.18 Income Producing Assets

18 Income Producing Assets

18 Income Producing Assets to Generate Serious Passive Income

May 14, 2018 By The Money Wizard

What’s the key to building wealth?   Multiple income streams.

At least that’s what millionaires will tell you. 65% of them have at least three income streams, and nearly 1/3 have 5 or more income streams.

So if you’re still tied to your day job, and you’re serious about reaching financial freedom, then ditch the cars, jewelry, and luxuries. Instead, let’s look into spending our money on the ultimate status symbols: income producing assets.

There is no lower, middle, or upper class. There is the investor class and the people who have to work for a living.”

I’ve always had a special fascination with idea of money flooding in from all directions. I don’t know why, but any time I hear of somebody making money in some oddball way, my eyes light up, and I file it under “Great idea! Life Goals…”

Sure, working your way towards a really high paying salary is cool, I guess. But transforming yourself into a business mogul, with money flowing in from all your different successful ventures? Now that’s winning the money game…

Over the years, this little fascination has left me with more ideas than I know what to do with. Unfortunately, I don’t have unlimited cash to invest in all these possibilities. (yet!? maybe!?) So, in case you’ve got more money laying around than you know what to do with, allow me to introduce…

The Official Money Wizard List of Income Producing Assets

Oh, and before we get too deep into this, no matter which asset you’re invested in, I continue to recommend Personal Capital. Their free software automatically tracks the performance of your income producing assets, including monthly cash flow, annual return, and even free fee analysis. All in one, easy to use dashboard.

The result? Your investment tracking becomes almost as easy the money you’re getting from all your income producing assets.

1. Savings Accounts or Money Market Savings Accounts

Using a bank account to generate passive income

Probably the most basic income producing asset in the world, and also one of the least profitable.

While these two both pay slightly higher interest rates than a regular ‘ole checking account, you’re still gonna be hard pressed to make any meaningful income from these ultra-safe choices.

Unfortunately, most people never get past this stage in their investment journey. Of course, we’re just getting started…

2. Certificate of Deposits (CDs)

No, not those antique silver disks. (Yes, you’re getting old!)

Certificate of Deposits are like savings accounts, except your bank won’t allow you to access your money for a certain amount of time without incurring a penalty.

Banks like CDs because they get to keep and use your money for a longer amount of time, without having to hold your cash on hand in case you get a wild hare to buy the latest infomercial special. You like CDs because they pay higher interest rates than cash in a savings account.

A 6-month, $500 CD paying 5% interest was actually my first investment ever. Man, did I feel like the coolest 16 year old around with my “retirement account.” I’ll never forget that intoxicating feeling of getting paid money just because I had money. What a rush!

Welcome to the world of investing, little Money Wiz.

In today’s low interest rate environment, you’re lucky to find a CD paying any more than about 2%. And while you might not even beat inflation at those rates, CDs are FDIC insured up to $250,000, so they’re risk free.

3. Interest Paying Bonds

Bonds are basically IOUs from businesses to investors. You invest a fixed amount into a bond, and the company agrees to pay you a certain percentage back.

Of course, this is a simplification. You can purchase bonds from all sorts of entities, including:

Companies (aka Corporate Bonds)

Large, stable companies (Investment Grade Corporate Bonds)

Small, ultra-risky companies (Junk Bonds)

The federal government (Treasury Bills)

Sections of the federal government (Agency Bonds)

State and local governments (Municipal Bonds)

Foreign companies or governments (Foreign Bonds)

Interest rates obviously vary significantly, depending on your type of bond and the current interest rate environment. But in general, you can expect bonds to yield anywhere from 1-4%.

Investors typically enjoy bonds for the stability of their fixed payments and the stability of the underlying price of the bond itself. While stocks tend to fluctuate wildly in price, the price of bonds is much more stable by comparison. Here’s a chart showing the worst decline in the past 25 years for the overall stock market vs. the overall bond market:

Bonds as income producing assets


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