I asked the following question earlier whether you have multiple sources of income that exceed 10% of your earned income. So far, 18 of you have voted and two-thirds of you say you do not while one-third of you say you do!

Why multiple sources of income?

Before we analyse the results, why is the concept of having multiple sources of income useful in the first place? The reason is diversification of risk. For most of us, our jobs and the earned income derived from working is the main means by which we generate income that allows us to live.  Thus, when we are reliant on one source for ALL our living expenses plus savings for financial freedom, we are putting all our eggs in one basket or opening up ourselves to the risk of having no backups if this source ceases.

Your employment can end due to illness, death or disability at one extreme of the spectrum. Your employement can also end due to being terminated, forced to resign, retrenchment, restructuring or whole host of other reasons at the other end of the spectrum. My own experience seeing two friends I know being forced out of their jobs due to cost-cutting measures not reflecting their own performances made me acutely aware of the need to protect your income earning capacity by developing other means to generate income.

Multiple Sources of Income - Your Feedback

One in three of you who responded to my poll have multiple sources of income that exceed 10% of earned income. That is commendable. Ever since I started investing in stocks and shares for dividends and capital gains, I have managed to squeeze out decent returns (around 5-10% per annum) until 2008 where my portfolio has taken a beating due to subprime and slowing Singapore economy.

I realise that obtaining 10% from other that your earned income is possible through judicious investment in blue chips and with some slight contributions from blogging income. While this means I cannot leave my day job, it has encouraged me to explore even more ways to develop other sources of income so as to help move myself closer to financial freedom.

Another reason for focussing on multiple sources of income is to reduce the risk of me being a slave to my job. My own frugality plus decision to pay off my loan early has resulted in me owning the roof over my head. This has made me less beholden to my employer and makes me less anxious about work in general and being able to take a more balanced approach to work-life issues. My mini-boss who is all of 5 months plus is also the reason for me to get home by a reasonable hour to have dinner and to carry her and love her during weekdays.

For those who are thinking of obtaining multiple sources of income can consider reading Robert G Allen’s book “Multiple Streams of Income” where he shares some insights on how one can go about developing their own streams. Tim Ferris’ “Four Hour Workweek” also shares with us how you can develop you “muse” or idea that allows you to mitigate the time-money trade-off to redesign your life to break out of the 9-5 container.

Be well and prosper.

Related articles by Zemanta

• Do you have multiple sources of income that exceed 10% of your earned income?
• Invest Profits From a Home Based Business
• The Million Dollar Active vs Passive Wager