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Thursday, 9 February 2012

Multiple sources of income versus the 80/20 rule

Multiple sources of income 

Nowadays, you see everywhere people selling or talking about the concept of multiple sources of income. Interesting.

I’ve never heard of this phrase 15 years ago. I guess it’s one of those flavour of the decade kind of thingy.

This phrase - multiple sources of income - is a great sales hook to pull in customers and converts (sheep to the slaughter).

I first heard this phrase during the Multi-Level Marketing (MLM) craze in Singapore. Remember it?

Next were Options, Forex, Property, Land banking, and what have you. Even in cyberspace, “experts” were selling programs how you can earn extra sources of income through affiliated marketing, blogging, etc.

Mind you, I have nothing against a side income or two. I myself have done it. But multiple sources of income?

Pareto’s principle or 80/20 rule

In our work life, especially those of us in sales know and practice this rule. We know how to prioritise and allocate our limited resources to those activities that give us the biggest payback.

If you are not familiar with this 80/20 rule, you may want to read up on it. Practising this rule is one of the biggest contributors to me getting my overseas posting.

Some KPIs you can miss; some KPIs you die die must hit! Clueless people try to hit all KPIs. Crazy! (Of course unbuttoning my shirt’s top buttons and wearing musk cologne helps with female bosses. Hey! I’m joking only!)

Isn’t it strange? We do one thing in our professional capacities, but we do another in our private lives. And I thought I was the only one with split personalities!

Experiment: Take one pin and a bundle of the same pins. Now poke your hand with each of them. Which is more painful? 

Walk the talk

Regular readers may point that I dabble in currencies, precious metals, equities, futures, CFDs, and so on. Aren’t all these multiple sources of income?

Before returning to Singapore, I have two sources of income: my salary from IKEA, and my profits /dividends from speculation.

Can you see what I try to show? Equities, futures, currencies, etc. are merely vehicles or tools that I use – what I do part-time is speculation or betting. Nothing more; nothing less.

I don’t care whether I should call it trading or investing. And I don’t split hairs between dividends and capital gains – money is money; just as long it’s legal!

Now after coming back to Singapore to enjoy my “sabbatical from work”, I have one single source of income – speculation.

Others try to increase their multiple sources of income, I’ve reduced mine. 

Selling or buying your way to financial freedom?

Now apply my logic to those evangelists of multiple sources of income. They may be engaging in lots of different activities, but there’s one common thread – selling.

That’s how they got rich! (Selling books; selling seminars; selling services; selling products; selling ideas; selling dreams, etc.)

Ask yourself: If you only buy from them, how are you going to be financially free?

I’m not saying don’t buy from them (we all have to make a living); but you got to join them after buying. Start selling too!

But I make money by buying equities and properties you may protest.

Au contraire! You make money by selling equities and properties at a profit!

Think about it for a moment.

(Tip: You earn your salary by selling your time plus labour and/or brain power.  No country gets rich only with imports.)

Confessions of an ex-salesman 


  1. Hi SMOL

    Multiple sources of income to me currently is blogging and dividends/interest from investment securities. I realise that it's hard to truly have another source of earned income unless we can leverage our time :-)

    Be well and prosper.

    1. Panzer,

      Instead of throwing 8 to 10 fishing lines and catching ikan kunings by the quayside, I was thinking if we focus on 1 or 2 lines in deep water, we may catch a bluefin tuna!

  2. When I fish, I will have 1-2 main fishing line for long throw into the deeper water to try big ones and while waiting I use a smaller fishing line to catch ikan kunings and tambans by the quayside. Don't go home empty-handed; or else need to go to super-market to buy ikan kunings.

    1. Dividends or rental or kopi $ = ikan kunning?
      But, we must be able to catch biggies too. No biggies no fun fishing.

    2. LOL CW8888!

      Spot on!

      You've got your Keppel and Biosensor from the deep waters. Congrats!

      No fish; prawn also good!

      Makes a lot of sense while waiting for the big fish to bite.

      I've noticed some focus so much on the ikan kunings and bilis that they have forgotten their main lines in the deep waters...

      Nothing wrong with ikan kunings or bilis. If this is what I want, I would use a net - not a fishing line!


    3. Thanks CW8888!

      Very grateful for making my post more "complete" ;)

      One of the main line is our day job. Nothing comforts the surprised investor/trader - who has been whacked with a lost of $50,000 - knowing that we can EARN it back. (And start all over again; this time wiser!)

      If 80% of our income comes from our day job... And if you factor in the missed promotions and raises due to "lack of commitment"...

      OK, enough rustling of the leaves :)


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