How to Create Multiple Income Streams

Extra money – who doesn’t like that idea! A paycheck isn’t as reliable as it used to be. No matter what your salary, how long could you go if you lost it?  What if you can pick up more cash without taking a second job? Let’s talk about the ways to build multiple income streams.

7 Streams of Income

The IRS identifies seven types of income. Other than earned income (your paycheck), they all represent passive income streams. The ideal for multiple income streams is making money without secondary employment.

  1. Earned Income

As noted, this is your paycheck. The best way to create extra money from earned income is to max your 401k and/or other retirement accounts. Though it’s not an additional income stream now, it will be later.

  1. Dividend Income

When you invest in stocks, you can earn dividends. A dividend is offered to shareholders when the company has excess earnings. The company makes a declaration of the dividend amount and payment date. It’s paid to a class of shareholders at the end of a quarter.  Mutual funds and even some S-Corporations may also offer dividends.

Ordinary dividends are taxed as income. Qualified dividends are taxed as capital gains – a lower rate. Qualified dividends must meet specific requirements. The dividend must be paid by a US or qualifying foreign company and meet a holding period. Certain types of dividends are ineligible for qualified status.

  1. Business Income

The profits you make from owning a business can be a profitable revenue stream. (This is not the same as earned income.) If you run your medical practice, you pay yourself a salary. Any revenue the practice generates is extra money for the owners or partners.

  1. Rental Income

Rental income is self-explanatory. You own property – residential or commercial – and rent space in it. This a resilient income stream. No matter what happens in the housing market, rentals stay strong. Rental values vary with location but can be easily inflated. By adding amenities you can increase the amount of rent you charge.

You don’t need to be a landlord to own rental property. Property management services will handle the day-to-day details. That service is one of the many tax write-offs that come with owning real estate.

  1. Interest Income

Interest income is exactly what it sounds like. It’s the interest you earn on CDS or savings accounts. Peer-to-peer loans and some crowdfunding opportunities provide interest as well. Interest income is when your money makes money.

  1. Royalties and Licensing Income

You generate income from royalties on books, music, film, and television. Both the owner of the product and the participants can benefit.  An example is the distribution of film or TV production. Actors, writers, and producers continue to get royalties during syndication.

Licensing is the use of a name or intellectual property. The Trump Organization licensed its name to properties it did not own. Celebrities can license their name to products – usually clothing lines.  Another example is the use of technology. Microsoft licenses its Office 365 software with a short term, annual licensing agreement.

  1. Capital Gains Income

Capital gains are the money you make from selling investments and other assets. They are assessed on the sale of luxury items, real estate properties, or small business. Short-term capital gains – owned for less than a year – are taxed as income. Long-term capital gains are taxed at a much lower rate depending on your income. The rates range from 0% to 15% to 20% depending on your filing status.

(READ: 4 Simple Steps to Start Your Investment LLC)

5 Ways to Create Multiple Income Streams

money magnet

Unless you want to take on a second job, passive income streams are the way to go. Passive income isn’t without some effort, but the income extends far beyond the initial labor. Check the income categories and see which are the best fit for your budget.

Then get creative. Making money on the side is easier if you follow your interests and expertise. Videos, eCourses, books, and blogs can be profitable ventures. Some commitment is required but the investment in time will pay off.

Real Estate Investment Trusts (REIts)

Dividend Income

If you have the cash to invest, it’s always a good time to look into real estate. REITs are companies that own or finance properties. Some are publicly traded on the stock market while others are private firms. They offer a stable, full-return investments that delivers high dividends. REITs also offer the potential for long-term capital appreciation.


There are three different types of REITs:

  • Listed on the Stock Exchange
  • Public but not listed:
  • Private (These lean toward accredited investors.)

Respectively, the minimum investments are 1) single share price, 2) $1000-$2500, 3) $1000-$25,000.

The IRS says REITs must deliver at least 90% of taxable income as shareholder dividends every year. That’s a great deal for investors. REITs must earn 75% of their gross revenue from real estate purchases or interest on financing. They must have at least 100 shareholders and there are constraints around share ownership.

When they meet these criteria, REITs do not pay corporate-level taxes, giving them an edge in financing. The dividends are historically high. Because of their buying ability, REITS are also growth investments. Which leads to bigger dividends.

Fractional Shares: Buy A Slice

Dividend Income

If you don’t have $1000 you can invest, you can still dip your toe in the stock market. You can buy a fraction of a share at a fraction of the price.


The ability to buy slices of stocks has diversified the investment community. In the past, the market was only affordable for wealthier people. Moderate-income investors had no way to engage. Fractional shares have changed all that.

On Feb. 1, 2021, Microsoft shares were selling at $242. If you can invest $25, you own 10% of 1 share. Microsoft also pays quarterly dividends. It won’t be much, but you’ll get 10% of the dividend on a full share. Let’s say you can invest $100. You don’t have to invest it in only one stock. You can buy a slice of stock in Target. Get AbbVie (pharmaceuticals) or Johnson & Johnson or Pepsi.

Each of these brands cost less than $200 a share. Invest your $25 a month for less than 8 months and you own a full share of each. Plus, they all offer dividends.

(Purchase future cash flow to get wealthy…stop buying more stuff)

Create a Brand

Business Income | Royalty and Licensing Income

A brand is built around a product or service that offers a solution to a real or perceived problem. The more people who need a solution, the faster the brand becomes known. The product or service must meet expectations and communication must be consistent in every transaction – online and off.

A brand is more than a business. It is a recognizable commodity that loyal customers trust and follow. This income stream will take anywhere from 2 to 3 years to develop. Expect investments of time and money.


If you already have a product or service, set up your business. Either an LLC or S-Corporation – both can be taxed at corporate rates. Make sure you have legal protections in place for intellectual property. Develop a marketing strategy that includes digital and/or brick-and-mortar distribution. Look for endorsements, create affiliate programs, utilize social media.

A strategy to consider is building a lifestyle brand. Lifestyle brands align with their customers’ desire to live their best life. Companies like Nike or REI tap into the belief systems of their target market. Then they deliver the products they want and need. These brands offer more than sneakers and hiking boots. They help customers embody their values.

A brand can also be about your expertise and personal lifestyle. These brands can develop into million-dollar businesses because of the individual leading them. Joe Wicks – known as “The Body Coach” has over 4M followers on Instagram. He’s parlayed his brand into cookbooks, apps, and workout plans for an estimated net worth of $20M.

On the opposite side of the spectrum is Eckhart Tolle, a quiet, quirky new-age philosopher. Tolle published a book on overcoming his own depression by applying a spiritual strategy. It became an underground hit and caught the attention of Oprah Winfrey. Today his brand includes conventions, courses, and a TV channel for a net worth of $70M.

To build a brand is a commitment. This is not a get rich quick scheme. Selling a product, a service or even yourself requires time and money. The payoff is an income stream that keeps expanding, providing more revenue opportunities.

Become an Online Teacher

Business Income

Learning is making a comeback online. In just the US alone, the e-learning market could grow by $12.81 billion between 2020 and 2024. Most major corporations are using online courses for training, with more to follow by 2025.


Depending on your skillset, corporate training is a strong market. Health and wellness is a priority for companies trying to reduce costs. A doctor who offers training on weight loss or the best diet for treating diabetes has an easy pitch. Classes on how to use software could be integrated into the onboarding of new employees.  Online safety courses will help to minimize accidents and reinforce company policies.

For those who want to be independent teachers, there are many platforms to host your courses. These may be of interest to professionals offering expertise to colleagues. These types of courses are technical and part of professional development.  The Medical Library Association offers courses taught by physicians, data specialists, and lawyers.

If you prefer, platforms like Teachable offer the means to post and publicize a course of your own design.  Publish the link on your website and social media. We highly encourage YouTube for course teasers.

Peer-to-Peer Lending (P2P)

Interest Income

Peer-to-eer lending is an alternative to traditional lending practices. Individuals lend money to people or projects instead of a bank. They earn interest on the loan. There are a number of platforms that facilitate the transactions.  You don’t need millions to invest – the minimum varies based on the platform. They offer different interest rates for loans. Some are directed at borrowers with better or worse credit histories.


Once an investor chooses a P2P platform, they open an account with an initial deposit. Borrowers post a financial profile and are assigned a risk category.  The risk profile determines the interest rate they will pay.  For people with good credit, interest rates are often lower than banks are offering. With sketchier credit histories, they are higher.

The P2P industry has evolved to include small business loans and auto financing. There are even options for physicians to finance medical care.   Investors offer the full amount of the loan or break the amount up among different applicants. This spreads their risk across multiple borrowers.

For some investors, P2P is also part of their value system.  A credit report doesn’t consider mitigating circumstances. These investors offer a second chance to worthy people.

The interest rates are higher than what you can make for CD or high yield savings account.  But you should always check the loan default ratio. Some platforms can be as high as 4.5%.

Multiple Income Streams Protect Your Lifestyle

No matter what earned income you make, that paycheck is dependent on your employer. It can be gone at any time. Even if you’re confident in your job – who doesn’t want to make more money? Passive income can take some effort – starting a business – or just means writing a check.

The money you earn can be invested in your future – a 401k, a Roth IRA. Multiple income streams provide the lifestyle you want, without jeopardizing your retirement.

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