When most people think about investing in the stock market, they think about buying a stock and hoping it goes up over time.  And while that is part of the game, the truth is that there is a simple way to use the stock market to create real cash flow...  not just growth that you see on a screen, but actual investment income that you make on every single day on repeat.

Think about this: what if your money could work for you every single day so that you are getting paid to be an investor?  Would you want to learn how to start doing that?  Would investing become something exciting that you could look forward to because you knew that you were actively growing your income with every dollar that you put in? 

I am going to walk you through the simple three-step path that I personally use to generate two separate income streams from the same shares of stock.  If you are just getting started with investing and have never done this before, this is the big-picture overview you need to understand before anything else.

Step One: Finding the Right Stock

The first step is to find a stock to buy, but not every stock is a good fit.  This is where most beginners go wrong.  They hear that they should invest in the stock market, so they just pick a company they recognize and buy a few shares.  That's not necessarily a bad thing, and it's better than doing nothing, but if you want to build real cash flow, there is one key thing you have to look for first: you need to find a stock that pays a dividend.

Not every stock does this, and that is really important to understand.  A dividend is a payment that a company makes to its investors simply for being owners of the stock. Some of the biggest, most established companies in the world pay dividends on a regular basis, usually once a quarter but some more frequently.  These are companies that are profitable enough to share a portion of that profit with the owners of the company (the people who own shares).

So step one is not just finding any stock.  It is finding the right kind of stock — one that is going to pay you simply for owning it. T his is the foundation that everything else is built on, and and it's what starts you out building real cash flow as soon as you buy the stock.

Step Two: Buy the Shares and Start Collecting Dividends

Once you have found a solid dividend-paying stock, step two is simple: you have to actually buy the stock.  Give the market some money, and buy the stock.  You are now an owner of that company (even if only a very small owner), and because you chose a stock that pays dividends, you are going to start getting paid for holding those shares.

This is cash flow stream number one.  You bought the stock, you are sitting on it, and the company is sending you money on a regular basis simply because you are an owner.  You don't have to do anything else.  There's no need to sell the stock, make any trades, or do anything special.  You own it, and get paid to own it.

This is one of the things I love most about dividend investing.  Most people think you have to be active in the market every day to make money — buying and selling and spending all day watching charts.  But with dividend stocks, the company is literally sending you money into your account just for being an owner.  It's pretty cool when you get your first dividend and realize that you just made real, passive income. 

Step Three: Sell Covered Calls and Create a Second Income Stream

Here is where things get really interesting.  Step three is to sell something called a covered call on the shares you just bought.  I know that might sound complicated, but let me break it down in simple terms because this is one of the most powerful tools available to everyday investors.

When you sell a covered call, you are essentially making a promise.  You are telling someone, "If this stock goes above a certain price, I will sell you my shares at that price."  And because you made that promise, somebody is going to pay you a premium right now — whether the stock ever reaches that price or not.  That payment is cash flow stream number two, and it comes from the same shares you already own.

To do this, you need to own at least 100 shares of the stock, because covered calls are sold in groups of 100 shares, or what's call "contracts".  That is the starting point.  Once you have those 100 shares, you can begin selling covered calls regularly — weekly, biweekly, or monthly depending on the stock and your strategy — and collecting that premium income on top of the dividends you are already receiving.

Think about what that means.  You buy the stock, you hold the stock, and that stock is now generating two separate streams of income for you.  The company is paying you dividends for owning it, and other investors are paying you a premium for the promises that you make.  Same shares.  Two income streams.  That is what it means to get paid to be an investor.

So What Does This Mean for You?

Here is what I want you to take away from this.  Most investors are playing a one-dimensional game — they buy a stock, hope it goes up instead of down...  they sit there watching their money go back and forth but without generating any income.  The approach I just walked you through is a completely different way of thinking about the market.  Instead of just hoping for growth, you are building a system where your money is actively working for you in multiple ways at the same time.

It is not complicated.  It is not something you need to be a financial expert to understand.  It is a simple three-step path — find the right stock, buy the shares and collect dividends, and sell covered calls to create a second income stream.  That is it.  And each of those steps is something you can learn, practice, and get better at over time.

This is super fun, and it feels amazing once you start to do it...  If this idea makes sense to you, take a look at this quick video I made talking about the same thing! 

Always remember,

Your financial future is in Your Hands.

​— Ryan