10 income generating assets that will make you rich

Have you ever thought about retiring early? I know you like your job so much that you cannot do anything without it. But do you want to work until you die? I don’t think you want to do that. What if there is something you could do to increase your income and start making money without doing extra work? The answer to these questions lies in income-generating assets.

Income-generating assets are assets that let you collect payments regularly in a form of income. By accumulating enough of these assets, you can exit the rate race and become financially independent.

So, in this article, I have put together the top 10 income-generating assets you can start buying today.

Without further ado, let’s get started.

Table of Contents show

1. Farmland

Farmland is probably one of the best income-generating assets you can acquire. Owning land requires no extraordinary maintenance assuming it is being used properly. If the land is irrigated, however, you must keep up with the maintenance of all utilities you have in place.

How can you make money with farmland? The best and easy way to make money with farmland is to lease the land. That is right. You don’t need to personally use the land in order to make money with it. According to USDA, the average cropland rent was $139 per acre for non-irrigated cropland and $216 for irrigated cropland in 2020. These rates vary from one state to another.

Although this money does not sound like a lot, you can make a decent passive income if you have a good number of acres. You would expect to make $13,900, for example, if you have non-irrigated 100 acres. The more acres you have, the more money you can make from this awesome income-generating asset.

2. Certificate of Deposits (CDs)

Certificate of deposits or CDs for short are great income-generating assets as they offer a fixed return for a given time. In addition, CDs are some of the safest income-generating assets you can buy. The downside of CDs is that they offer a very small return. There is always a price to pay. Safe investments usually come with lower ROIs.

So, what is a CD?

In case you have never heard of a CD, I will cover the basics for you. A CD is just a time-based deposit you make with a financial institution that earns you a fixed interest for the duration of the CD. These types of accounts are sold by banks, credit unions, and thrift institutions. Although CDs are a form of deposit accounts, they are not the same as savings accounts. A CD has a maturity date and will earn you a fixed interest rate during that period. More importantly, their terms are stricter than savings accounts.

According to Bankrate, the average return on a one-year CD is 0.15% and 0.28% on a 5-year CD. These rates vary from one provider to another. Some banks can offer as high as 1.1% APY whereas others offer much less.

The idea here is that CDs are great income-generating assets. To generate enough income from CDs, however, you will need to have enough money into your CD accounts. If you are considering this venture, do your research. Just because the national average is 0.15%, it does not mean you have to settle for that low rate. Some banks and credit unions offer higher rates. So, look for those ones.

3. Income-generating assets: Royalties

Do you have any particular product that you have created or can create? If yes, then you can make some money from those products or assets in a form of royalties. Royalties are one of the best income-generating assets because you can make money as long as your product is being used.

So, what is a royalty?

A royalty is nothing other than a payment you will receive from someone or an entity for using your invention. If you are an artist, for example, people can pay you to use your music in their ads.

According to Tipalti, the following are types of royalties.

Music royalties
Social media influencers and digital content
Book publishing royalties
Gas, oil, and minning royalties
Franshise fee
Patent

Royalties rates of returns(RoRs) differ from one industry to another. For example, the average rate of return on investment for a music royalty was 12.14% in 2019, according to Royalty Exchange. This is a great return as you will create your music once and continue to make money as long as your music is being used.

4. Income-generating assets: Rental Properties

Rental properties are some of the greatest income-generating assets. Just like farmland, you will need someone to use your rental estate. For example, you can buy a commercial rental estate that attracts businesses such as restaurants, office offices, shops, etc. Or if you don’t have enough starting capital, you can start with residential properties and build your portfolio over time.

The people who will occupy your properties will be your tenants and they will give you money known as rent. Usually, the rent is paid on a monthly basis. Others consider long term, especially when dealing with businesses that will occupy the premises for a long time.

The profitability of rental properties will vary depending on their types, sizes, and locations. In addition, the scalability of your portfolio will depend on the types of rental properties you are buying.

For example, it would be hard to build a portfolio of single-family units. This is because, for each unit, you will have to apply for a different mortgage, have different terms, come up with its down payment, closing fees.

On the other hand, multifamily properties are more profitable and easy to scale up. The only tricky part with them is that they are a little expensive for beginners who don’t know how to use leverage. If you are interested in learning more about rental properties, use the following resources.

5. Dividend paying stocks

If you live on planet earth, you have pretty much heard of stocks or the stock market in general. If you have not heard of it, I will walk you through it.

The stock market is a market where stocks or shares of companies and related equities are bought and sold. It is that simple. Complex definitions exist, but for now, let’s focus on this one.

Shares of companies represent pieces of companies. In order to own stocks, the company must be a publicly-traded company. When you buy shares of a company, you automatically own a percentage of that company that is proportional to the number of shares you own. In other words, you are a shareholder of the company.

Some companies decide to distribute a portion of their profits to their shareholders every quarter. The portion of profit distributed to shareholders is known as dividends. The amount of money you receive in dividends depends on the number of shares you own and the earning per share.

If XYZ company has an earning per share of $0.25, for example, and you own 100 shares, you will receive $25 in your account. What if you had 1000 shares? In this case, you would receive $250. You can see that the number of shares you won matters.

Dividend-paying stocks are stocks of companies that pay dividends. As a shareholder of these companies, you would expect to receive these dividends as long as you keep your shares and the company continues to give dividends. This is what makes stocks one of the best income-generating assets. Your dividends can be taken out as regular income or you can reinvest them and grow your portfolio.

6. Income-generating assets: Peer-to-peer lending

Do you have money sitting in your checking account or under your mattress that you are not currently using? You can put it to good use through peer-to-peer lending also known as p2p lending.

So, what is p2p lending?

P2p lending is a form of lending where a borrower and lender are connected through an online medium. These loans are a form of personal loans for individuals who cannot qualify for conventional loans. For example, a person with a bad credit score can find it difficult to qualify for a regular loan from a bank or credit union whereas it would be easy to qualify for money through p2p landing.

According to Forbes, p2p lending targets individuals without a high chance to qualify for conventional loans due to the following reasons:

Their credit score is fair
They cannot qualify for convetional loans
Their credit history is small
People who want community based experience
Or have good credit history and credit score but want to qualify for lower rates they are not getting through conventioal loan providers.

Some of the online marketplace for p2p lending include but are not limited to:

These lending institutions can connect you with prospective borrowers and the hard work will be done for you. The returns you will gain are also great compared to the work you will be doing. According to Credit Summit, you would expect to make between 7% to 11% on average from p2p lending. These ROIs make p2p lending one of the best income-generating assets.

7. Income-generating assets: Write an eBook or a book

Books and eBooks are good income-generating assets you should consider. With an electronic book, you can self-publish or use a publisher. The hardest part is only about creating a book or an eBook. Once written and published, your eBook will require minimal work.

8. Create a physical product

This is similar to creating your eBook except that your product will be physical. Some people hate physical products because of shipping issues. Not everyone enjoys wrapping products, shipping them, and making sure that they have been delivered.

If you are ok with shipping-related issues, however, creating a physical product will be great for you. Some of the products you can create can range from t-shirts, mugs, homemade clothes, crafts, arts, etc. The choices of what you can make are endless. If you have expertise in creating things or know who can help you create them, this could be your first step toward greatness.

You can sell your products on your own store, Amazon, eBay, Craigslist, Etsy, Poshmark, etc. If you want more details on where you can sell things online, please refer to the following article.

9. Savings account

If you have been keeping a lot of cash at home or in your checking account, you need to consider other alternatives. Not only that you are losing your money through inflation, but also, there are chances that you can lose it easily or spend it.

A great alternative you can consider is a savings account. Savings accounts can offer you a great income that you can enjoy for as long as you have the money in the account. Just like CDs, savings accounts provide a very small return on investment. So, you would need to have a lot of money in the account in order to make a decent profit.

Saving accounts have fewer restrictions compared to CDs. According to the Federal Deposit Insurance Corporation (FDIC), the average APY for a $100,000 savings account is 0.06%. This is a very small return on investment (ROI). However, it is better to have a small return than to have your money eaten by inflation.

10. Income-generating assets: Bonds

Start thinking about bonds if you want income-generating assets. Bonds are secure and provide a fixed return until the maturity date.

What is a bond?

When you buy a bond, you lend your money to an institution such as a company or government. In return, the institution gives you interest paid periodically until the maturity date. The interest you get from bonds varies from the types of bonds and bond issuers.

According to the balance, there are at least five types of bonds which are listed below.

US Treasure Bonds
Municipal Bonds
Corporate Bonds
Agency Bonds
Saving bonds

As noted by Mint, a 10-year government bond (G-Sec) has an average return of 6.126%. The fact that these bonds are secure makes them a great attraction for people who want to build wealth through income-generating assets.