The benefits of creating multiple passive income streams

During the course of our careers, in our respective places of employment, we may receive a number of promotions and salary raises that will aid toward increasing our monthly incomes. Despite this, our incomes; or our costs to our respective companies; will never bring us wealth. Our employers will often award us a sum each month that allows us to be comfortable, or at minimum, survive the month. Wealth is created through making clever decisions and having strategic financial plans in place. To grow your wealth, you should seek to have more than one income stream, as it is those extra income streams that create wealth.


For example, Mary earns R20 000 per month from her day job. She happens to be a good salesperson and each month she generates an additional sum of R5 000 in commission from selling various items. She invests this amount – R5 000 – in a property which also generates rental income. Last year her assets increased by R500 000. Mary is creating wealth for herself.

Having only one single stream of income creates financial risk – it’s never a good idea to put all of your eggs in one basket. In Mary’s case, she is protecting her family against these risks

An additional income stream could be active, passive or a combination of the two.

Where active income is the result of the income generated from (for example) a small selling business, a passive income stream is generated with the core agent having to do very little work.

An example of passive income would see a person write the content for an education course that could be sold with very little effort.

By diversifying your income streams among different industries, you are then able to both protect your lifestyle against major losses during downturns in one market, as well as allow opportunities for financial benefit from the upswings in another.

At Northwood Financial Services cc our retiree clients have between three to five different income streams. Not only does this protect their basic survival, but it further allows them to live the lifestyle that they desire.

If you are seeking financial planning services, and are interested in exploring the possibilities of passive income, contact Northwood Financial Services cc and speak to one of our representatives.

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