Multiple streams of income

Here's a neat one worth talking about:
FTA: My question is, should I be focused on smaller multiple streams of income? Or focus on larger, single projects?

I'm hearing financial jungle here, but I'm going to take him one step further. There is no passive income.

A 9-5 requires well 8-10 hours/day (let's not forget commute). Rental properties usually suck up all kinds of time, if you have a 9-5 you end up losing weekends left and right. Rentals require repairs (contractors), you have to find new tenants, make newspaper postings, file all of the related paperwork, etc. To maintain a rental "income" that's actually passive, you need lots of rental property, which eventually becomes it's own job. Blogging for money is no more or less a job than the above, at best it's just more fun, but it's not guaranteed that you'll keep doing it, check this one out.

Now it seems that everyone thinks stock investment is actually passive, but really it's still actually a lot of work. Want to make an 80k salary? Oh that's easy you just need 2 MILLION dollars in the bank at 4%. Of course, after the government's share you'll still only end up with 40k, but I guess that covers the bills (and let's not forget 1% interest rates). Now if you don't have that much money (which most of us don't), but still want to make an income, then you're definitely going to have to work at it: financial readings, market watching, moving investments, finding money to invest, taking out loans to leverage your gains, however you do it, it's definitely work. I mean you'll have to do something to find a way to make better than average returns off less money.

(As an aside, finding 2 million dollars is quite the issue. The average Canadian family income was about 55k in 2001 and about 60k in 2005. That 33 years of the average family saving the entirety of their income! I don't think the 2 million dollar retirement plan is really that viable)

So here's the way I like to look at it. You don't get to take any money with you, none. At best you get to leave some to your kids, which is no promise they won't just piss it away. And at that point, you might as well give them most of it while you're still alive to help them manage and possibly respect it :)

Now the bigger question is "If you actually had a passive income stream and didn't have to work at all, how big would it need to be and what would you do with your time?". You see, unless you have no drive, will or interest of any kind then you'll end up doing something. And that something is the really important part.

You have things that you love to do and somewhere out there is a job for some aspect of what you love to do. You can make all the excuses in the world it "not being a job" or how "nobody makes a living at that", but that's all just BS. You like blogging, someone's making a living on it, you like carpentry? reading books? doing Tai-Chi? flying hang gliders? running long distances (started at 30!)? eating food? Ok that last one's a little weird... point is somebody is taking the thing they like to do and they're making a living out of it.

Diversifying yourself can help keep money coming in when one market dries up. But I think that there is so much more to investing than just throwing money into the markets or housing and assume that you're leveraging enough of yourself. Maybe I just read the wrong blogs, but it seems to me that the easiest and simplest investment is really yourself (but that's a whole other post).

The investor's primary goal is to generate as much wealth per time unit (day/month/year) as possible. The person's primary goal is to generate as much pleasure per time unit as possible.

Unless you get a real kick out of generating wealth (and not spending it), then these two goals are in some kind of conflict. So the real question is "how much money do I need to make to do the things that make me happy?". Money is really all about what you want do with it.

So do you need multiple streams of income?

How about "do you love what you're doing to generate money"? If you don't love what you're doing then make really sure that the money is letting you do something that you do love. I mean, we can talk all we want about wealth generation and pros/cons, but that's not the goal. The goal is to have the money to do the things that make us happy.

What you probably want are multiple streams of happiness, the rest is irrelevant. If you're like the Frugal Trader and have four different "jobs", then the question isn't really should I do "more or less", the question is actually two related parts:

1. How would I rather spend my time?
2. How much money do I make that way?

Answers to one will influence the other, b/c lack of money will limit your options. But spending too much time on things you don't enjoy will limit your life. If you graphed this out (Happiness vs. Money), you'd quickly realize that the graph is not a straight line, or even a simple polynomial function. It's not easy to find some "max point" of happiness. Especially when things change, as they always do, with time. If you make less money, but love your days more, then where are you at? If you make more money and love each day a little more then are you on the right path?

So back to the start "one stream or multiple streams?", well this is fundamentally the same questions as "what the hell do I want to do with my life". So that seems as good a place as any to start.