Little streams turn into big rivers

The ultimate goal for me is to have enough passive income coming in every month to retire.  Passive income comes in many different forms, however.  Some forms bring in less money more consistently, while others can bring more money, but less consistently.  I believe in having many different streams and a combination of both.  There are three levels of income I have found so far; top, middle, and lower level.  I plan on using all three levels to achieve my goals.  The lower level streams will help pay for the middle, while the middle will help pay for the top.  Let me explain what that means.

The lower level consists of ideas such as blogs, a YouTube channel, and an eBook.  I am currently looking for even more to go with those, but any ideas are helpful.  These are smaller, less consistent, streams because they rely on a fan base to either click on ads or buy books from affiliates on your blog, watch videos on your YouTube channel, or buy your eBook.  These small streams are still very important because they can help fund the middle level rivers.

In the middle level are more consistent, but more risky ideas like the Options strategies of writing covered calls and covered LEAPs, buying Tax Lien Certificates, and Peer to Peer lending on Lendingclub.com.  Covered calls require you to buy a stock and write contracts against them, while covered LEAPs require you to buy long term contracts and then sell short term contracts against them.  Both of these can be expensive and risky.  The same goes for Tax Lien Certificates, which requires money to pay a homeowner's unpaid property taxes in exchange for a very high interest rate when they pay you back.  Peer to Peer lending also costs money with the risk of default.  Each method of creating passive income described in this level has risks and rewards that I will discuss later, but they all can generate money at much faster rate than the lower level in order to pay for the top level retirement river.

The top level, to me, is the giant retirement river that all of the little streams and rivers flow into.  I have found two main investments that will make this river up.  The first is writing covered calls against dividend paying stocks.  Large companies will pay dividends of around 3% annually to shareholders.  When you combine making about .5% a month from the contracts you write, you get a pretty good amount of money for relatively low risk.  The second investment is rental properties, where people pay money every month to rent properties you own.

I will get into all of these more in later posts.  Having a plan is the first step toward achieving a goal, and this is my plan.