Robert Kiyosaki opened my eyes to the notion of passive multiple income streams 9 years ago and it changed my life. Of course, my dad had been talking about “cash flow investing” since I was born but for some reason I was too dense to figure out what he meant.
In the context of Kiyosaki, multiple streams of income has generally been interpreted as investing in real estate. After Rich Dad Poor Dad was published in 1997, a generation of real estate groupies was born! You couldn’t help but get excited. You get a few houses or apartment buildings cash flowing, and before you know it, you are financially free, right?
For those of you out there actively trying to make this happen, it is a little bit harder than it sounds, isn’t it? For one, finding properties that cash flow and won’t end up costing you money in the end is actually a lot of work and takes some level of expertise.
That’s why we have the Wealth Formula Accredited Investor Club– to help facilitate opportunities and to help you deploy your capital. Beyond finding deals, however, there is also the challenge of not having enough capital to deploy to get you to your financial goals in a time frame that you might find acceptable.
A good cash on cash rate of return on real estate is 10-12 percent. Let’s break that down. You save $100K and deploy it in an opportunity that yields 12 percent cash on cash. In exchange for your $100K, you get $1K per month. If you are a $100K level investor, that extra $1K per month is probably not going to be enough to free you of your golden handcuffs. You’re going to need a lot more capital over time.
OR–you could find something that makes you A LOT MORE return on investment than owning real estate. You could invest in a business. Truth be told, I own four cash flowing businesses that account for the majority of my income. I certainly do own plenty of real estate and other assets, but the businesses I own are the assets that throw off the most income by far.
To be clear, I consider my businesses cash flowing assets just like my real estate–multiple streams of income does not mean it all has to come from rental homes, or owning notes.
Of course, owning businesses is far more volatile and risky than owning apartment building as a general rule. The key to making this strategy work, in my humble opinion, is to have a portfolio of assets with different risk/reward profiles that includes high cash flowing businesses.
The problem for most people is that they do not have enough time or the expertise to start a business. There is also an initial capital cost to start or purchase a business that, if you fall flat on your face as an entrepreneur, could result in a painful financial outcome.
So, as your Wealth Formula sherpa, I’ve been on the lookout for ways that you too might be able to participate in business ownership with relatively low financial risk and I think I may have found one.
I know a handful of people who have done really well on Amazon over the years so I wanted to present this option to you–one that I might be looking into myself at some point with my eight year old daughter.
To discuss the Amazon option, I invited Dylan Frost on this week’s Wealth Formula Podcast. Dylan is behind thewholesaleformula.com and will tell you how to create streams of income on amazon that you can automate. Make sure to check it out!