The Myth of Multiple Income Streams …

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For a while now the web has been a’twitter with ebooks spouting the idea of Multiple Income Streams …

… literally, here is an example from Twitter:

Multiple Income Streams is the ONLY way to Achieve Extreme Wealth …

I’m not so sure that was true for me – hence it can’t be ONLY 😉

But, is it true even if we substitute ‘usually’ for ‘only’?

Again, I don’t think so … in fact, I feel that most people achieve a very high level of INCOME from just one of their ‘multiple streams of income’ (that is, even if they have more than one) … for me, it was very much an 80/20 thing:

– One of my businesses produced $1 million a year EBITDA (earnings before bullsh*t),

– The other produced $200k a year (still does).

Now, for those who are astute, you will see that I twisted the original statement from ‘wealth’ to ‘income’ … and, as we all know by now:

Income [does not equal] Wealth

So, this is what I think: you don’t necessarily need multiple streams of income, but you DO need a place to store the income earned – and, it’s the wealth that “passively” builds up there that creates the true wealth (at least, it did for me i.e. my businesses fueled my property investments, and THAT’S what took me to my first $7 million) – and that more equates to my Perpetual Money Machine concept than it does to the usually espoused Multiple Income Streams Fallacy … they may seem the same, but they are very different:

Build your Perpetual Money Machine and prosper! 🙂

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5 thoughts on “The Myth of Multiple Income Streams …”

  1. Adrian

    Another myth busting post.

    On multiple streams of income, sometimes I wonder whether a fixation with multiple streams of income is analogous to diversification of investments. Trying to develop too many streams of income means that none of those streams are getting as much attention as could be give to one (major) income stream.

    In my own case, I spend most of my time earning a level of income which is high enough to reach my number in the next few years (famous last words). I do not spend much time on developing other sources of income because doing so would detract from my existing income stream – an income stream which is sufficient for my purposes. Instead I store money in real estate, listed equities etc which require relatively little time and effort to acquire and monitor (i.e. they do not interfere with my ability to generate my principal source of income) but do produce better returns than simply leaving the money in the bank.

    Cheers
    traineeinvestor

  2. TraineeInvestor – and another well-considered comment 🙂

    I agree with your point on the diversification/distraction issue … and, it looks like you are building your own Perpetual Money Machine (esp. if you are investing in buy/hold income-producing assets like RE).

  3. I am pretty sure that was my twitter/blog title that you quoted?

    I will give you the fact that income does not equal wealth, and I have actually wrote about that on the blog, but not in that post. That is my mistake but ignore it just for the purposes of this comment.

    But I think you and trainee are arguing my point rather than debunking a ‘blogging myth’:

    After re-reading your perpetual money machine post (great post btw) you use Scott as an example who is a high earner, and then supplements his income with real estate, isn’t the fact that there are 2 sources of income, the very defintion of multiple.

    Same with Trainee above, he has his high earning position and, “Instead [he] store[s] money in real estate, listed equities etc.” The real estate, equities, and “etc” is multiple streams of income coming in on a daily basis.

    I didn’t say whether that income stream should be active or passive, but rather the evidence (the U.S. tax data I used for the post) that, as a person’s income increased so did the percentages of where that money came from. Again, I made the mistake to assume they are wealthy and you are right they may be making $10mil and spending $11mil.

  5. @ MyJourney – I can’t recall how I found the twitter [ http://twitter.com/wealthonline23/statuses/3402203300 ] … maybe you pointed to it on one of your posts (in which case, I thank you for the lead!)?

    But, my point is very different:

    – Multiple streams is about building more than one source of income RIGHT NOW

    – Perpetual Money Machine is about using one income stream to fuel a replacement income stream IN THE FUTURE.

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