BUILDING wealth requires investment in opportunities or assets that appreciate in value and/or generate additional income. A wise person once said, “Work full-time on your job to make a living while working part-time on your fortune.” If your day job is your only source of income, you may want to explore how you can increase your wealth by creating additional sources of income. This puts you in a position to increase your allocations to your investment account or take advantage of business opportunities that may come your way, allowing you to accelerate the wealth accumulation process. Below we explore some options available for you to generate additional income, courtesy of NCB Capital Markets Limited.
BUILD WEALTH BY INVESTING IN REAL ESTATE
Last week we shared the benefits of acquiring real estate for its ability to generate wealth through appreciation in value. Today we explore its income-generating potential through both short and long-term rentals.
The rise of Airbnb (short-term rental)
The recent growth in popularity of Airbnb properties on the local market makes real estate an even more attractive option for women to generate additional income and ultimately build wealth. Many Jamaicans have found listing their house, apartment or even a room in their house on Airbnb to be quite lucrative. Having a good value proposition such as ease of accessibility to commercial areas, a customercentric approach with an overall offering of high-quality service in a clean and attractive space, could increase traffic to your property. While Airbnb is the most popular, there are other accommodation sharing sites such as HomeAway, Vrbo and FlipKey. If you are an existing property-owner, renting to visitors short-term is something you can consider to start generating a second income.
You can also build wealth by using your property for the traditional long-term rental. Though long-term rentals are often not as profitable as short-term rentals, they require less effort to manage because of the lower tenant turnover. It should be noted that property rentals will only be lucrative and generate positive cash flows if the property income exceeds accumulated expenses such as mortgage, insurance, taxes, maintenance, etc. Therefore, these are factors to consider when looking at renting property.
START YOUR OWN BUSINESS
Despite the risks, entrepreneurship can yield a continuous flow of income and returns on capital investment. The business that you choose to develop need not be elaborate, but it should capitalise on an opportunity in an untapped market. For Patria-Kaye Aarons, daytime TV presenter and CEO of Sweetie Confectionary, this opportunity was in the local candy market and its desire for authentic Caribbean fruit-flavoured hard candy. Since inception in 2014, Sweetie Confectionary has captured a larger market through regional exportation. Similarly, you too can carve out opportunities to reap returns by uncovering a common problem to which you can provide a solution through the creation of a good or service that adds value.
Although there are accompanying challenges and downside risks associated with entrepreneurial pursuits, the upside potential of establishing a business with high growth possibilities that can lead to appreciation in wealth is greater.
MAKE YOUR STRENGTHS, SKILLS AND HOBBIES WORK FOR YOU
What skills, talents and strengths do you have that you can use to generate additional income outside of your traditional job? Your love and ability to sing, dance, act, cook, write poetry, etc, are assets waiting to be monetised. Capitalising on interests you are passionate about allow you to generate additional income while completing tasks/activities that essentially do not feel like work. Isn't that what is called the 'best of both worlds'?
Sakina Deer, a Jamaican actress, Simone Clarke-Cooper, the group chief communications manager at Grace Kennedy, and Talia Soares, a Jamaican lawyer, are examples of career women who have leveraged their talents to generate additional income. These women represent just a small sample of the larger group of successful women who have positively exploited the income potential of their capabilities.
The modern woman is known for artfully juggling her career and family life. Now it is time for that skill to be extended to another important facet of your life — building your wealth. Having diversified sources of income will enhance your wealth building capacity and can propel you to your financial goals at a faster pace. It is often said that the average millionaire has seven streams of income — let's start from two and work our way up!