Generating passive income is a top priority for many people. Many investors prefer stability and income from their investments instead of price appreciation alone. That’s why income-producing assets like dividend stocks and real estate have become increasingly popular.
Receiving interest, dividends, or rental income from investments can help you grow your wealth over time while supplementing your existing income. But with so many options out there, it isn’t easy to know which assets are suitable for your financial goals.
This article will look at some of the best income-producing assets you can invest in today.
What Are The Best Income Producing Assets to Invest In?
There are a few things to keep in mind when investing in income-producing assets. You want to look for opportunities that are:
Benefits of Income Producing Assets
|Benefit||Why does it matter?|
|Diversification||Helps mitigate risk and smooths out returns over time.|
|High Liquidity||You have the flexibility to access your money quickly if you need it.|
|Value||Ensures that you keep more of your returns.|
With these factors in mind, here are 15 of the best income-producing assets to invest in this year:
Invest in Dividend Stocks
When most people think about income-producing assets, stocks usually aren’t the first thing that comes to mind. However, dividend stocks can be a great way to generate extra income each month.
Dividend stocks are companies that regularly pay out a portion of their profits to shareholders. It can be an excellent way for investors to increase their passive income without much work.
There are several great dividend stocks investors may choose. For example, some of the most widely known include Johnson & Johnson (JNJ), Apple (AAPL), and AT&T (T).
Getting Started: If you’re interested in investing in dividend stocks, you can do so through a brokerage account. Many online brokerages offer commission-free trades, making it easy and affordable.
Sell Covered Calls
Selling covered calls is another way to generate income from your investments. When you sell a covered call, you give someone the right to buy your stock at a specific price within a certain time frame. In exchange for this, you receive a premium.
Suppose you own 100 shares of IBM stock currently trading at $100 per share. You could sell a call option with a $105 strike price, which would give the buyer the right to buy your shares from you at $105 per share no matter what the stock price does.
If the stock price goes above $105, the call option buyer will exercise their right to buy your shares at the strike price. However, if the stock price falls below $105, the call option will expire worthless, and you’ll keep your shares and the premium.
This strategy is a great way to generate income from stocks you already own. Also, it’s one of the lowest risk options trading strategies since you’d only sell call options against stocks you already own.
Getting Started: You’ll need a brokerage account that offers options trading if you want to start selling covered calls. Options typically require a higher account balance than stock trading, so consider this when choosing a broker.
Real Estate Crowdfunding
Real estate crowdfunding is a relatively new way to invest in real estate. It involves pooling money from a group of people to invest in a property. Investors can participate in real estate crowdfunding online through a website or an app.
Real estate crowdfunding is an excellent way for people to start investing in real estate without coming up with a large amount of money on their own. It also allows you to diversify your investments across multiple properties while supplementing your existing income.
There are a few things to keep in mind when investing in real estate through crowdfunding:
- Make sure you do your research and pick a reputable company.
- Always read the fine print before investing.
- Be aware of the risks involved in this type of investment.
This income-producing asset is ideal for those looking for a low-risk investment and is interested in diversifying their portfolio with real estate.
Getting Started: Find a reputable company to invest in real estate crowdfunding. Once you have a company in mind, read through its terms and conditions to make sure you understand the investment. After that, you can create an account and start investing. Some companies will allow you to invest with as little as $100.
Certificate of Deposit (CDs)
Certificates of deposit, or CDs, are a type of savings account. They offer a fixed interest rate for a set amount of time. CDs are one of the most low-risk investments and are ideal for those who are looking for a safe place to park their money.
CDs are a great way to save for short-term goals. They offer a higher interest rate than a regular savings account, and there is no need to have a lot of money to get started.
When investing in a CD, you should consider the following:
- Length of time until maturity: The longer the term, the higher the interest rate (usually).
- Interest rate: This is important to compare because it will affect how much money you earn on your investment.
- Early withdrawal penalty: This is the fee charged if you withdraw your money before the CD matures. It is essential to understand this fee before investing.
Getting Started: You can open a CD at most banks and credit unions. You will need to deposit a minimum amount of money, which will vary depending on the bank. Once you have deposited the money, the bank will hold it for the length of the term. At the end of the term, you can withdraw your money plus the interest earned.
Real Estate Investment Trusts, or REITs, have become one of the most popular income-producing assets. Indeed, they offer investors a way to gain exposure to the real estate market while also enjoying some of the benefits of being a shareholder.
There are two types of REITs: public and private. Public REITs are listed on an exchange, while private REITs are those that are not.
Public REITs tend to be more liquid, making buying and selling easier. On the other hand, private REITs can be harder to come by, but they often offer investors a higher yield.
Public and private REITs must distribute at least 90% of their income to shareholders in the form of dividends. It makes them an attractive income-producing asset for investors looking for a steady income stream.
Getting Started: The best way to get started with REITs is to buy shares of a publicly-traded REIT or REIT ETF. These can be bought and sold just like any other stock. Alternatively, you can also invest in a private REIT, though these can be a little harder to come by.
Rent Your Property
Renting out property is a great way to generate income, and it’s one of the most common ways to invest in real estate. There are many different ways to rent out a property, and each has its benefits and drawbacks.
One of the most popular methods of renting out property is Airbnb. Airbnb allows people to list their properties and rent them out to guests.
The benefit of Airbnb is that it’s a hassle-free way to rent out your property. You don’t have to worry about finding tenants or dealing with repairs, as Airbnb takes care of everything.
Another popular method of renting out property is through formal rental agreements. It involves signing a lease with a tenant and collecting rent every month.
Getting Started: To start renting out your property, you first need to decide how you want to rent it out. If you’re going to start renting on Airbnb, you can list your property on the site and rent it out to guests. If you’re going to sign a traditional lease, you can contact a real estate agent or property management company to help you find a tenant.
Sell Digital Products
Selling digital products is a great way to earn income from your blog or website. If you have a skill or knowledge that others are willing to pay for, you can create an online course, eBook, or PDF and sell it.
It’s a great way to earn income passively since once you create the product, you can sell it repeatedly.
Keep in mind that this approach requires upfront work, but once the products get created, you can sell them repeatedly.
There are several different digital products that you can sell, such as:
- Online courses
The great thing about selling digital products, like an E-book, is that there are low overhead costs, and you can reach a large audience with them. If you’re looking for a passive income stream that you can start from home, selling digital products is a great option.
Getting Started: The first step is to decide what kind of digital product you’d like to create. Once you have an idea, you can make the product and then market it to your audience. You can either sell your digital product on your website or through an online marketplace like Etsy and Gumroad.
Sell Creative Assets
If you’re a creative person, you can make money by selling your work. It’s a perfect option for graphic designers and photographers. There are many platforms online that allow you to sell your work, such as:
- Envato Market
If you’re a photographer, you can also sell your photos through stock photography websites, such as:
- Getty Images
You can also sell paintings, drawings, sculptures, songs, poems, short stories, etc. The sky is the limit when it comes to what you can sell.
There are a few things to keep in mind when selling creative assets:
- Make sure you have the right to sell the asset. If you didn’t create it, you can’t sell it.
- Choose a platform that will reach your target audience. There are many platforms to choose from, so do some research to find the best one for you.
- Make sure your prices are reasonable. Don’t try to gouge your buyers, as this will only discourage them from buying from you in the future.
Getting Started: Getting started with selling creative assets is simple. The first step is to create a portfolio of your work, including sketches, drawings, paintings, or any other form of creative media. Once you have completed your portfolio, you can start looking for buyers. There are several online marketplaces where you can sell your work. You can also set up your website to sell your work.
Buy a Traditional Businesses
If you’re looking for a more hands-on way to earn income, you can buy a traditional business. It can be an excellent choice for people who have some business experience and are looking for an entrepreneurial way to grow their money.
Traditional businesses include brick-and-mortar businesses, such as:
- Retail stores
- Service businesses
The great thing about buying a traditional business is that it can provide a steady income stream. However, it’s essential to keep in mind that this option requires more work than some other options.
When thinking about buying a traditional business, it’s essential to do your research and make sure that you’re buying a company with the potential for growth.
It would help if you also were sure that you have the resources available to purchase the business and that you’re able to run it effectively.
Getting Started: The best way to get started with buying a traditional business is to research companies for sale in your area. You can also look online for businesses for sale with a business broker. Once you’ve found a few businesses you’re interested in, you need to reach out to the seller and schedule a meeting.
Build an Online Business
Building an online business can be one of the best income-producing assets that someone can invest in. It is a great way to make passive income, but it’s also a fantastic opportunity to work from home and set your own hours.
The best type of person to start an online business is someone who is motivated, organized, and has a knack for sales and marketing. You’re likely to succeed in this venture if you have these qualities.
There are numerous online business options available, so you can rest assured that there’s one out there that’s perfect for you. Some popular online businesses include:
- Flipping websites
- Printing on demand
- Affiliate marketing
Anyone can start these businesses with little to no money, and they have the potential to generate a full-time income.
Getting Started: If you’re interested in starting an online business, the best thing to do is research the different options available to you. Suppose you want to start a blog. If that’s the case, you’ll want to look at ways to drive traffic and monetize it!
Once you’ve found a business model that interests you, read up on how to get started. Most online businesses have detailed guides and tutorials that will walk you through the process step-by-step.
If you’re looking for an asset that has the potential to appreciate, art investing may be a good option for you. When you invest in art, you’re buying pieces that have the potential to increase in value over time.
Not only does art have the potential to appreciate, but it can also provide you with a steady stream of income. You can rent out your art collection to generate rental income.
Not only is it a tangible asset that holds value, but the art market is constantly growing, making it a more stable investment than some other options.
There are a few different ways to get involved in art investments. One way is to purchase shares in an artwork held by a museum or other public institution.
Another option is to buy shares in an art fund, a collection of artwork managed by an expert who decides which pieces to add and sell. Or, an investor can purchase shares in an art trust similar to an art fund, allowing for more direct ownership of the artwork.
Getting Started: To get started with art investing, an investor can visit a site like Masterworks and purchase shares in one or more paintings. Masterworks is an art investment platform that allows investors to buy shares in world-renowned paintings.
After an investor has purchased shares, they can then sell their shares on the secondary market, managed by Masterworks.
Start a Side Hustle
There are many benefits to starting a side hustle. For one, it can provide you with extra income. Additionally, a side hustle can help you develop new skills and knowledge. Finally, a side hustle can give you a sense of satisfaction and accomplishment.
If you’re thinking about starting a side hustle, there are a few things you should keep in mind. First, consider what you’re good at and what you’re passionate about. Additionally, think about how much time and effort you’re willing to put into your side hustle. Finally, make sure you have a plan for marketing and promoting your side hustle.
Getting Started: First, you need to come up with an idea for your side hustle. To do this, consider your skills and passions. Once you have an idea, it’s time to start planning. This includes figuring out how much time and money you’re willing to invest in your side hustle. Additionally, you need to create a marketing plan. This will help you promote your side hustle and attract customers.
Once you have your idea and plan in place, it’s time to start taking action. This includes things like building a website, creating social media accounts, and promoting your side hustle. Additionally, you need to start offering services or products. And finally, you need to get customers and clients.
A side hustle can be a great way to make extra money, develop new skills, and achieve satisfaction. However, it’s important to keep in mind that a side hustle takes time and effort. So, if you’re thinking about starting a side hustle, be sure to do your research and plan ahead.
Peer to Peer Lending
Peer-to-peer lending, also known as P2P lending, is a form of debt financing that allows investors to loan money to businesses and consumers. The loans get funded by a group of investors rather than a single lender.
This form of lending has become increasingly popular in recent years, as it offers investors the opportunity to earn high returns with relatively low risk.
Peer-to-peer lending is best suited for investors looking for a higher return than what they can get from traditional savings accounts or bonds.
The average return on investment for P2P loans is around 8-10%, significantly higher than what you would get from most bank accounts. Additionally, the loans typically have shorter terms, which means you get your money quicker.
Getting Started: To start with peer-to-peer lending, you first need to create an account with a P2P lending platform. There are several different platforms to choose from, such as Lending Club and Prosper. Once you’ve created an account, you can browse the available loans and choose which ones you want to invest in.
Royalties are payments made to someone for the use of their intellectual property, such as a patent, copyright, or trademark.
It’s an excellent option for creative people who have the skills to create intellectual property. Examples of things that can be copyrighted and generate royalties include music, books, articles, movies, and software.
The great thing about royalties is that they can continue to generate income for years or even decades. For this reason, royalties are an excellent option for long-term investments.
Getting Started: To get started with collecting royalties, you need to create something that can be copyrighted. It could be a song, book, article, movie, or piece of software. Once you have made your intellectual property, you need to register it with the appropriate agency. After registration, you can start looking for ways to license it and generate royalties.
Rent Your Car
If you have a car that you don’t use very often, you can rent it out to people who need it. It’s a great way to generate some extra income, and it’s becoming increasingly popular as more people are looking for alternatives to traditional car ownership.
The benefit of renting out your car is that it’s a relatively passive way to generate income. You don’t have to do anything except make sure your vehicle is available when someone wants to rent it.
Getting Started: To start renting your car, you first need to sign up with a company that allows you to do this, such as Turo. Once you’ve signed up, you’ll list your car on the platform and set a price. When someone wants to rent your car, they’ll contact you and arrange a time to pick it up.
Land is a valuable resource that investors can rent to generate income. The type of person who is best suited for this type of investment is someone patient and willing to wait for the right opportunity.
The best way to rent out land is through a lease agreement. A lease specifies the terms of the rental, such as the length of the lease and the rental fee.
There are several things to consider when renting land. The first thing to consider is the location of the land. It’s crucial to find an area that is in high demand. The second thing to consider is the price of the land. It’s essential to find a balance between the cost of the land and the amount of income you can generate from it.
Getting Started: If you’re interested in renting land, contacting a local real estate agent is the best place to start. They will be able to help you find land that is available for rent in your area.
Best Income Producing Assets FAQ
The most profitable assets generate the most income with the least initial capital required. Typically, these are leveraged assets, such as real estate or businesses, since they allow you to generate income without putting up all of the capital yourself.
What investors choose to invest in to generate income depends on their skills and financial goals, but dividend stocks are a great way to start generating income. Investing in dividend stocks allows you to receive payments from the companies you invest in, providing a great source of recurring income. It’s also easy to get started and doesn’t require much money upfront.
There are many ways to invest in assets with little money. For example, you can start investing in stocks with as little as $5. You can also invest in real estate crowdfunding platforms for as little as $100.
There are many different types of income-producing assets that investors can consider. Receiving interest, dividends, or rental income from investments can help you grow your wealth over time while supplementing your existing income. Regardless, it’s important to consider all of your options before making any decisions carefully. Doing so will help you make the best decision for your specific situation and ensure that you can generate the most income possible.