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Top 9 Income Producing Assets to Grow Your Wealth

What does it take to become a millionaire?

According to finance professor and Nobel Laureate Burton Malkiel, you should just keep buying income producing assets. In his book “A Random Walk Down Wall Street,” he explains that if an investor follows this approach for 20 years or more then the person’s chances of becoming wealthy (that is having total wealth greater than $1 million) are as high as 97%.

This advice may sound easy enough, but choosing the right assets to invest in is not always straightforward.

The investing world has a lot to offer, but many investors often neglect other investment opportunities. If you are serious about building wealth, consider all the income producing assets available for your portfolio.

This list helps you figure out which asset would be a good fit for your situation.-

The 9 Best Income Producing Assets to Grow Your Wealth

Stocks/Equities

Stocks are a great investment because they have been very reliable over the long run. If you read any of these three books, Triumph of the Optimists: 101 Years of Global Investment Returns, Stocks for the Long Run, or Wealth War & Wisdom you will see that stocks create wealth and it is one way to do so in your life.

Stocks have been able to deliver consistent long-term returns all over the world. Even during times of economic crisis, stocks are still a reliable investment option for anyone who is looking to save and grow their money in the future.

Yes, it is possible that the 20th century was a fluke and future equity returns are doomed. However, I wouldn’t bet on this outcome. There’s no reason to believe things will be different going forward!

Stocks are an amazing investment because they require very little effort and maintenance. You own the business and reap the rewards while someone else (i.e., managers) runs your company for you since it is their job to do so!

Bonds

Bonds are the opposite of stocks, but they still make money and can be a smart investment if you know what to look for.

When you buy a bond, you are lending your money to the issuer and receiving periodic payments (coupons). At maturity, the full principal is returned.

When people talk about bonds, they usually refer to Treasury Bonds. The U.S government is the borrower and these come in various maturities/terms with different names based on how long those terms are:

  • T-Bills – 4 weeks 
  • T-Notes – 2 years 
  • T-Bonds – 10 years

You can purchase other types of bonds in addition to U.S Treasury Bonds, including foreign government bonds (loans made by the country’s central bank), corporate loans (made to companies), and municipal borrowing (for states or localities). When these kinds of investments pay higher interest than US Treasuries but come with more risk attached.

Foreign government bonds are riskier than U.S. Treasury Bonds because the United States is more creditworthy compared to other countries and can print dollars at will, which makes it easier for them to pay back debt without borrowing from others again.

This isn’t necessarily true with foreign governments or corporations who don’t have easy access like printing money whenever they need cash (and might cause inflation).

Investment/Vacation Properties

An investment property is a fantastic way to earn income outside of the realm of stocks and bonds.

Owning an investment property is great because not only does it provide you with a place to relax, but it can also earn you extra income.

If you manage the rental property so that other people help pay off your mortgage while enjoying long-term price appreciation on the house. You will see even higher returns if borrowing money when buying the home due to added leverage helps too!

Owning a vacation rental can be difficult, but also has its benefits. While you have to work with people (renters), list the property, and provide ongoing maintenance. it is important to note that owning an investment/vacation property requires less time than other assets because of all the added stress on your balance sheet.

In 2020, things went wrong for many people who bought homes to rent out using Airbnb. Vacation rentals aren’t always easy! As the above quote suggests, when an investment property is successful it can be wonderful but if something goes wrong then that’s a problem too.

It seems like in recent years there have been more problems with this method of owning a home so maybe you should think about other options before jumping into any big investments!

Owning an investment property is a great way to diversify your portfolio and earn more money. It requires work but you’ll get that back in spades when the returns come rolling in!

Real Estate Investment Trusts (REITs)

If you want to own real estate, but don’t like the idea of managing it yourself, then a REIT may be right for you. A REIT is a business that owns and manages properties while paying out dividends from their profits back to shareholders.

Because they are required by law to pay 90% or more of taxable income as shareholder dividends, this type of asset produces some very reliable income streams.

However, not all REITs are the same. There are residential and commercial types of real estate investment trusts that can own different kinds of properties such as apartment buildings or office spaces in addition to being offered publicly traded, private, or non-traded.

Farmland

One of the best reasons to invest in farmland is its low correlation with stocks and bonds since farm income tends to be uncorrelated with what is happening in financial markets.

In addition, farmland has low volatility and provides inflation protection. Because of this asymmetric risk profile, it’s unlikely to go to zero, unlike an individual stock/bond. However, the effects of climate change may alter this in the future.

Small Businesses/Franchise/Angel Investing

If farming isn’t your thing, you should consider investing in small businesses. However, before embarking on that journey you have to decide whether or not operating a business is for you.

Owner + Operator

If you’re thinking about becoming an owner/operator of a small business, just remember that it will likely take more time and effort than you expect. Brent Beshore, who is an expert on the subject of investing in small businesses says “If I had to give one bit of advice: Just realize how much work this truly takes.”

Peer-to-Peer Lending

An example of a peer-to-peer lending platform is Lending Club. They make it clear that interest rates and future returns are not related: for instance, loans with high interest can return great results!

There are several reasons why riskier loans have a higher rate. First, these types of borrowers may default on their loans because there is a chance that they will not be able to repay them if something goes wrong with the business.

Furthermore, even though you receive more money from those who do well in paying back the loan, your overall returns can vary drastically when taking into account all transactions for each borrower grade due to differences in payback rates and interest charges across different grades.

I think the biggest downsides of peer-to-peer lending are lower returns compared to other risk assets and hidden risks that may exist within these loans. I say this only because we don’t have a lot of historical data for them, which is why when there’s an unprecedented event it might not perform as expected.

Royalties

If you aren’t a fan of lending money, maybe investing in something with more culture is for you. This is where royalties come into play. On sites like RoyaltyExchange, people can buy and sell the royalties to music, film and trademarks as investments that generate steady income which doesn’t correlate with financial markets unlike other types of investment options do this means there’s no risk at all!

For example, a recent purchase on RoyaltyExchange was made for the next 10 years of this song’s royalties. The buyer paid $190,500 and will earn 11.2% per year over that period because Jay-Z & Alicia Keys’ “Empire State Of Mind” earned about that much annually in earnings from its last 12 months ($32K).

The future of this song’s royalties is uncertain, but there are benefits to investing in royalty-based assets. Not only does culture change over time with music tastes shifting and evolving, but the changes can be profitable for investors who own these types of investments!

Your Own Product

Additionally, you can set the price on your own products and by doing so determine their returns (at least in theory). Last but not least is one of the best income-producing assets to invest in your own.

Unlike other asset classes like stocks and bonds which tend to be traded frequently, owning a product allows for more control over it – especially considering that as its owner you’re 100% responsible for all decisions about how it’s produced or distributed.

There are many ways to make money online. Selling your own products is one of them. It can be done through various channels like social media, email lists, or a website – even if you don’t have any yet! With tools such as Shopify and Gumroad, it’s never been easier to sell things on the internet that people will want – either digitally (ebooks) or physically (courses).

Selling products can be difficult and time-consuming, but once you get one product off the ground it is easier to expand your brand with other things.

For example, after years of blogging, I now can earn more than small affiliate partnerships and ad sales. These opportunities are always popping up so if you have any questions feel free to contact me.

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