How Secure Is Your Source Of Income?

01 Sep

Posted by Peter Werth as Money

After many years of hard work, you find yourself at the top of your field. All your income is riding on one customer, one job, or one avenue of revenue. Does this sound like your situation? If you answer yes, then you must consider creating multiple streams of income.

What if one day, unexpectedly, you are ‘down sized’, ‘cut loose’, ‘let go’. Call it what you like, but you find yourself without a job, without income. I know how it feels, it happened to me.

Why is it important to have a wealth-building plan in the first place? If you live to a ripe old age, as we all wish, a time will come when you will be either too old or too sick to work on a full time basis. However, you will still need to pay for life’s necessities and for other activities that will occupy your time.

Healthcare, travel and insurances will be significant expenses in your budget. It is for these reasons that you will need a reasonable, steady and reliable source of income to enable you maintain an enjoyable lifestyle during your retirement years.

There are 2 places you ought to be thinking about – pre-retirement and after-retirement. It is easier to plan about pre-retirement because you know your current financial situation, earning ability and preferred lifestyle.

Let me give you a clue. Joe is 65 years old and will retire at the end of this year. His Financial Independence Number is 1.2 million and it equals the value of his investments. Joe can therefore expect to spend $50,000 every year for the next 35 years till age 100. He will invest the $1.2 million in an interest earning account that will give him at least 5% interest per year during his retirement.

Some debt is good e.g. house mortgage and education loan. Just make sure the interest rate is fixed and payments are affordable. Remember to shop around for the lowest interest rate and the shortest payback time.

The third floor is income management. Is income from your investments large enough for you to live on? If the other floors are taken care of and your answer is yes, then your house is complete. You are financially independent. You can stop working for money and start enjoying life. If your answer is no, then pull up your sleeves and get to work.

Peter Werth is an expert MLM Home Business Opportunity business owner. Visit his web-community for practical MLM Home Business Selection Advice today!