You may already know about the importance of diversifying an investment portfolio, but are you also working to diversify your revenue? Diversifying an investment portfolio is all about distributing your wealth across many types of assets; this way, if a single asset greatly underperforms, or suffers a catastrophic loss, your entire portfolio won’t be jeopardized. Instead, you’ll see a much more consistent pattern of growth. It’s a manifestation of the adage, “don’t put all your eggs in one basket.”
For the most part, diversifying your revenue works the same way. But how exactly are you supposed to do this?
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Why Diversify Your Revenue?
Most people earn revenue through one source exclusively. That source is almost always a consistent salary from a full-time job, though retirees may rely on income from social security, or from a pension program. This isn’t necessarily a bad thing, of course—any income is better than no income—but if you have multiple income streams from different sources, you’ll enjoy several important benefits, including:
- Greater total income. First, you’ll enjoy a much higher level of income overall. If you’re still making your primary source of income and you add three or four smaller sources of income, you’ll likely ascend into a new tax bracket. More money is always a good thing.
- Protection from unexpected losses. Having multiple income streams also protects you from the possibility of unexpected losses. For example, let’s say the company you work for suffers a major catastrophe, and they’re forced to lay you off. Do you have a backup source of income that can sustain you until you find a new job?
- Exposure to new areas and new skills. Setting up other streams of revenue also grants you exposure to other areas of focus, and can grant you new skills and experience. Depending on your circumstances, this could mean improving your value to your current employer, or opening the door to other job opportunities in the future.
How to Diversify Your Revenue
Now let’s look at the different ways you can diversify your revenue:
- Rental property. You could purchase property with the intention of collecting rental income from tenants. As long as you get an attractive property in a decent area, you should be able to collect rent from tenants in excess of what you’re paying for your property loan. This difference instantly becomes profit, and you may be able to cash in a greater profit when you sell the property in the future. You can also minimize the time requirements of the property by hiring a property management company.
- Dividend stocks. Investing in the stock market is a great way to build wealth over time, but did you know that some stocks pay quarterly dividends? Dividends work as a form of profit distribution, and many big companies take advantage of it. Each quarter, they distribute a share of profits to all shareholders, usually in the form of a fixed payout per share; in other words, the more shares you have, the greater your dividend will be. If you own enough dividend-paying stock, it can serve as a meaningful source of revenue.
- Side gigs. “Side gigs” is a broad category, but it’s one worthy of exploration. If you have some extra time each week, you can easily dedicate those hours to a different line of work. Depending on your interests and skillset, that could mean driving for a ridesharing service, consulting with a different type of client, educating students, or selling your art.
- Additional products and services. If you already own a business, or if you’re making your money from selling a single product or service, consider adding new products and services to your lineup. You may be able to upsell existing clients and customers, or you may attract an entirely new type of clientele.
- Blogs. Consider starting your own written or video blog, assuming there’s a market for your field of specialty. If you’re able to generate a consistent stream of traffic, you can monetize it to make a significant stream of income. This could mean hosting ads on your site, building affiliate links into your content, or selling content-related products.
- Affiliate marketing and sponsorships. If you have a strong social media presence, you may also be able to make money through affiliate marketing and sponsorships. For example, companies may be willing to pay you to mention their product in your social media feed, or send you samples to review.
You don’t have to diversify your revenue to be successful, but it can help you earn more money and remain stable in the face of unexpected losses. Think carefully about your income generation strategies, and try to remain adaptable no matter how you proceed.