What is being Rich and what is being Wealthy?

This is a topic that I have spoken about too many times in the past….One of the steps required is to create different and various sources of income.

For a beginner who is starting on a first or second job how is he/she expected to create a second or third source of income?

Well at age forty if you want your Income Side to look like this:

Job 1

Job 2

Running a website on what you love to do

Writing articles on topics of interest (for which people will pay!)

Rent / Interest

Dividends

you have to start at age 22!

Well start building a portfolio – just make sure that you do as well as or better than the fund managers. If you are not confident of beating the fund managers, LEARN. Or go to the organized fund management industry a.k.a mutual funds. Unless you have to invest more than a couple of crores, or you wish to invest a lumpsum for a long time..SIP is a good route.

Seek a second job if your first job is not so great – or make the first job so great that you make enough money!

Clearly if your goal is to create the 3rd and 4th categories of income you need to buy some real estate (which can be rented out, not used!).

By the time you are 40 your dividend income, rent, and other so called ‘side’ income will be at least equal to your earned income.

By creating this multiple streams of income you develop the guts and the cash flow to tell your boss ‘Hey …I am not coming from tomorrow’ or like a friend told his boss:

“Thanks to my investment management capabilities I have created a dividend stream 4 times my salary. I live on about 1/10th of my post tax income. On the basis of my current lifestyle I have enough income and wealth to live till the age of 140 years. However as my performance has been the best, give me a bonus which makes me feel good…or I just walk..not for the money, but because I am sure the market will pay me more – as a mark of my ability”

So go and create multiple sources of income…it helps!