Sources of Personal Income

This article originally appeared on The Div-Net on 2010-07-13.

Last time we talked about sources of income it was in the context of where companies get their income from. We discussed one specific company and how healthy and durable that source was.

Today, I want to talk about your personal source of income. Like companies, you too probably want to make sure you have a diversified stream of income from reliable and durable sources. For most people, that source of income consists of salary, savings accounts, stocks and bonds and perhaps even a rental property. If you have any two of these you are already better than most people on this planet in terms of income.

But chances are you're a reader of this blog because you would like to have more income. And we do cover a lot of ground regarding stocks, dividends and even real estate. But the investment world is not limited to those and perhaps you should consider adding other income streams flowing directly into your pocket.

Let's take a look at some of the possibilities.


Adding more salary to your income stream is probably something you're already doing now. Getting a raise or a bonus is what you work so hard for. We even discussed the topic of return on salary previously. But once you get it, chances are that to get another one you have to work even harder or longer. And at some point this plan doesn't scale anymore -- it can't continue to grow and grow.

So, what should you do? Get another job? Well, that's always a possibility. One can work part-time or on weekends or after-hours or double shift. But again, this only goes so far.

Is all lost then? Not at all. Keep working on (and in) your job but start to look at other possibilities too. Have you considered...

Angel investing

We discussed that by looking to invest on small or startup companies that other investors cannot invest on (because they lack the personal connections), one can even beat Warren Buffett at his own game as well as big-shot venture capitalists who are looking for the next Google and will probably miss the next corner store, butcher shop or flower stand.

If you keep your eyes peeled and your ears tuned, perhaps you could even invest in the next Walmart before the big shots. But if not that, investing in your next neighborhood bar or local gas station might be a start and a solid plan, depending on your capital and expected return.

Investment clubs

Investment clubs are nothing new. But they can be overlooked by many investors because investing often feels like it should be a solitary activity. Nonsense! Investment clubs can actually scale better than solo investing because by pooling together people with similar goals, it's easier to benefit from each other's knowledge and time to analyze companies and find new opportunities.

Often times, investment clubs that are flexible enough may even want to pool their resources together to invest in private companies, do some angel investing or move into real estate.

The benefit is clear: leverage each other's time, money and all get to share the benefit of new ideas from others who may think alike but do so independently.

Start your own business

This is also a topic I've alluded to before but have yet to discuss further. Opening up your own business -- whether part-time or home-based -- can be easier and safer than one imagines.

First, there are many businesses that don't require huge upfront investments nor huge effort or high cost to operate. And while one may think these are easy to replicate and thus should return close to zero to their owners, think again. The trick is to do something you love or have a strong interest in or something you'd love to have but somehow is not available yet or is not easy to get in your area. Or you just need to do it better than the competition. In many cases, you don't need to do all of these, so long as you have the passion or interest.

Let's just consider a few examples that are close to me. I'm sure you can think of a hundred other example of small businesses that you could create easily and that are meaningful to you.

Growing escargot. Yeah, the slimy snails that some people love to eat (especially the french). Turns out my dad used to create escargot in our backyard when I was little. He had plans to sell them, but he never developed the business around it and chose to eat them all instead. Growing escargot is easy -- they reproduce faster than rabbits -- and extremely cheap -- they eat lettuce and other greens. If you have even a medium-sized backyard, you can build a little shed and grow escargot in simple to build boxes. Just make sure you have all the necessary sanitary and business permits and you could sell them fresh or frozen to your local specialty store, restaurants or even grocery shop chains.

Pizza dough. Growing up, I remember us buying pre-made pizza dough from a friend's neighbor. They made the dough at home and packaged them in four or fives and sold them to order. If I were to do this today I'd probably offer multiple options such as whole wheat, yeast-free, gluten-free, special multi-grains, vegan. All organic and natural and 100% preservative-free.

The pill. Yes, believe it or not I have a friend whose grandparents used to make women's anticonceptional pills at home. They had all the permits and licenses and sold them under their own brand name. They never felt much competition from the big brands because they had their local niche market. I would probably be more careful on this one given the risks, but with proper knowledge and insurance this just comes to show that one can get as entrepreneurial as one wants. The sky is the limit.

Homemade jewelry. I actually know two people (not related to each other in anyway) who used to make earrings, rings, pendants and other jewelry at home or at small local shops from cheap metals or semi-precious ones, with semi-precious stones or other good-looking materials. In one case, the person would sell everything she could make to big-name retailers who would sell under their exotic or one-of-a-kind departments.

There. Four small but very real ventures created and run by people like you and me, most of which had a job and a family to attend to.

Know how to cook? Love dogs? Can build children's toys out of stuff in your backyard? Can teach piano lessons over the internet? What are you waiting for?

This article was written by EPIC INVESTOR.

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