Benefits of income diversification
Whether you live abroad or not, there are many advantages to diversifying your income, such as increased purchasing power, greater protection against life's uncertainties, and even an increase in your financial and/or physical assets. These are essential, especially if you live overseas.
Income derived from a single financial source (typically a salary) is often subject to unforeseen circumstances. A person's financial and social situation can change if they lose their job. You might initially believe that income diversification only concerns those who are already wealthy. In reality, anyone can diversify their sources of income. Real estate investment, a secure income placement, immediately comes to mind. However, it is not accessible to those with low incomes (will they be able to get a loan to start with?). Other ways of diversifying your income include creating professional partnerships or selling handicrafts or digital products.
Investing in property
Real estate investment is a secure and popular choice for both locals and expats. It remains relatively stable despite the economy's ups and downs. Indeed, some countries are currently facing a real estate crisis (China, Canada, the United States, Sweden, France, etc.). Buyers are finding it more difficult to access credit, and interest rates are rising as well. However, industry experts believe that real estate investment remains safe due to its profitable nature, as there will always be a need for housing, and both a demand and supply of it will always exist.
Renting your property
You can purchase a property and rent it out to diversify your income. The property can be bought in either your host country or country of origin. Those who invest in their home country may be planning to return on retirement or for any other reason. In light of the current economic situation, they may also be assessing the "best" country to invest in, bearing in mind that the return on property investment takes longer than the economic condition. It is common to incur debts before reaping any profits. The initial income from rents will be used to pay off the debt and then to increase the investor's income. The profits can be used to invest in a new real estate project (annuity, stock market investment, etc.). There are several options, depending on the investor's preferences, budget, market and target buyers. For example, investing in a small area (a studio apartment in a student town, for example) may be wiser. But you can also decide straight away to purchase a house.
Holiday rentals
Holiday rentals powered by Airbnb remain popular. However, many local residents dislike it, especially in neighborhoods where there are a lot of Airbnb rentals. Countries such as Portugal, France, and Japan have introduced legislation to limit and control holiday rentals.
Transforming your home into a guest house
Another way of diversifying your income is to invest in a guest house. Unlike holiday rentals, investors stay in their own homes, which they have transformed into guest houses. Here, as well, the investment is subject to certain restrictions: the investor must comply with the laws of the host country in order to host guests. Guest houses are known to be more welcoming. The aim is not simply to provide housing to guests but to impart to them a piece of the country's culinary and cultural heritage. Running a guest house involves more than just renting out your home. In many cases, you'll be responsible for cleaning, cooking, general housekeeping and any activities you may be involved in, unless you have enough financial resources to hire one or more professionals, either seasonally or all year round. It's not necessary to operate as a guest house all year round. Some people take advantage of the high or low season to attract their guests while they undertake another professional activity for the rest of the year.
Investing in a garage
Have you thought about investing in a garage? Purchasing a garage is not only less expensive than investing in properties, but it also yields returns more quickly. It can be particularly profitable in urban areas where there is a shortage of parking spaces.
Monetize the renovation of your property
Have you purchased an akiya (abandoned house) in Japan? Are you buying a small house or renovating your property? Why not share your story? The DIY (Do It Yourself) movement is trending. Many individuals are joining the business and sharing their experiences on social media, blogs, etc. A simple desire to share their experience can become a new source of income. Professionals can be attracted by these individuals who may do their marketing. Partnerships can grow out of a simple blog or YouTube channel. Here, income diversification can take several forms: monetization of the platform (blog, YouTube channel, etc.) and/or receipt of "gifts" from the partner to distribute to their community, financial support from the company, etc.
Engaging in sales
Sales is another good way of diversifying your income. This has been observed in the monetization of social media and/or websites for property refurbishment. Alternatively, you can also rely solely on sales: running advertisements on your platform, selling goods and services, or partnering with businesses to make joint ventures (in which case you earn commission).
Selling products and training courses
Do you possess a particular skill? Are you employed in a specific industry? You could monetize your expertise by writing an e-book, providing training, or providing online service.
Be careful not to mislead your audience. If you present yourself as an expert in handcrafted jewelry but know nothing about it, your potential customers will quickly spot the scam. You should also bear in mind that online sales are highly competitive. Just look at the number of websites offering e-books and online training courses. These are goods and services that could initially be offered free of charge to attract customers, collect e-mail addresses and create a target customer base that you can then follow up.
As you have realized, you can still diversify your income when living abroad, irrespective of your income level. A hobby can become a new source of income. Professional partnerships can result from specialization in a particular field or activity. And, of course, investing in the stock market is another way to diversify your income. The most crucial aspect of all these projects is to abide by the host country's legislation and to be clear about your objectives and the means of achieving them. Lastly, even if you're hoping for a quick return on your investment, you should avoid any reckless behavior (this is especially true for stock market investments). It can take a long time to yield a return on your investment, so you should remain cautious to avoid unpleasant surprises.
