Top 4 Best Investing Income Streams for Safe Returns
You know an average millionaire has around seven sources of income in order to achieve wealth.
Having multiple streams of income is important but building multiple income streams is not an easy job.
That’s because most of your time is spent on maintaining your first stream of income.
That’s your job or your business.
And it’s even harder when you have to work long hours and get tired when you get home.
It’s not an excuse but we’re all human.
We have our own limits and incapacities and we cannot ignore the fact that our time is limited as well.
That’s why I decided to write this post to show you the best and easiest way to grow your wealth safely and effortlessly.
So how can you easily create four streams of passive income?
The answer to this question is simple.
You just need to invest your money in four different types of paper assets.
And if you do everything right those investments will be consistently putting the money back into your pocket.
You can increase your income without any extra effort and you can easily make a lot of money while you sleep.
Interesting right, so what are these paper assets?
Let’s look at four different types of paper assets that I’ve been using to multiply my money and create multiple streams of passive income.
They are ETF or exchange traded funds, value stocks, dividend paying stocks, and REITs or real estate investment trusts, in order to create four distinct sources of income.
You just need to put your money into these types of investments and then let them do all the work for you.
Now let me dive into each type of investment in turn so you can see exactly how you can use money to make more money.
Okay first of all I’ll talk about ETF.
So what exactly is an ETF?
ETF stands for exchange traded fund. An ETF is simply an investment portfolio that contains various types of investments, such as stocks bonds or some kinds of funds.
Normally they are designed to track the overall performance of a particular stock market, sector or entire index. For example using an ETF you can buy the entire S&P500 Index.
You can also do similar things in a bond market or even a real estate market.
So when you buy an ETF this simply means that you’re investing in a diversified portfolio that includes a number of different investments.
For example you invest in DIA which is often known as Diamond ETF.
It’s an ETF that’s designed to track the overall performance of the Dow Jones index.
For those who don’t know about the Dow Jones, the Dow Jones Industrial Average has a stock market index that consists of the 30 largest businesses in the United States.
So when you buy this ETF it simply means that you’re investing in those 30 largest businesses.
And the cool part is your money will be diversified and invested into many different markets sectors such as financials health care, technology, energy, consumer services and so on.
And that’s the reason why investing in ETFs is the best way for you to build your long term wealth.
You don’t need to buy a lot of companies, by simply investing in a single ETF you’re investing in different businesses in different market sectors.
Basically they are the same as mutual funds or some kinds of index funds but there expense ratios are much lower. This is because you are not buying and selling lots of stocks continually which increases your fees cost. It is also because you are not hiring an investment manager which is another added cost.
So for example if you buy a mutual fund you’ll have to pay one to 5 percent of your return in management fees every year.
While if you hold an ETF you’ll only have to pay from point 0 1 percent to less than 1 percent in management fees.
That is to say investing in an ETF is 10 to one hundred times cheaper than investing in a mutual fund.
If you invest in an ETF you can easily make a 10 to 15 percent return every year.
It still requires some strategy though.
The fact is that not every ETF is worth investing in, some ETFs come with bad performance, high management fees and a high level of risks, so you’ll need some strategies or some kind of knowledge to pick the right investment for yourself.
One more useful tip to take away before we dive into the next type of investment, is: Always make sure that you stay away from mutual funds and Wealth Management Services.
That’s because buying an ETF is much cheaper and you can easily manage your portfolio by yourself.
There’s no need to waste your money on any wealth management services.
You are an investor.
So do it yourself and take full control of your money.
The second type of investment, is Value Stocks.
I bet you’ve heard a lot about value investing.
So what exactly is value investing.
Value investing simply means you buy something that’s worth $2 for only one dollar.
Well not exactly but you get my point here.
Value Investing means you buy a company when it’s cheap or undervalued and then sell it when it becomes more expensive or overvalued.
So how do you know if a stock is undervalued or overvalued to determine whether stock is cheaper or expensive?
You’ll need to estimate its intrinsic value.
A company is undervalued when its intrinsic value is greater than its current market value.
Intrinsic value is simply a real value or true value of a business and market value is simply the price at which the stock is currently selling.
So to put it simply, if the true value of something is greater than the price at which it’s selling… this means it’s cheap, undervalued, or under priced.
So when you buy a stock that’s undervalued tere will be a high chance that its value will increase over the long term, and that’s how you’ll make a profit.
That’s all value investing is about, buy something that’s now cheap and sell it later for a profit. Buy low, sell high. A lot of people got rich from applying this one simple principle and investing for the long term.
Find the intrinsic– real value of a stock. If it is undervalued then it could be a good buy and hold.
Similarly a company is considered overvalued when its intrinsic value is lower than its current market price.
The fact is that not every stock is worth investing in even if they’re blue chip companies.
If you frequently perform intrinsic value calculation you’ll find that 90 percent of companies you’re evaluating are overvalued.
There will be a very low chance that you’ll make a profit if you buy these stocks.
And of course there will be a very high chance that you’ll lose your money if you picked the wrong investment.
Now I’m not scaring you but just like any other businesses investing involves some kind of risks.
But some of these risks are controllable and can be easily avoided, if you equip yourself with enough knowledge.
If you master the art of value investing you can easily make a 15 to 25 percent plus return every year.
Actually when you do everything right you can easily make 20 percent or more in just a few months.
Just like I and many of my students did.
There are thousands of opportunities to make money in the stock market.
There are thousands of stocks out there.
So the only thing you need is a real strategy to pick the best ones to invest in.
Now I’ll talk about the third source of income: Dividend paying stocks.
Investing in dividend stocks is the easiest way for you to profit from the stock market.
Dividend Stocks are simply companies that pay good dividends to their shareholders and investors like yourself. A stock dividend is an amount paid out by a company usually in the form of cash to investors who hold shares of their stock.
So investing in this type of investment is very easy but profitable because you just need to find a good company, put your money into it, and wait for it to put the money back into your pocket.
Most companies pay dividends quarterly.
So you can collect the money four times a year just invest in a stock that pays good dividends.
Forget about it.
And three months later collect the money without really putting in any effort.
That’s exactly what dividend investing is about.
The most interesting thing about dividend stocks is that they’re a hybrid investment.
This means you invest once but you can profit twice.
Sounds interesting right.
Dividend Stocks allow you to share in company profits while also retaining ownership of your investment.
When you invest in a dividend stock you can earn a 5 percent to 12%+ return every year, paid out by the company in the form of cash dividends.
And because you own all the shares you bought, when those shares increase in value you’ll make more profits too.
Normally a good dividend stock will potentially grow at 5 percent or more every year.
So if you put your money into this type of investment you’ll potentially earn 10 percent or more return on your investment, every year without any effort.
However similar to EFTs and Value stocks, not every dividend stock is worth investing in.
Some lousy businesses tend to attract outside investors by offering a high dividend yield.
So you’ll need to evaluate them carefully to find out if they’re actually a solid company.
The last type of investment that we’re going to talk about is REIT.
REIT stands for real estate investment trust.
A REIT is a company that owns multiple rental properties such as office and apartment buildings, hospitals, shopping malls, hotels resorts and so on.
Similar to a REIT is more like an investment portfolio that includes many income producing real estate.
So when you buy a REIT this simply means that you’re buying a small part of the portfolio– and the cool part is you don’t need to have millions of dollars to become a landlord.
By buying a single REIT you’ll become a part owner of many rental properties. REITs make a profit from renting out their properties and they’re legally required to pay out as much as 90 percent of their income to unit holders or investors every year.
So investing in REITs will bring you a stable stream of passive income and the more interesting thing is, that your money is now diversified into the real estate market.
Just like investing in dividend stocks investing in REITs is very simple.
You just need to find a good company.
Put your money into it and wait for it to put the money back into your pocket.
Investing in REITs will potentially bring you a stable return of 6 to 12 percent every year.
So those are my top four investing income streams that ensure I profit each year, earn dividends and increase capital gains. All while be very diversified so if something drops down, usually something else comes up, allowing me safe returns on my investments over time.