When creating content online, the amount you initially get from what you've created may not seem like a lot, but one thing to take into account when building an income stream is the long-term revenue generated by that income stream. This can put an entirely different perspective on the result of the work done building it. A newly created income stream could be considered to be worth the amount of money it takes to generate that amount of income, which can be quite substantial.

At the lowest levels of risk are bank deposits, which can be government insured to a certain amount (in the UK at least). An account without monthly fees and quick access will give you an interest rate of 1.5% - if you are lucky - and which typically requires a minimum amount to be kept on deposit, and often a minimum amount that must be deposited every month. The rates are even less on many accounts, although tying the money up for longer can result in higher rates of return.

This does not even consider taxation issues, which will reduce the actual percentage received, nor inflation which, at these low rates of interest, will mean that in real terms the money will decline in purchasing power over the long term. The amount may increase, but it will buy less and less as the years go by.

Property InvestingCredit: SXC.HUIncreasing the levels of risk, through channels such as peer to peer lending, can increase the interest received to 5%+, but the higher the risk, the less protected your capital is. For higher levels of return of 10% or more through channels such as property investing, an increase in the amount of leverage (borrowing) and a commensurate increase in the level of risk, will often be requires. Stock market investing can be a good alternative, but if you are a know-nothing investor, your best bet is to invest with an index linked fund rather than individual investments. That's Warren Buffet's opinion anyway.[1]

With the possible exception of property, generating an income from these areas require an investment of capital in the first place. With property, capital may be required, but it doesn't have to be your capital, although Buffet himself originally invested other people's money and earned from that.

Writing in a NotebookCredit: MorgueFileThere are a number of ways of building income streams online. Writing for revenue sharing sites such as InfoBarrel is one method. An article, once written, can continue to earn in the future, but this income may not be stable. Constant changes on the internet and with search engines can make methods that worked in the past fail to work in the future. They may need updating, depending on the type and topic of the article in question. Product reviews, especially those of technology items, can become rapidly obsolete, and those that may not specifically review any products, but include links to different products within the article, can often still need updating should that particular item no longer be sold.

"News" articles about current events will quickly become dated - there is only a limited amount of interest in "olds." Evergreen articles about topics that are always of interest, even if that interest is seasonal, such as Christmas and Easter, are a good start. Longer, well written articles with interesting pictures can be better at maintaining their appeal in the future.

Books can be one of the most stable sources of income, especially those that are available digitally as ebooks, as once written they can continue earning indefinitely. Ebooks don't require the repeated release of different editions that printed books need. Once written, an ebook may never need touching again, especially for the non-technical books that do not go out of date. Publishing for the Amazon Kindle, and other similar platforms such as Smashwords, is a good way of entering the book publishing business.

Sites, and niche sites, are another possible method of earning online. These can suffer from the same problem as articles, becoming obsolete or needing updating. One method here is to make a lot of small sites, on the assumption that most will fail, some will do okay, and the odd one will pay for them all and make a good profit on top of that. There isn't really a guaranteed way of designing a site that will prove popular.

Aim for Low Maintenance

The best possible income stream is one that will continue to earn for the foreseeable future without putting in much additional work. Tim Ferris, in his book "The 4-Hour Work Week" calls a low maintenance stream a "muse," which will generate enough money to live on without requiring the constant input of time. Once sufficient income is being generated, there is more time freedom, and some can always be allocated to capital accumulation and building.[2]

Hands FreeCredit: SXC.HUThe only truly "hands free" income streams are certain types of investments such as bank accounts and proper stock investing (where the right company is picked first and the investment is left there for the long term) but these all require an investment of capital first, which is not really the same type of thing as building income streams that are the equivalent of an amount of capital, but not capital itself. This income can then be converted into capital.

What's the Income Stream Worth?

So, an income stream crated that generates $1.50 per year without maintenance is the equivalent of a $100 deposit in the bank. It could therefore be considered to have a value of $100 under those terms. This is on the high side, though. Uncertainty over the long term income that will be generated from a particular source will make it worth less. It is unlikely that anyone would be willing to pay that amount of money for something that would take that long to pay for itself, so an interest rate of 10%, and higher, would create a more accurate valuation. An income source that generates $1.50 a year is still equivalent personally to having $100 in the bank, even if it isn't worth that much to others.

When creating a stream that generates money regularly, always consider how much capital it would take to create that same amount of money. Unlike a job, an income stream will continue to create income into the future, although the amount may vary. With paid work, once the work is done and paid for, that's it - it won't generate more money in the long run. Earning $1.50 for an hour's work doesn't seem like a lot, but continuing to earn money in the future for work that has already been done makes it much more valuable.

A Rising ChartCredit: SXC.HUA Way to Financial Independence

The traditional way of becoming financially secure is to build up your capital and investments to the point where they generate enough money to live on without working and without the value of them being eroded by inflation. This is certainly a feasible way, but it requires a lot of capital to produce enough income, with capital protection, for even a small family. By creating income streams that require minimal maintenance, the same effect can be achieved much more easily, and any excess income can then be converted into income generating capital.