Ask HN: How do you diversify your income? | Hacker News Reader

Ask HN: How do you diversify your income?

19 pointsCoreSet15 comments

As I get older, I'm trying to focus less on absolute financial independence than a sort of income redundancy, where I have enough sources of revenue to sustain my barest expenses in case something goes wrong.

My dream: four or five streams, requiring different levels of investment and labor, but generally clocking in under 40 hours and, to the point where I could lose one or face a serious cutback in two, and never be in jeopardy.

I know this overlaps with the passive income obsession, so I'm excited to hear HN's thoughts, but I'm concerned less with overall effort than reducing the risk tied to my income coming solely from my job.

I'm super interested to hear if any HN'ers have tried to diversify their income outside of tech, maybe through some small-ball physical investments like ATMs or vending machines?

background: late 20s, FE dev, small amount of savings, no debt

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My fantasy set up: remote FT developer, with a small float tank business in my basement, and a dog walking business with a few clients. A few hundred dollars a day from various sources, with a nice walk in the afternoon, and a chance to meet new people through the float tank business. If you lose your dev job, the main source of income, you at least have enough back up to get you through it. I have no idea if this is actually feasible or not, but it's what I'll be attempting to pull off over the next few years.

Think about what you enjoy doing and if there's some way to get paid for that. Teaching, writing, speaking, land lording, house flipping, coaching. Design, build, and manage (or some subset of that) vacation properties, and you can use them for yourself when not rented.

You could also use some labour to reduce costs rather than generate income. Grow your own food, fix your own car, ERE style.

Considering you mentioned "focus less on absolute financial independence" and "small amount of savings", I guess that you want to generate multiple streams of income through your "labor" instead of "capital".

There are only two ways to generate, increase, create multiple stream of income through "labor": increase number of hours of "labor" spent working and/or increase the hourly rate you charge for your "labor". Two problems with "labor" based income generation approach: there is upper limit on the "labor" hours you can contribute and "capital" providers typically control how much they will pay you for each hour of your "labor".

When you generate income through "capital", you have none of these limitations. Unlike days of our parents and grandparents when "labor" was well-respected, now a "capital" based income generation approach is considered much superior.

You should be thinking about how you can move from "labor" based to "capital" based income generation approach. My wife likes to say it like this: "I want my Green workers (color of dollar bills not newbies) to work hard for me instead of other way around." Focus on maximizing conversion of your "labor" into "capital", accumulate/save the earned "capital" and then use it to generate income.

I'm working on this 'Portfolio' approach at the moment. Slowly, because I'm choosing to keep my main income fairly high which means it warrants more of my time.

Current income sources:

- Primary business, working as a business coach/consultant. Affords us a fairly decent level of life, but I cap my income (well, time) to focus on other streams because consulting income is only ever as good as next month

- Investment properties - 1 tenanted at present, with some plans to do the same with our current house. This is in Australia - both would be negatively geared, meaning they 'lose income money' every year (costs>revenue) but that's made up in capital growth. I originally thought property would be my primary wealth vehicle, but then got into business

- I have one live profit share arrangement with another business I helped build, where I get x% of revenue for a period of time. Nothing awesome, but a valuable experience and some 'free' income each month

- With my newest consulting brand, I plan to build on online membership knowledge base. Working on the structure and product/market fit right now.

- There's another company I'm actively working on, with the same membership model in place.

Both of the final two are 'proofs of concept' for me - learning by doing. I believe my current business skill set lends itself to creating the brand and product for this business model, so I want to add experience with the online platforms and channels to round it out. If I can get that combination humming, there's nothing stopping me partnering up with subject matter experts to create a few similar business each year. Each that work might only be mid-6 figure pa businesses and I'd have a minority stake, but you don't need too many like that in your portfolio to have the financial independence you're describing.

Not to say it can't be done, but it's probably better to focus on becoming more of an expert and learning new things to keep a job than an idea that's good at selling books, but really hard to achieve. I've lost a lot of money trying to chase side businesses. It's really hard to half ass something and make it successful. And if you do happen to find something like that why not put few more resources into it and make it really successful. The best investment I've had by far was socking away money into a 401k.

The problem is most businesses pay labor at minimum wage or slightly more plus own profit which a lot usually gets eaten by marketing, overhead etc.

Thank you for your comment - I really appreciate that you engaged thoughtfully with my question.

I understand I could make a massive amount (relatively) of money specializing, and to a certain extent I am, but I truly hate the market's insistence I be a one-trick pony. I'm willing to accept a lower standard of living to avoid this. I want to focus on other things in my life than the problems my boss tells me are important.

EDIT: I'm a big fan of ERE, if that tells you anything.

There's always real estate. Not passive mind you but still one of the more reliable ways to make more income on the side.

You could become a consultant/contractor. Not telling you not to explore other opportunities and or businesses. Although, I would avoid most canned business opportunities. I would focus on one at a time until its been exploited to its potential.

This. If there were magic businesses that you can run with little / less than fill time effort and earn reasonable cash, then wouldn't everyone do it?

The only successful people I know that run 'side' businesses work at them 110% putting in crazy hours for some good returns. One friend runs a company that gives out branded chilled desserts on hot days with advertising on. Maybe this will turn into his retirement money, but for now it gives him a good lump of money, but takes serious hours and head space alongside other commitments. And there is no guarantee that it will still make him cash next year.

I know specialising can feel like selling out, but that it where you look to specialise is something you are passionate about and care for.

Savings, maybe property in the right area and stocks it you get lucky is the way to go likely, all backed up with a solid career.

But then again, I'm a wage slave so what do I know! Go for it and let us know how you get on! Id imagine it would make a brilliant blog!

Thanks for the encouragement! We wage slaves need to support each other.

I buy ticker VOO, maxing out tax advantaged accounts first and then just keeping buying more.

http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-...

Something that I was listening to today along the same lines.

http://www.madfientist.com/side-hustle-nation-interview/

From the linked site:

Today on the Financial Independence Podcast, Nick Loper from Side Hustle Nation joins me to talk about the importance of investing in yourself, why you should diversify your income streams, and how creating your own side hustles can help make your journey to financial independence shorter and more enjoyable!

Build some websites and sell them on https://flippa.com.

Or buy one and improve it and collect adsense money.

does this work - always seems a minefield

I buy and sell HN Karma as an investment. So far im looking at about 40% ROI

Could you elaborate on this? I'm really curious ...

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