors.
Now that you have some ideas for generating multiple streams of income you can get started and check out which option to try out. It is important to always introspect and weigh out the pros and cons for each option before committing. Seek professional advice and do your research before jumping in to try a new investment avenue.
If you’re interested in creating multiple streams of income, start by exploring some common sources of income and finding what works best for you. The information provided here is for general informational purposes only and should not be construed as professional, financial, or legal advice. Any reliance you place on such information is strictly at your own risk. Before making any financial or legal decisions, you should consult a qualified professional who can take into account your specific circumstances and advise you accordingly.
Not sure if your current accountant is a good long-term fit? Contact us at Aero Accounting Group today and we’ll help you minimise your taxes and maximise your profits