By Chinwendu Obienyi
There is a saying that Nigerians can survive in every area of the world and this is true because despite the weak macro economy, we have seen businesses expand especially small businesses grow from strength to strength.
However, what many people do not know is that these businesses have different streams of income which is gaining so much attention and is tagged in today’s world as “side hustle”.
Creating multiple income streams is a way to supplement one’s primary income to achieve financial income to achieve financial goals such as saving for retirement, getting out of debt or meeting other obligations.
There is nothing wrong with having one primary source of income but it can be very risky. Many Nigerians experienced this during the COVID-19 pandemic. This is why it is crucial to have more than one stream of income because if one dries off, you have the other ones to fall back on.
The year 2023 is just days away and there is a bearing need for every Nigerian to be deliberate about creating multiple income streams to accelerate their journey towards financial freedom.
There are recommended types of income streams. They include; Dividend income, capital gains, interest income, earned income, business income, rental income
1. Dividend income
This is an income earned from investments in stocks, mutual funds and exchange traded funds (ETFs). You can set aside a certain percentage of your savings to invest mostly in stocks (Nigerian or foreign) that have consistent and good dividend payments. This strategy helps you to navigate the market cycles (ups and downs) while enjoying steady income. Dividends are paid bi-annually, quarterly, periodically.
2. Capital gains
This refers to the profit one makes from selling assets that have increased in value (financial assets and property assets). The assets can include stocks, mutual funds and ETFs. For example, if you purchase a stock at N10 and it becomes N20, you can sell and take the profit. This opportunity comes up when you invest in companies with huge potential over the long term. The prices of mutual funds and ETFs can also increase and you can sell to make profit. However, if you invested in good companies with consistent performances, then you can keep these investments to enjoy the capital gains and reduce your exposure to these when getting close to retirement to invest more in fixed income instruments.
3. Interest iZncome
This is the income from monies invested in fixed income assets (Treasury Bills, FGN Savings bond, Commercial Papers) as well as return money put in high yield savings and investment accounts. The key is to invest your money in a safe and reliable investment that will pay you a consistent interest payment. This is a trick to growing your investment faster and one has to ensure he or she avoids keeping idle funds in his or her bank account and invest in these aforementioned securities.
4. Earned income
This income comes from jobs or side hustles. This is that type of money you make from working outside your full-time job which means that you will need to work for more hours. Also you can sharpen your work skills and experience and then these can be monetized later.
5. Rental income
This income comes from money earned from renting out properties (apartments, commercial estates e.t.c). While periodic return on real estate can be low, the income gotten is steady and the property can also appreciate over time. If you are not comfortable with managing or investing in rental apartments, you can also invest in REITs which are publicly traded companies and operate income producing real estates. However, the performances of REITs in Nigeria has not been encouraging and hence an investor or individual should treat with high caution.
6. Business income
This is the money earned from running a business and this usually happens when one is self-employed or earns passive income if one has an investment in businesses or running a business alongside your full time job. It is also essential that this does not conflict with your full time job.
Hence, it is recommended that Nigerians imbibe or cultivate a savings culture that allows you to create multiple income streams to enable one sustain their current lifestyle when in active service or retirement. 