To become financially independent, create multiple streams of income.
So why do you create multiple streams of income? Because it is cash flow that allows you to spend, save, and invest.
Many investors simply miss the point if they over borrow to invest in something like property and shares, and then cross their fingers hoping there will be sufficient capital growth to cover their losses and sell for a profit sometime down the track.
This usually ties up their cash flow from their job and the rent or dividends from the investment they bought for many, many years while they pay it off.
Too bad if any other opportunities come their way in the meantime. You can’t use capital growth to spend, save and invest unless you sell or borrow against it.
Astute investors follow a simpler path.
Firstly, they understand that the most important source of cash flow is their primary income from their job or business. This means that they always live below their means and use their surplus income to invest every pay, no matter what.
Secondly, they invest in income producing assets. The difference though, is they pay very close attention to the income or cash flow available from that investment.
This cash flow is used to purchase more income producing assets, which purchase more, and so on.
The ultimate idea is that they replace the income that they generate with their time, blood sweat and tears, with passive income from their investments that earns them money while they sleep.
The more income sources the better.
This does not mean that they do not borrow, of course they do. But they offset their risk by having their debt covered as much as possible by their investment income, and as little as possible from their income from work or business.
This means they usually start by saving hard and making their first investments smaller and build or trade up as they go.