Does this sound like an infinite loop? Does it seem impossible? Here on Militaryfamilyinvesting one of our goals is to build more multiple income streams. Once we build more income streams we invest that additional income into investment portfolios, which in turn makes us more money. The more money that we have invested, the more money our investments will generate. It is an infinite loop. Notice that I did not say we are greedy. We are not doing this for a love of money. We are doing this for a love of family. But how does all this relate to the family?
The first step to understanding these principles is understanding the 3 types of income: earned income, business income, and investment income. Once we comprehend these types of income, we can start to build a game plan on how to increase our revenue streams in order to increase our revenue.
Most of us will start by earning income via a job. In this very normal scenario, we are exchanging our time for hard-earned cash. This is the stage where most people spend most of their careers (earned income). We try to earn promotions through the “system”. It causes lots of frustration and angst. We feel that the only way to increase our income is by working harder and getting promoted. I personally worked for 20 years in the military under this promotion philosophy. There is nothing wrong with this way of life. We are a positive member of society while providing for our families. What could be better? Actually a lot. Once you learn about business and investment income, it should make a profound difference in your life.
Before I knew about the 3 types of income, I knew that I had to do something extra to get ahead. In January 2019, I had recently got selected to the rank of E9. The pay raise was going to be $1100 a month. This was a very substantial raise, and I knew it would help Kris and I get ahead in life. However, in the summer of 2019, Kris wanted to go to Turkey. Only her and I would go this time. Doing the math, I knew that this was going to cost tons of money. I would have to save every penny from my promotion. And what’s the fun in that? We had a guest bedroom in the house and I convinced Kris that we should rent out the room in order to save up for Turkey. She let me do this hair-brained idea (she is always supportive of me). We ended up renting the room for $500 and then converting my game room into another rental room. This one also rented for $500. We were able to comfortably go to Turkey in June 2019.
What we had done was to create business income. Renting our rooms was our business. So in addition to our jobs, we were generating business income. In this case, the income was being used to go on a family trip to see more family. Once we got back from Turkey, we continued to rent out rooms. Today, we are renting two rooms for $1600 a month in total. This is the power of business income. I am an E9 in the military. There is physically and literally no way for me to make more money via the military. There is nowhere else for me to go. Instead of being stuck in this loop, we decided to build our own business. Remember that my promotion to E9 was a pay raise of $1100. It took me 5 years as an E8 to earn that promotion. In the course of a year, Kris and I were able to build a business that pays us $1600 a month. And the best part is that our business takes very little of our time. It requires a little of our space and effort, but it is completely worth it.
Now that we are generating extra income, what are we doing with the extra cash? We are using the extra cash to generate even more cash. We are investing it into multiple different investment types that all generate us a return on our investment. For example, I currently have $900 invested into a company on the stock market called AGNC. This company pays a monthly dividend (cash) based on how many AGNC stocks I own. Right now, the monthly payment I receive is $6.60. As long as AGNC is around I would get this payout on the 10th of each month. So imagine if you had $9000 invested and received $60.60 per month. What about $90,000 and $6060.00 per month. Ultimately, that is the goal of investing. To generate more investment income. Once the money is in investments, it is completely passive. You have to check up on the allocation of your money from time to time, but on a daily basis, it is passive income.
“So what does all this have to do with the family? This sounds like greed, pure and simple.” Well, once the investment income starts coming in, you don’t actually have to be working to enjoy it. You can easily be on the beach or at the park and continue to receive your dividend payouts. Imagine if you didn’t need to work any longer, how would you spend your time? Kris and I would spend our time with family. We imagine a life where all our kids and grandkids (and hopefully) parents would be on a boat in beautiful Florida. Also, remember that we can continue to generate business income. If we have rental homes or rooms, they would still be generating income, stacking on top of the investment income.
Kris and I understand that in order to get to this lifestyle, it requires money. Lots of money. We have to be very intelligent in how we make our money. We understand that it will require some time right now but this allows us to free up some time in the future. I am about to turn 40 years old. I am in my prime money-making years. This is the time to create business income and investment income, WHILE still working for earned income. Most people find us greedy or “all about the money” but we have a very specific dream that requires us to sacrifice a little in the present day. We also understand that business income and investment income can be transferred to our children and even to their children. If we have 5 rental properties generating $5000 a month and a $1 million investment portfolio generating $4000 a month, this is $9000 that our kids can use towards their lives. Then they don’t have to sacrifice so much of their time working for earned income. This is how the G.F.I.R.E. movement started. So to state it very clearly “We want to make more money (via earned income and business income) so that we can make more money (via investment income).” In our world, the only people that can prevent us from generating more income is us.
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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