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Book Review: Multiple Streams of Income

Multiple Streams of Income by Robert G. Allen [3] is barely worth borrowing (from the library), skimming, and returning about a day later. It was originally published in 2000, then revised in 2004, and basically is split into two parts. The first part discusses how to manage your finances (encapsulating the entire concept of The Automatic Millionaire [4] in one chapter) including budgeting, controlling your spending, and other commonly discussed principles on this blog and dozens of others. The second part is identifying three ways to generated income (hence multiple streams) and those are basically in the stock market, in real estate (where he made his fame), and in a nebulous grouping he called “network marketing.”

Robert G. Allen made his claim to fame by writing Nothing Down for the 90s [5] back in 1989 (a newer edition, Nothing Down for the 2000s : Dynamic New Wealth Strategies in Real Estate [6], is now available). If you’re interested, you can read a little of the background research performed by John T. Reed on Robert Allen [7] which, if you believe Mr. Reed, shows Allen probably not as successful as he leads on to be.

Ignoring Allen’s apparent real estate track record, the first section of the book explains how you should manage your spending. An analogy he uses throughout the book is that of a mountain covered in “streams” and filling up pools. The pools themselves have cracks, your expenses, and you must learn to control both the streams and the cracks. Section one, deals with those cracks first.

The best takeaway from this all is an excerpt about John D. Rockefeller, oil magnate, and his allowance strategy with his kids. The kids worked for all they earned above a base salary of a quarter or so, then 10% went to charity, 10% went to themselves, and the remaining 80% was saved. This mimics some of the allowance strategies by some of my fellow bloggers [8].

The second part of the book covers where you can find more streams. He begins by explaining the difference between linear and residual, or in the parlance of our times, active and passive income. Linear is active income, you work an hour, you get paid an hour. Residual is passive income, you work one hundred hours to write a book, it continues to pay you after you stop writing the book. The three categories of streams he lists are pretty straight forward and there’s a healthy dose of his mainstay: real estate.

The first two categories (stocks and real estate) explain what you’d expect them to explain – investing makes you money. The third category involves “network marketing” which means getting other people to help you make money, without paying them, basically. He pushes a vitamin pill multilevel marketing (MLM) scheme as something he doubted but then loved and he explains how these network type businesses make you money.

The one good section I did like was the one explaining tax liens a little bit, that’s the part you should read, but, in a tone as if he’s trying to sell you something, he makes it sound easier that it probably is. He makes it sound like you buy the lien, sit back and wait for the check, and, this is the kicker, there is NO RISK.

Overall, this book and its flashy informercial-esque cover isn’t worth buying, but you might want to skim it. I think personal finance novices should avoid it, as it gets crazy ideas into your head, and you should go with something else. The multiple streams section’s main thrust, passive over active income and to have multiple streams, is a simple concept to understand and doesn’t need a book. (If you want to learn about investing in the stock market, read a book by the Motley Fool.)

If you’ve read the book, I’d love to hear your two cents on it.