“Variety is the spice of life,” or so they say. And why getting rich to be any different. Currently, the crypto market is down, the stock market is flat, the rental market is up, and my royalties are doing very well.
So which one do I have to focus on to be successful in today’s world? All of them and none of them. I can just keep doing what I always do, continuing to be a Bonafide Investor.
You see, first I have a job. I will not quit my job until my passive income is in a position to support my family (and generations) for the rest of my life and beyond. Next, I diversify the rest of my passive income so that one is always doing well at any given moment.
Start a Luxury Vehicle Business
“Josh, how do you diversify your streams of passive income? I don’t know anything about real estate, business, cryptocurrency, or investing.” Do you think that I learned this in middle school?
No, I took the time to learn these things by reading books and getting involved. Each stream of income takes patience and education before you see results. Let’s take a look at the early days of each of these investments.
Retirement Income. When I joined the Marine Corps in 1999, I averaged $900/month for the first year. Now, I am making around $140,000/year. Even better is that my retirement pension raises every day I continue to stay in the military.
Real Estate. We bought our first house in 2008 and lost all the equity we had from our down payment. Now we own three homes and average around $2,400/month of rental income.
Investments. I started buying dividend-paying stocks in June 2019. It took two months to get my first dividend, and it was $0.23 from Papa John’s. Now we bring in $400-$500/month in dividends.
Royalties. I began publishing books on the Kindle platform in January 2021. My first month of book sales produced $3. In May 2021, my total for the month was $40.
Start a Home Business
Cryptocurrencies. I jumped into cryptocurrencies in May 2021 by putting $5,000 into the market. The market proceeded to take a dive and take 40% of my cash (on paper, you only lose when you sell). I just continue to keep buying.
No matter where you start, you will have some ups and downs. That is part of life and something that you should expect. Everything worth doing in life will require some form of hardship. We have to overcome limiting beliefs in each of our pursuits.
I remember when I started writing and publishing books. I had all kinds of limiting beliefs like “you are not a writer,” “Who will listen to you?” But, by reading books, I realize that I could overcome these limiting beliefs by taking action.
I used to worry if my audience liked my work or not. Now, I can care-less. It’s not that I don’t want my audience to enjoy my writing, but it has nothing to do with me. It is an outcome I cannot affect. I now write for myself. I love the purity of filling a blank piece of digital paper with my thoughts. To me, there is nothing like it on Earth. Even better, I am building a library of great articles that I can leverage for my entire life.
The Road to Wealth
For example, I recently wrote an article titled “I Live Paycheck to Paycheck, so I created 300+ Paychecks a Month.” I thought that it was a snarky title. When I released it, a few people read it, nothing major. But, I then went and created a small book under the same name. And what do you know, random people enjoyed it. It sold two copies in the first couple of weeks—this is huge for books, by the way.
The book can now sit in my library, and people can buy it for the rest of my life. Maybe it will sell two copies for the rest of my existence. Or perhaps it sells two copies a month, forever. That is the exciting thing about royalties. You never know what you are going to get.
I bring this up because royalties are entirely removed from stocks, crypto, business, retirement, and real estate. I plan on getting my royalties up to $6,000/month. It may take five years, but it is absolutely worth having a source of income completely removed from everything else.
Now, I am going to really blow your mind. Inside of each of our passive income asset classes, we still need to diversify even more. No, we can’t just invest in McDonald’s stocks for our investment income.
We can separate each asset class into different categories that can help us withstand downturns and prosper in the long run. Again, let’s look at each of our investment pillars to discover the diversity inside each of them.
Retirement Income. Defined benefit plans (pensions), social security, 401Ks, TSP, Roth IRA, traditional IRAs, disability, annuities, CD ladders, savings.
Happy Cash Flow Retirement
Investments. Index funds, electronic traded funds, real estate investment trusts, mutual funds, closed-end funds, bond funds, commodities, options-trading, leveraged funds, inverse funds, commodities funds, preferred shares, baby bonds.
Real Estate. Room rentals, finished room over garage (frog), finished basements and attics, mobile homes, tiny homes, overseas homes, homes in small cities, raw land, single-family, multi-family, commercial, apartments, real estate notes, hard money lending, private money lending, billboards, real estate agents, wholesaling, fix and flip.
Business. Online, content creation, royalties, books, YouTube, music, farms, dog parks, food trucks, rental car, rental boat, rental 18 wheeler, winery, brewery, online classes, marketing, gigs, food sales, mentorship.
Cryptocurrencies. Stable coins, smart chain coins, interest on coins, staking, initial coin offerings, pooling.
I count 63 off the top of my head. These are just the start, and there are way too many to list. Each one of these can be an article in and of itself. The idea isn’t to know all these comprehensively; it is to know of them.
Mailbox Money: The Power of Dividends, Royalties, and Rents
The more we know, the more we grow. If you can learn about many of these, then when the opportunity arises, you won’t miss your chance. For example, if you see that a tiny home is 50% off for some reason, you will have the mindset of an investor and know how you can leverage it if you purchase.
This mindset is the very reason that I write each and every day. Not only am I making myself brighter, but I am passing along actionable investing knowledge to the masses. The goal isn’t to be the best investor, real estate mogul, top entrepreneur, or 100X crypto person.
The goal is to be mildly successful in each of these and invest for the long run. I promise that if you can invest in each of these for the long run, your financial future will be outstanding. Let’s look at two scenarios—one where the investor makes a tremendous single investment, and the other investor makes many small investments.
Our first person, Brian, makes a considerable investment in Tesla early on. Tesla spikes in price, and Brian now is sitting on $1 million of Tesla stock. Brian has not diversified in the stock market or outside of it. He doesn’t know what to do with the money. Every day he worries about selling Tesla or holding for the long run. He worries that Tesla will not be around for another 30 years to trade for his retirement.
Our second person, Bob, makes a smaller investment in Tesla, and when it spikes, he is sitting on $500,000 in Tesla. As much as he loves the company, he knows that this is his chance to diversify into other investments, and he has been reading MilitaryFamilyInvesting daily. He sells some Tesla, paying taxes, and leaving $100,000 in Tesla.
Hustle in Your 20s and 30s, and Enjoy Your 40s and 50s
This leaves him with $300,000 to invest across his various new asset classes. He first buys a rental home in Mississippi for $100,000. He buys two Tesla Model 3 models to start a rental car business ($100,000). He also will create a YouTube channel documenting his business journey. This leaves him $100,000 to invest. He buys $70,000 of dividend-paying stocks and $30,000 into cryptocurrencies.
Bob is now well diversified across his passive income portfolio and will have rental income from his home in Mississippi, dividend income from stocks, interest and capital gains from crypto, and business income from YouTube and rental cars. He even has capital gains from Tesla remaining.
Now, who would you rather be? No matter how cool it sounds to have $1 million in Tesla stocks, Bob is in a better position to be a millionaire for the rest of his life. He won the jackpot with Tesla and sees that he has an opportunity to set himself up for the rest of his life.
Become CEO of Yourself
Opportunities like this do not come up often, and when you get “lucky,” you will need to know what to do with your cash. Sadly, people are “lucky” all the time; they just don’t realize it. People who bought homes in 2010 are sitting on a ton of equity. They will need to become a Bonafide Investor and learn how to leverage this equity to diversify their passive income portfolio.
Lucky for you, I am going to help you out a little more. Over the next few episodes of the Cash Flow 101 series (101, 102, 103, 104), I will go into a little more detail on how to diversify into more of these asset classes. These articles will serve as a cheat guide; however, you will need to dig deeper to get the particulars into each segment.
So, I am off. Hopefully, you understand the purpose of reading as much as you can about passive income. The goal isn’t to invest in everything you learn but to see (or create) opportunities as they arise. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. 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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