Having Only One Income Stream Is Not Enough...

...found this interesting article in Singapore's 'Today' newspaper last week. It's written from a Singaporean perspective, but the validity is truely global.

It goes in the same direction as "Retire young, retire rich"; that it's best to not (only) have a salary, but let your (and other people's) money work for you - thus earning rent, interest, dividends and having value appreciation of your assets as 'other' streams of income.

In this way you can reach true financial freedom and independance from any employer or nasty boss. This concept is especially important for us Nomads, no? ;-)

Having Only One Income Stream Is Not Enough
by Valerie Law valerie@newstoday.com.sg

Dr Clemen Chiang is the chief executive of Freely Business School, the first private school in Singapore to offer an options diploma course. Dr Chiang shares about ways to create multiple income streams.

Why should a person have multiple streams of income and how popular is this concept in Singapore and Asia?

I believe it is a very popular concept. In a typical household, fathers were the sole bread-winners in the past. Nowadays, both the husband and wife work.

Sometimes, even the combined income is still not sufficient. Having multiple income streams is critical in today's landscape because of uncertainties in the world. In 2000, there was the dotcom crash; in 2001 the terrorist attacks; then in 2003, the Sars crisis hit Singapore's economy very hard.

Today, there are also job uncertainties due to China's and India's emergence.

Creating a secondary source of income does not necessarily require you to migrate. You can be mobile yet remain in the same country - that is the essence of creating multiple sources of income.

Why do you believe in using options trading to create the first alternative source of income?

It is a question of seed capital - how much money you have today. Say your starting capital is small - less than $10,000, there are not much things you can do to build a business.

So you shift your focus to investment instruments by asking: "Which instruments will grow the seed capital from a small sum to a big sum?"

If your capital is small, you should focus on one instrument first - options. In the United States, there are 3,000 option-able stocks out of 30,000 tradable stocks, and these options come from the very best companies.

Options allow you to trade when the market moves up, down or sideways.

When you reach your target, you may then take that lump sum cash to invest in real estate in Singapore as another source of income.

How feasible is it for an employed adult to have multiple sources of income in Singapore, given that today's jobs may require long hours?

The employee must know how to mange his/her time, and passion to create multiple sources of income. Nobody is stopping you from investing your own money.

Most individuals have the traditional mindset towards income generation, thinking you must appear physically at a place at fixed hours. For me, earning an alternative source of income means being mobile, keeping in touch with the latest products and technology, and becoming a self directed investor.

For investing and trading, you do not have to appear physically somewhere.
You can make money using the Internet, and you do not need to face suppliers or competitors. You just need to face yourself.

So how much time do we need to get to half a million dollars?

There are three variables:

1. How much seed capital do you have?

2. What is the lump sum amount you wish to have?

3. What is the performance target for your capital each month?

Let us use an example based on the principle of compound interest:
Starting with US$5,000 ($7,900) and earning 10 per cent return per month on your seed capital.

It will take 58 months or less than five years to reach a million dollars.
But you must be committed - it is a marathon. You may need to commit 30 minutes per night at first, and later choose to become full time traders.