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How to diversify your income stream

In the beginning of 2022, the global stock market grew to an all-time high, albeit temporary, and was shortly followed by what some economic speculants are now starting to refer to as a recession. Since January 2022 the Dow Jones Industrial Average has fallen with just over 20% by late September 2022, climbing back up to roughly 10% below the market almost a year ago. 

This is partially due to overvalued stocks during the pandemic and a massive interest spike in crypto currency. Now that most economies have opened up and COVID restrictions have been relaxed, these markets are losing interest and consequently investment interest. To make matters worse, there are many other socio-political factors that affect the health of the global economy, and if this is disrupted (as it is with wars and the aftermath of COVID) the markets lose investment and therefore fall in value.  

The crypto market has also not been faring well. Bitcoins all-time high was $69 000, but today only stands at just below $16 800. This drop in value can be attributed to market volatility and investment doubt following two crypto trading platforms, Voyager and Celsius, declaring bankruptcy July 2022. Additionally, in November 2022 FTX cryptocurrency exchange faced a liquidity crisis and declared bankruptcy in one of the biggest cryptocurrency fraud scandals to date.

Why diversify your income?

Diversifying your income refers to receiving income from more than one source. This not only gives you more security, but will create more wealth that you can save and invest. The good thing is that you don’t always need money to make money, and there are ways to diversify your income without coming up with significant amounts to invest in a fund. 

When you think of diversifying your income, there are many ways of creating a stream of passive income with little to no cost to set up. If you are relying on a paycheck from only one income stream, you are running a very high risk of losing all your income, should your role be removed or the company closed down.

Ways in which you can diversify your income

When we speak about diversifying your income, we need to recognise the difference between active and passive income. 

Active income is something that requires your regular input, such as freelance work as your side-hustle or a second part-time job. If you have the capacity to add more work to your plate, active income is something that requires no cost to set up – only your time and effort. There are many websites that offer the opportunity to bid for freelance work, and part-time job applications are also available in most industries. 

Passive income is income that you receive with minimal to no input required from you. Typical examples of these are interest received from money market or savings accounts, shares that pay annual dividends and capital gains on property bought and sold. All of these require significant investment amounts to deliver a return that you can rely on as monthly or annual income, and they take a long time, often over 5 years, to show significant growth. Taking a financial planning or investment course will greatly add to your expertise as an investor and you will be financially rewarded for your efforts over the longer-term.

Our top additional income streams

If you have money available to invest, patience is key. Take the time to learn more about investment, market behaviour and practice. Knowledge and understanding of where you are investing your money is a crucial part of diverse investment portfolios that most investors miss. As Warren Buffet, Charlie Munger and Peter Lynch say, stay within your circle of competence. If you don’t know anything about an industry, why would you invest in that sector? Recognise the industry you are in and your level of understanding of the advancements that the sector has made in recent years.

The no cost method

If you have little to no money to invest, you will likely need to put some time and effort in to set up your next stream of income. This can either be by doing a photography course to sell images online, a sound or music course to gain freelance work, or even an accounting course to become a part-time bookkeeper. If you have spent time and effort on learning a new skill and have become good at that skill, you also have the ability to teach. Creating an online course might be an effort at first, but it is proven to be a great source of passive income. 


Diversifying your income is a crucial step to gaining financial independence from your day-job. The average millionaire (in USD) has 7 streams of income, these are passive and active income streams. It all takes time and effort to set up, but rather start now than never.

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