Most of us have heard the phrase “multiple streams of income” as a means of achieving financial freedom. This doesn’t mean getting another part-time “job,” but creating wealth and residual income through multiple sources of businesses, investments, and real estate. Residual income is money that continues to come in, whether you’re actively working at it or not.
The advantage of multiple streams is if one stream dries up or slows down, you have others flowing in to pick up the slack. With the recent trends of corporate downsizing and the loyalty of employers being a way of the past, multiple streams of income from different sources are more important than ever, and will be perhaps essential in the future. Not only is this a good idea for you and your family’s security and wealth-building strategies, but it can help fulfill your vision of giving to expand the Kingdom.
Is this a new idea? Not at all. The Scriptures are in agreement. Ecclesiastes 11:1-2 says, “Cast your bread upon the waters [plural], for you will find it after many days. Give a serving to seven, and also to eight, for you do not know what evil will be on the earth.”
The first part of this chapter (vs. 1-6) speaks of taking risks and making multiple investments rather than operating out of fear and exercising too much caution. It also speaks of being generous with your wealth. But these first two verses speak of the need of multiple income streams because you don’t know what “evil” will be on the earth.
What do you think are examples of the “evil” it’s speaking of here? It could be economic changes or market trends, to being a victim of fraud, lawsuits, and so on. The “evils” may change for different times in history or even certain seasons in our lives. The “evil” isn’t necessarily from the devil. It’s not always a spiritual attack. It could just be trends and changes in the system, but for whatever it may be, we need the multiple income streams to diversify and spread the risks. We like to believe as Christians that we are immune to such things, and I certainly am not speaking that over you, but the Lord does give us wisdom to be prepared for the potential rain that falls on the “just and the unjust” as it says in Matthew 5:45. Multiple income streams is one way to diminish or even eliminate the “evil,” because if you have enough streams, one can completely disappear and you won’t even notice it too much.
This passage in Ecclesiastes goes on to say in verse 6, “In the morning, sow your seed, and in the evening, do not withhold your hand; for you do not know which will prosper, either this or that, or whether both alike will be good.”
We think that if a certain investment doesn’t give a good return, or maybe even goes south, that God wasn’t in it. But it’s plain here that not everything you invest in will prosper, but do it anyway! Of course, don’t be foolish, be smart, do your homework and your due diligence, but just free yourself by knowing that some will be good and some won’t. Don’t condemn yourself when some investment or business or real estate deal doesn’t work out maybe like you thought it would. I believe the Lord will bless your efforts, if not on that particular investment, it may be the next one. The problem with the wicked servant in the parable of the minas in Luke 19 is not that he tried something and it didn’t work. He didn’t even try, and that’s what made the master upset.
Remember the dot-com bubble in 2000-2001? People in droves began investing in real estate. Then when the media began chanting about the possibility of a real estate bubble (which spells “opportunity” to me), many were looking for what they thought would be the “next big thing.”
However, if you are diverse in your businesses, investments, and real estate, then you won’t be affected as greatly as markets change in various areas. If there is a bump in the road with one of your markets, you have the others that continue to flow.
Most people think of diversifying as investing in mutual funds. They believe this is a method of spreading the risk and playing it safe, but in reality, all they are doing is investing in more and more paper assets. What if the stock market crashed? Don’t be deceived into thinking that type of “evil” can’t ever happen again as it did in 1929. If the stock market had a major crash, most mutual funds would be wiped out. We had a glimpse of that a few years ago when many retirement plans invested in mutual funds plummeted to almost nothing. I understand the buy and hold strategy and dollar-cost averaging, but what about those just entering retirement age? They didn’t have time to wait for the funds to go back up. So mutual funds and 401(k)s can have risks, too, right?
We continue to assume that the stock market will always go up and that mutual funds will give us the security we need. Mutual funds may diversify into many different funds, but they are still largely connected to the traditional stock market. Yes, they are diversified into growth funds, bond funds, mid cap funds, money funds, sector funds, international funds, etc., but what are all those? Stocks and bonds! It’s okay to invest in mutual funds and 401(k)s, but what I’m saying is don’t rely on just those and not do anything else. No one should rely solely on one investment type or one business for their sole source of income or retirement.