The bulk of my income (98%) comes from my job, however like many other personal bloggers I’m actively concerned with growing my other income streams. Earlier in the year I detailed some methods of making money. These income streams are primarily:

  • Rental Properties - I have just one right now, my old condo. (.5%/-6%)
  • Interest and Dividends (4%)
  • Peer to Peer lending via Prosper (13%)
  • And pulling the rear in dollar terms, Blogging (30%)

The number in parentheses is my return on investment for the year. This is the first year I have income from each of these sources. Without question, making money off dividends and interest has been by far the “easiest”, but is also the most difficult one to earn out-sized returns (at least for me).

Rental Property
I reported two number as my return, both are calculated as function of the money I put down (the down payment). The lower number, -6%, reflects that on cash flow basis I’ve lost money. I don’t generate any income on this property as I have to augment the rent I receive to cover the mortgage payment, condo fee, and taxes. The higher number, .5%, reflects increased equity.  Given that a portion of what I’m paying towards the mortgage is applied to the principal, I am in effect also paying myself.  That should count for somethig, though I doubt seasoned real estate professionals would ever count it.

Interest and Dividends
I’ve earned the most money in dollar terms via interest and dividends and expect this will continue to be case in 2008. My 4% return is reflective dividends and interest paid as a function of the amount invested. It does not reflect higher (or lower) stock prices.  I am expecting a dip in dividends and interest in the coming year given the lower interest rates, and the tough economic climate especially as related to banking stocks. Bank stocks are some the best paying stocks out there, but some like Washington Mutual have already cut their dividends. They are amongst the hardest hit companies by the ever expanding housing and subprime crisis. I would expect a dividend cut from many a bank.

Prosper
I haven’t put much money into prosper, only a few thousand, and have been lucky to have had no defaults as of yet. The 13% return is reflective of the total I’ve put into prosper, not just what I’ve deployed which is only 2/3rds of that amount. While it’s still early, I think I’ve been able to keep my default rate fairly low by both being selective on the borrowers I’ve lent to and actually reading each profile in detail.  Even though I’ve been lucky with defaults, I should anticipate that a few of might lons may not pan out, and pre-emptively earmark amount as an expected loss which would reduce my rate of return.  The biggest problem for me is how I approve loans, it’s hard for me to scale as I don’t want to dedicate all my free time bidding on loans.

Blogging
This is the income source I’m most interested in growing.  Not because I think I can earn the most money - the fact I’ve been able to cover my costs has already made me happy. I expect dividends and rental properties will be my primary sources of alternative income later in life.  Blogging however is the one I have the most fun doing, and earning more by it really gives me a great sense of satisfaction. It’s primarily my hobby, and secondly an income earning venture.  That said I’ve made a great return on capital (though not labor) as I’ve spent less than $50 on hosting for the year.  I would still have a computer and Internet connection even if I wasn’t blogging so I haven’t included those as part of my cost.