The American dream has been sold to us as a reality for centuries. But what does it really look like? For many of us, it’s the idea that we can work hard and eventually retire in comfort – living off of our investments and never having to worry about money again.
However, these days, most people don’t have enough saved up for retirement when they stop working. They run out of time, or they get laid off unexpectedly, and they’re left scrambling to make ends meet…or worse.
But is this how things have always been? And are there ways you can protect yourself from ending up like these unfortunate retirees who didn’t plan ahead?
The answer is yes! There are plenty of income-generating assets that can help you make sure you have a steady flow of income when it’s time to quit working. In this article, we’ll be going over 21 of the best kinds of these assets and briefly describe how each one works.
What are Assets that Generate Income?
Before we start, it’s important to understand what exactly an income-generating asset is.
An income-generating asset is anything that can provide you with a steady flow of income. This can be rental properties, stocks, bonds, or mutual funds.
However, the key here is “steady.” The stock market goes up and down all the time, which means that you can’t always count on the money you make from it. This is why it’s important to combine these assets with other types of investments. This way, you can have the benefits of an income-generating asset without the volatility that comes with others.
21 Best Income Generating Assets for Steady Income In 2022
Stock Market
A stock is a piece of ownership in a company. Owning stocks means that you own a part of the company (like if you owned your own store).
Stocks are bought through brokerage firms that are middlemen between buyers and sellers. The price depends on how much people will pay for it, which varies based on the company’s performance. You can buy stocks on margin, which basically means that you borrow money to pay for it.
If the company does well, then your stock will do well too, and you’ll make a lot of money through dividends (a payment made by the company based on how many shares are held). But if the opposite happens, then you’ll lose a lot of your initial investment.
Real Estate
Another type of income-generating asset, especially for those willing to take on the task of managing them. Real estate can be either residential or commercial, and the difference is in the number of units.
Residential real estate would be things like duplexes, townhouses, or single-family homes that you rent out to tenants. Commercial real estate would be larger buildings that you can turn into a business or office spaces that you rent out to companies.
In both cases, the initial cost of buying the property will vary from place to place and from time to time since they tend to rise in value over time. But on average, a single-family home might cost about $100,000 just to buy it, while a duplex might cost $200,000.
Building an Online Business
If you are interested in growing your wealth, building an online business is one of the best ways to go about doing it.
The key to making a successful online business is scalability – meaning that you want to build a business that can grow with you as your income grows. This means that it’s important to make sure that whatever product or service you are offering is something more than one person might be interested in.
Things like eCommerce stores, informational products, and software/apps are some of the best ways to build an online business. These things have a rather low barrier to entry and can be started with just a little bit of money. Because of this, it’s easy for you to scale your business as much as possible.
Rental Property
If you’re looking for a relatively safe yet high-yielding asset, rental property is one of your best bets.
The reason why I list it under “relatively safe” is because losing the asset you own if a renter doesn’t pay their rent is a real possibility. However, there are ways around this: being smart about who you choose to rent from and making sure that you have an eviction clause in the contract they sign.
You can also add on extra features such as a fitness center or pool, for which you can charge the renter an additional fee. This is important because it allows you to bring in more money without raising the rent!
Precious Metals
One of the best assets to purchase is precious metals. Gold, silver, and platinum provide many of us with relatively stable income – more so than most other assets on this list.
The reason for this is two-fold. First off, these metals are widely used in jewelry which means that there will always be a demand for them no matter what. This makes it far less likely that gold or silver will ever become obsolete or not needed in the market.
Secondly, if you are interested in making your money grow, precious metals can be a great choice because they are often easier to buy and sell than many other types of assets. They don’t have long wait times before you can access your money, which means you aren’t losing out on interest.
Car Rentals
Do you happen to own a car that sits idle for most of the time? This can be a great opportunity to make some money!
Thanks to peer-to-peer markets like Turo and Getaround, you can list your car on their website and rent it out whenever you’re not using it. There’s really no limit to how much money you can make from this, making it one of the best income-generating assets.
Short-Term Rentals
Another income-generating asset is renting out property that already exists rather than investing in the construction of new properties. The goal is to acquire a house or apartment and rent it out to tenants, receiving monthly rent payments as a result.
The good news is that this choice provides a relatively steady income, as you’ll be receiving monthly rent and not just a one-time sum. It also means that this investment can continue to grow its value over time, whereas most other assets will drop in value if the economy takes a turn for the worse.
Royalties
Royalties are payments that are made to you each time one of your creative works is used. This could be anything from movies, music, and books to photographs and paintings.
The key with royalties is that they tend to increase as demand for your work increases. So if you spend a few years working on an album or novel, then it’s likely that the royalties you receive will increase as more people become interested in your work. This is why it’s important to make sure that you should write it down and hold on to it if you’ve got some major creative talent!
Cryptocurrency Mining
If you’re interested in using your computer’s hardware power to generate income, then look no further than cryptocurrency mining. Cryptocurrency mining can be done with GPUs or ASICs and can generate you a lot of money!
One thing to keep in mind is that the difficulty with cryptocurrency mining often goes up, which makes it require more powerful hardware. This means that unless you’re willing to invest in high-end GPUs or ASICs, then this might not be the best income-generating asset for you.
Lending Cryptocurrency
If you are interested in buying cryptocurrency but aren’t sure what to do with it, lending it out is a great way to gain interest in your holdings.
The key here is that the more risk you have, the higher potential reward you will be provided with, like with traditional loans. This is because there can be a lot of volatility with cryptocurrency, which means that you will need to make sure the borrower is creditworthy.
There are various sites online where you can lend out your cryptocurrency. Be sure to find one that fits your interests and risk tolerance the best!
Private Equity
Private equity is money you put into a company – usually in exchange for shares. If the business becomes successful, those shares become more valuable and, as such, generate income for you.
This type of asset is great because it allows you to work on something that can make a lot of money without having to actually take any risks. After all, you’re not the one who will be dealing with those customers. In fact, you’ll be forcing yourself to leave it all up to chance!
All-in-all, private equity is great for those who are looking to make money without having to take on much risk.
Farmland
This is another excellent choice for those looking to invest in a way that grows with you. Farmland is one of the more popular assets that people look to invest in because of the high demand for it.
To put it simply, food is always needed, which means that farmland will always be valuable. Plus, because of the relatively high cost to purchase this type of land, you can expect your investment to grow at a steady pace.
Investing in farmland can be done in many different ways, including purchasing it outright or buying shares on a farm. Some investors are wary of buying this type of asset because they aren’t sure where to purchase the land from or how it works.
Peer to Peer Lending
Peer-to-peer lending is quickly becoming one of the more popular choices when it comes to income-generating assets. It’s a fairly new concept that has exploded in the last several years, but it’s relatively safe and simple to get started with.
To put it simply, peer-to-peer lending involves loaning money from person to person. That means you have the ability to choose specific loans that interest you, which is not possible with many other types of income-generating assets.
However, the biggest benefit here is that you can expect your money to grow while giving others access to capital – all while doing so without worrying too much about losing your initial investment! With peer-to-peer lending, there are risks involved, but they can be easily mitigated if you do some research on your end.
Start a Small Business of Your Own
There are several different ways you can start your own business and still be able to work it around your schedule.
However, the best kinds of businesses for those looking to generate steady income long-term include ones that provide services rather than products. This means that as long as people need what you’re providing, there will always be a demand for your service.
For example, if you decide to start a landscaping company, as long as people have houses and yards, they’ll need someone to come in and take care of them – otherwise, your business will fail. This means you can make a steady income from your landscaping services for as long as you want.
Money Market Accounts
A money market account offers a yield that is higher than what you will get from your savings account but lower than what you would get with a checking account.
Not all banks offer these kinds of accounts, but it’s worth it to check with your bank if they do.
One of the main benefits of a money market account is that it allows you to have more liquidity than you would get with a bond. The interest rates are also pretty competitive, so there’s no reason not to try and see if your bank offers these kinds of accounts!
Dividend Stocks
Dividend stocks are like regular stocks that can either increase or decrease in price depending on how well the company does. However, some companies offer a “dividend,” which is basically a small percentage of the stock’s value (usually between 2% and 10%).
Two of the most important things to look at when buying dividend stocks are growth and yield. Growth is an estimate of how much the company will grow over a set period of time (usually between 1 and 5 years). Yield measures how much you’ll make for each share you own multiplied by 100 (to get it into percent form).
So, if a company has a growth of 5% and a yield of 5%, you’ll make 100 x 1.05 = 105. This means that each share is worth $1.05, which would give you $105 for every share you owned.
Initial Public Offerings (IPO’s)
An IPO is when a company goes from being private to public. They do this by selling shares to the public in order to raise capital. When a company makes an IPO, it is usually because they have a great business plan and are ready to expand their product or service.
For instance, let’s say a company has invented the next generation of smartphones. If this company wanted to expand its product line, it might do an IPO to raise money in order to build factories and hire workers. This way, they can produce more phones which will increase market share and, therefore, revenue which can be used to pay back investors.
You can buy IPO’s through the same firms that sell regular stocks. When you do, make sure to find out how large of a company it is and whether or not they are stable enough to offer dividends. Since this type of investing is usually riskier than the others on this list, remember to always invest with caution!
Bonds and CDs (Certificates of Deposit)
A bond is basically like an IOU given by one party to another. You can think of it as borrowing money from the bank at a fixed interest rate. This interest rate is known as the “coupon,” and it’s usually paid out by the issuer (whoever gave you the bond) every six months.
When you buy a bond, you’re basically loaning money to the company that issued it. If they do well, then you can expect your return on investment to be higher than the coupon rate. But if they do poorly, then you can expect lower (or even negative) returns on your money.
CDs are similar to bonds in that the bank is lending out their money through you to whoever issued it. However, CDs don’t pay any interest during the investment term (which lasts for a particular period like a year). Still, the advantage is that you don’t have to worry about losing money because there’s a guaranteed return at the end of it.
The downside of both CDs and bonds is that they’re usually low-risk investments. They work well for people looking for steady, slow income gains rather than something risky like trading stocks. Both CDs and bonds are good for people who want to save up for the future when they’re close to retirement.
Mutual Funds/ETFs (Exchange-Traded Funds)
Mutual funds and ETFs are very similar, but there’s a difference between them. You can think of mutual funds as a collection of stocks held by a fund manager, where ETFs are funds containing stocks from various sectors.
Both of these assets require an initial investment, and they also charge fees for managing them. There’s usually a minimum amount that you can invest, and if the value of your investments falls below that minimum, you’ll lose money on transaction fees.
But there’s also an upside to this: you don’t have to worry about what stocks or sectors to choose. You can trust the fund manager (who usually has a lot of experience) to make the right decisions for you.
Annuities
An annuity is basically like an insurance policy for your retirement savings. When you buy an annuity, you give an insurance company a lump sum of money that they’ll use to invest for your benefit.
The upside is that this investment is protected from market risk. Even if the stock market takes a dive, you’re guaranteed not to lose any money on it because it’s being managed by professionals who have experience investing in volatile markets.
The downside is that annuities usually charge high fees. They’re also not very flexible, so you can’t easily withdraw the money if you need it for something else.
Commodities
Commodities are things like oil, gas, or coffee beans that you can buy and sell at a future date. They usually require a big initial investment, which comes with a high amount of risk.
The upside is that it’s possible to make much bigger returns on your investment when commodities increase in value. You can either wait out for their value to go up or even sell them before that if you think that the price is about to drop.
The downside is that commodities are very volatile, which means that the price can easily take a dive and wipe out your investment in no time. There’s also another risk called technical risk, where prices might fluctuate because of various market factors unrelated to the commodities.
Conclusion
Achieving financial stability is a goal for many people. There are plenty of assets that can generate a healthy income, but it is important to be well informed when deciding. Income-generating assets can include rental property, stocks, bonds, mutual funds, and annuities. Each of these income-generating assets has different levels of risk that can be mitigated by taking a closer look at how each asset operates and the potential reward that comes from investing in it!
It’s also important to remember that investing in any of these assets is a long-term commitment. If you’re not ready to be committed, the risk may outweigh the reward, and it might be best to wait until you feel comfortable with the investment process.
We hope that this article has helped you come to a better understanding of different income-generating assets and how they operate, as well as the potential risks associated with each one.