What are Income Producing Assets & How to Get Them

Income-producing assets make an ordinary person get rich. This means getting multiple sources of income from different investments or income-generating assets. 

 In the long run, provide benefits through diversification and avoid relying on a single financial resource or payment stream to benefit you. 99% of most successful entrepreneurs do this; they make different sources of income that produce income means cash flow. It is better to invest in cash flow rather than speculation. Assets that produce cash flow tend to appreciate in value over time like real estate and index fund stocks. 

In this blog, I will discuss multiple income-producing assets and then consider which are better so you can start working on them from today. 

What are Income Producing assets?

According to youngandtheinvested.com, income-producing assets is an investment which generates consistent, recurring revenue, cash flow or income over time. 

Assets that generate income need upfront costs; some assets need more than others. Some require capital to grow and maintain the investment over time. 

In addition, these asset classes can help you make money while you sleep. With proper research, planning and funding anyone can diversify their sources of income by investing in passive income activities. 

Now, let's discuss some of the best income-generating assets.

1. Real Estate Crowdfunding

Real estate is one of the best investments due to its tangible nature because in comparison to stocks, bonds and mutual funds you can touch, feel and even smell your properties. This type of income-producing asset appeals to investors because:
1. Tangible nature
2. Low correlation with the stock market.
3. Debt and Tax Benefits
4. Good control over your investments 
5. Multiple Return Components-(Appreciation & Rentals). 

However, in crowdfunding, it is better to diversify your portfolio to reduce risk. However, if you are not interested in managing and taking care of the property, then you should stick to this idea. In this investors can profit without doing any work. The company you JV with will control the active part, and you as an investor will handle the passive part. 

Depending on the type of investment you wish to make in crowdfunding JVs you have multiple options available to you. 
Let's talk about some of the popular options available. 

1. Multi-Family Properties

Cardone Capital is a well known and trusted platform of real estate. Like most investors, you will not have access to the best properties and strategies. Here Cardone Capitals takes place Grant Cardone the owner of this company takes funds from investors and buys great properties in Florida, Panama and other states in the USA. 
Grant Cardone is one of the top investors in the USA and has 2 billion dollars of real estate under his company. He states that if you want to create wealth from real estate then investing in apartments will be the best choice. Today he owns 10000 apartments under his company across the seven states of the United States.

Want to become an expert in Real Estate like Cardone then read his book on How to Create Wealth Investing in Real Estate.

2. Investing in Fix and Flip

Fix and Flip is a type of real estate which is not uncommon. In this, you acquire a distressed property, fix it and then and then sell it for a profit. Many companies do fundraising for these types of properties. I would recommend that you partner with GroundFloor

GroundFloor offers short term, high yield real estate debts for investments to general people. The objective of this service is repair and refinancing, and it is better known as fixer-uppers for short-term debt instruments with a maturity of 318 months. 
 If you are interested in a fix-upper but don't have the personal experience to choose the right property or the best contractor for value, you should consider GroundFloor
 The service is designed to generate an average annual return of 10% for asset classes that are not available to the general public. You only need $10 to start investing on the platform.

3. Investing in Real Estate Portfolios
This is a type of investment in which you make investments in different properties simultaneously. Theoretically, this diversifies the risk while providing more broad investment opportunities. 

There are many companies which offer this investment opportunity but from all of them, the company I recommend is Fundrise
This investment platform provides multiple options for you to view and invest your funds.

2. Investing in REITs

REIT (Real Estate Investment Trust) is a company that invests in income-generating real estate. Investors who want to acquire real estate can in turn purchase shares in REIT and effectively add the real estate owned by REIT to their portfolio through ownership of the shares.

Some people recognize REITs as mutual funds of real estate. Here you can choose to invest in apartments, single-family residences or condos. 
In return for your investment, you get residual dividends. This is one of the best strategies you can use to get hands-on profits without buying and managing the properties yourself. 

3. Farming 

Real Estate is a broad investment business so if you don't want to invest in residential properties. Then investing in farmlands can be a good investment. 

From ancient times, farmland investing has been available to ultra-rich people. As one of the best passive income investment concepts, farmland generally provides stable and reliable investment returns, has a low correlation with traditional assets such as stocks and bonds, and can be hedged against inflation. 

For a few centuries, farmland consistently provided returns of over 10%, and it also became a beneficial investment to the public. Farmland provides food and crops to eat. 

This makes farmlands tend to appreciate and from the last few years it is appreciating at the rate of 6% annually. 

4. Write and Sell E-Books

These days, self-publishing is booming more than writing with traditional publishers. Whenever you buy a book from Amazon or Etsy there are more chances that you are buying a self-published book. 

Self-publishing is so easy and there are no barriers to entry. Moreover, it allows a common person to make royalties from home and not go through the full publishing process. Making money from self-publishing can range from a few bucks to millions. 

Book sales are the most common way to generate wealth from self-publishing. You will either earn royalties or revenues if you sell physical copies. Earning royalties for an average writer can earn from 35% from selling physical copies up to 70% from ebooks. 

But there is a trip in self-publishing, currently an ebook ranges from $0.99 to $15 which means if you want to make a profit by selling ebooks you need to sell a lot of copies. I guess you need to sell 5000 copies if you want to make $50000 per year. 

Read more on Self Publishing-  Will you make money from self-publishing?

5. Interest

1. High-Interest Savings Accounts

A typical bank gives 0.05% interest on your money, but on the other hand, some banks give 5% interest annually on your savings. If you have patients and not doing it for your living then you can earn compound interest on your savings. If you let your money stay for 30 years at the rate of 5% then you can become a millionaire doing this. 

2. Dividend Stocks

Dividends are profits that the company distributes for investing in their company. Dividends are not a favour from the company, it is there because they are making a profit from your money. 
Well, this is a profit but not all of it companies don't give full profit, they keep some for future use in the acquisition or to recover their previous debts. If you are serious about investing in dividend stocks then I recommend that you keep an eye on the following details.

1. Understand How Company Works
2. Decide Future Annual Dividend Yield
3. Review the History of Dividend Growth
4. Dividend Payout Ratio
5. Evaluate Company Financial Position
6. Review Stock Evaluation

But there is a bottom line if you are planning to invest in dividend stocks, look for companies that have the potential to boast earning growth. If the company dividend yield is between 5%-15%, produces strong cash flows, low debt-equity ratios, and has industrial strength then it is worth investing in that company. 

I would recommend that you should follow Father of Business: Warren Buffet, guidance and rules before investing in dividend stocks. 

But there are traps, don't get attracted by high dividend yields as this can get things out of control and often lead to scams. Companies attract investors by giving high dividends for their stocks in times of recession or market crashes which can lead to loss. 

6. Bonds

If you don't want to do much research, there is a quieter way. Investing in bonds does not require enough research, because everything is simple. 
Bonds are loans made to a lender from an investor to be returned back over a specific period. Many bonds are paid periodically over the loan term before the full amount is paid at the end term. 
Many investors refer to bonds as government bonds. 

Advantages of Bonds

1. Bonds Tend to be Less Volatile and unlike stocks, they are less risky. 
2. When held to Maturity Bonds are Often Stable and Give Consistent Cash Flow.
3. Has Higher Interest Rates than Normal Savings Bank Accounts, Deposits or Money Market Accounts.
4. Bonds tend to be Diversified
5. Bonds Tend to Appreciate in Value when Interest Rates and Stocks Decline.

On the other hand, you should also 

Disadvantages of Bonds  

1. Rising interest rates, well-rising interest rates produce cash flow. However, the value of the bond falls when the interest rate increases. This means you can make a loss in this process. In an environment of rising interest rates, your bond portfolio may suffer market price losses.
2. Market Vitality and Credit Risks 

Bonds Vs Stocks

The volatility of bonds is usually lower than that of stocks, but in the long run, they do not perform as well as stocks. Since 1926, the average annual return on large-company stocks for investors has been 10%, while the average annual return on government bonds has been 5% to 6%. 
 Young investors may prefer stocks because they have the opportunity to earn higher returns over time, while investors approaching retirement may prefer bonds because they are interested in earning regular and reliable interest income with lower risk. 
 In a bear market, stocks tend to lose more than bonds, especially government bonds. Older investors who depend on investing for retirement may not be able to wait until retirement to need these funds, leading some advisers to encourage investors to buy more bonds before planning their retirement.


All the information provided above will be enough to get started with income-producing assets. 

Regardless of which income-generating asset portfolio you ultimately choose, remember that there are many ways to win when it comes to investing. 
 In this game, instead of choosing the "best" asset, you choose the asset that best suits you and your situation. 
 If I've learned anything since I started blogging a few years ago, it's that two reasonable people can have very different investment strategies, but they can both be right. 
 Having said that, I wish you a safe investment trip and thanks for reading!


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