Why is it Important to Have Multiple Streams of Income?

11 Benefits of Having Multiple Sources of Income

FAQs on Why Multiple Streams of Income Are Important

What are some of the popular ways to create multiple sources of income?

There are three popular ways of generating multiple sources of income. This usually includes passive income, active income and portfolio income. Active income is the monthly earnings from your job, passive income is from hobbies or rents, and portfolio income is from investments.

Why is it important to have multiple sources of income?

Numerous sources of income provide you with the peace of mind that you can have sufficient money to meet immediate expenses. Also, if any of your income streams dry up, you can depend on the others while replenishing the same. Moreover, you will not have to go for credits in case of immediate fund needs.

What are the problems associated with multiple sources of income?

The only problem associated with generating multiple sources of income is efficiently managing them. It becomes important to manage your passive, active, and portfolio income equally well. Also, you should track your earnings from each and look for ways to diversify them.

Which income sources provide you protection against financial risks?

Several income streams can supply you with money when you need cash. This includes emergency funds, life insurance and mutual funds. You can build a goal-oriented emergency fund and keep it in a savings account for returns. Life insurance also gives your beneficiaries money in case of your untimely demise. Furthermore, you can withdraw money from mutual funds as and when required.

What are some of the top multiple streams of income?

Some of the multiple sources of income include earned income, capital gains, interest income, dividend income, rental income, business income, and royalty income. You can select any number of income streams as per your financial goals and the duration within which you will have to achieve them.