Would you like to start building new income streams? There have been quite a few reports and trending articles in the past stating that statistically, the average millionaire has 7 streams of income.
Most articles state that “according to IRS” (without the source) which I believe, basically relied on the definitions that IRS gave to active, passive and portfolio income and how IRS provided further breakdowns as to what the 3 types of income consists of. To spare you the searching, this Robinhood article sums it up rather nicely.
Yup, that’s not a typo – and you would definitely be interested in know which are the 7 sources of income, right?
I have seen various websites that listed different sources that make up the 7 streams but it is generally going to be the following categories –
- Earned – from working a full-time or part-time job
- Business – earned via profits from businesses owned
- Interest – earned on money that we lent to others
- Dividend – earned for being shareholders of companies
- Rental – earned from renting out properties
- Capital gains – earned from selling assets that have appreciated
- Royalty – earned from selling rights to something we create
Guess what? I’m not a millionaire – not yet anyway! No surprise there. However, what I do have now, is multiple sources of income which is very much like how a millionaire does!
Emphasis – “Like” a millionaire.
If this blog post caught your attention, then you might mostly likely be interested in reading my income reports which I have been compiling since 2015.
In the first quarter of 2020, I raked in a grand total of SGD$2163.75 or an average of SGD$721.25 per month. Speaking of which, my income report for the second quarter of 2020 would soon be out in August.
Let me get straight to the juicy bits then, shall we? I will have income streams that belong to the same category but here goes –
Income Stream #1 – Full time job
This is the part that I am trying super hard to get away from, which is exchanging my time for money. You can call it work or job.
Sure, my job pays well. Very well, actually. It wasn’t always that way.
Regardless, I’m trying my absolute best to sock away as much money as I can and at the same time, avoid lifestyle creep i.e. increased discretionary consumption on non-essential items as the income increases.
I am very grateful for having a job despite my generalist nature. Or perhaps, it is exactly because I am a generalist that I have managed to do well in my current role.
The reality is that I’m painfully aware of the Peter Principle – it is a concept in management developed by Laurence J. Peter, which observes that people in a hierarchy tend to rise to their “level of incompetence”: employees are promoted based on their success in previous jobs until they reach a level at which they are no longer competent, as skills in one job do not necessarily translate to another. Source – Wikipedia.
I have repeatedly been pushed and jostled into positions that I am not comfortable with, simply for doing my job well – despite stating upfront that I do not want the new role. That’s life, eh?
While I’m thankful for the income I derive from putting in the hours, the truth is that I’d ditch it in a heartbeat when I am able to do so.
Income Stream #2 – Blog ad revenue
Many people think that blogging is an straightforward path to the easy money, Just start a blog and write, right?
Well, yes and no. There is a tremendous amount of work that goes into making a “good” blog but this post isn’t for this. You’ve got to think about analytics, managing subscribers, newsletters, social media, engagement, aggregation, blog speed, security, optimization and keyword research – just to name the obvious.
If you’re interested in starting on your own blogging journey, my ongoing blogging series is a must-read for you!
Mediavine is responsible for full service ad management for my blog and has been an awesome partner. Ads are served on my blog and they are on a pay-per-view basis. No one is required to click on anything, which is exactly what I wanted.
Guess there are good days and bad days huh? Life isn’t always sunshine and rainbows. Ad revenue gets sent to me via PayPal two months after the end of the current month.
Ad revenue from blogging is definitely not classified as fully passive income despite what many may want you to believe.
The beautiful thing is that once the hard work is done, it goes on to do its magic without any attention e.g. when we sleep – at least for a while. The amazing part is that this is something I enjoy doing and obviously nowhere near the job or work category.
Income Stream #3 – Blog affiliate sales
See that shiny new store that I have in the menu bar?
That’s where I keep all my referral codes and links! Don’t get excited yet – I don’t have any products of my own to sell, which is why you’ll see mostly referral deals in there.
Number one rule – I will only have referral codes and links for products I have either bought, or services that I am currently using. No exception!
I believe in being truthful for everything I write on this blog, and there is zero compromise when it comes to this.
I can candidly share that I recently turned down a very generous offer of a couple hundred USD plus additional reward per referral because I wasn’t convinced by what was shared with me. And yes, this particular sponsor’s posts were making its round on quite a few personal finance blogs.
If you end up using any of my referral codes or links, both of us will receive benefits – plus I will personally guarantee that this is achieved at no additional cost to you.
Same as the previous income stream: semi-passive.
Income Stream #4 – Cash accounts interest
My liquid cash is spread across mostly bank accounts and that actually includes the Singlife account which is more accurately an insurance savings plan that earns up to 2.5% per annum returns.
Interest rates are tanking and I’m doing my best trying to salvage whatever bit of interest is available.
There are also increasingly different cash management options available with some being offered by robo-advisors e.g. Endowus Cash Smart. Definitely worth looking at if you have plenty of spare cash lying around.
Income Stream #5 – SSBs interest
Singapore Savings Bonds are a special type of Singapore Government Securities (SGS).
I have actually staggered my purchase such that they will provide me with payouts (approximately 2% per annum) on months (Jan, Apr, Jul and Oct) that are typically quieter for stocks and REITs. They help to smooth out the monthly passive income I’m receiving, even though it is a fairly small amount.
With decent liquidity, they are pretty much identical to cash accounts and they function primarily as storage for my emergency funds.
Income Stream #6 – Investment dividends
My DIY stocks and REITs picks provide me with passive income and the payouts are mostly on a bi-annually or quarterly basis.
Payouts have taken a hit under the current climate and are expected to remain depressed in the short term.
Although the time-weighted returns of my DIY portfolio (above chart from StocksCafe) has done reasonably well over the last 8 years (100.30%) vs the STI ETF (5.64%), moving forward, I am intending to increase the proportion of funds that are being deployed to robo-advisors and reducing DIY picks.
Just to achieve that hands-off passive approach, you know?
Income Stream #7 – Robo advisor dividends
Like what I have mentioned in the previous stream of income, robo-advisors have options available for income portfolios and these take a more passive approach towards dividends.
I like what Syfe is doing with its REIT+ portfolio with its passive approach of tracking the SGX iEdge S-REIT Leaders Index, and I am ramping up my investment to $20,000 Singapore dollars so that I will attain the “Black” tier – it will allow me to select the dividend payout option.
Otherwise, for the lower “Blue” tier, only dividend reinvestment is allowed.
Hmm. So, while I’m not currently receiving any dividends from robo advisors yet, by the time this post goes live – I would likely be eligible!
Income Stream #8 – Crypto income
Finally, my last stream of income comes from the wonderfully volatile crypto universe.
I wouldn’t advise anyone to start dabbling in it until they have a good understanding of what they are getting into, that’s for sure. Otherwise, an excellent way to get your feet wet is to earn crypto instead of buying crypto.
Coinbase Earn is a wonderful way to earn some crypto by watching instructional videos, and I would highly recommend you to take a look at it even if it is merely for educational purposes.
For crypto income, my sources are fairly diversified. I have Bitcoin (BTC), Ethereum (ETH) and USD Coin (USDC) earning interest in BlockFi interest account. I am staking Cosmos (ATOM) tokens as well as Crypto.com (MCO) tokens – comes with free Spotify and Netflix – in their respective wallets.
What would be the next project for me to dabble in?
Farming DeFi yield is something I do from time-to-time, but I probably shouldn’t be giving too many ideas here in this post. My crypto income series does touch on my adventures in crypto-land. If you are skeptical about the whole idea of blockchains, perhaps you might want to keep an eye on Unagii that is backed by Singapore government deep tech funds.
Even after considering these, I have additional holdings that are stored in cold storage for a little more safety in diversification. The recent Wirecard fiasco that impacted Crypto.com is a timely reminder that we must always be prepared for the unexpected.
My crypto life is now complete after getting a “follow” from Zhao Changpeng, who is more commonly known as CZ and the founder and CEO of Binance!
What the future holds
OK, excluding full-time employment and tadah – I would have 7 sources of income as well!
At the moment, I still see this blog as a hobby – and yes, a very time consuming one. But I truly enjoy it tremendously!
For now, my blog is small enough to generate less than $6,000 annual net income. Plus, I don’t take any sponsorship, free products or services. Reference – IRAS.
If I eventually do swap full-time employment for a blogger YOLO lifestyle, this is probably going to change.
Next up is rental income. I have previously mentioned in my FIRE gone wrong post that if I took advantage of geo-arbitrage and relocated, I would likely rent out my apartment and therefore, generate rental income in the process.
Last of all would be royalty income that is income received from allowing someone to use my property. Not entirely sure if I would ever have this stream of income, but I would definitely focus on having my own products and services which would be more likely to be categorized under “business income” instead.
Add-on : Like what Carl has mentioned in the comments, CPF money and interest can be potentially withdrawn by leveraging on our parents CPF retirement accounts (CPF-RA) and this is exactly how I am withdrawing $300 each month from my CPF ordinary account (CPF-OA).
For obvious reasons, I have only included income streams that can be replicated every month. One-off revenue e.g. sale of items are excluded.
Yep, no one said we must have all 7 categories of income streams right? As long as the dough keeps rolling in, happy wife and happy life!
Have you thought of what alternative sources of income you can generate?
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Hello! I’m Kevin, Turtle Investor
At the age of 30, I am the personal finance blogger who laid claim to a negative net worth of minus $25,755.
Seven years later in 2019, I hit CPF Full Retirement Sum (FRS) of $176,000 without making a single cent of CPF top-up. More tidbits about myself here if you’re curious. My blueprint for financial independence can help give you a headstart in your own FIRE journey.
I am married to a lovely wife and that means dual income with no kids. In my free time, I chase miles so that we can fly in business class. My hobby is making pocket change off this blog and sharing everything I know with you!
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