10 Best Income-Producing Assets

Last Updated by Neiko Johnson on 
December 9, 2021
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Income-producing assets are investments that generate income and cash flow.

The income generated from income-producing assets can be used to increase your wealth over time because you will be able to earn more than the cost of borrowing.

Income-producing assets typically have a higher return on investment (ROI) than other types of financial instruments, such as stocks or bonds.

In this article, we will talk about 10 income-producing assets that may help you build wealth by focusing on increasing your income and generating consistent returns over a long period of time.

What are income-producing assets?

Income generated from income-producing assets can be used to increase your wealth over time.

Income-producing assets typically have a higher return on investment than other types of financial instruments, such as stocks or bonds.

There are many different income-producing assets that you can invest in, but we will focus on the top ten in this article.

The purpose of this article is to provide you with information so that you can make an income-producing asset investment that is right for you.

The following list contains some of the top income-producing assets:

1. Real estate as an income-producing asset

Tenants pay rent on a monthly basis, and your property will appreciate in value over time as more people move into the area.

Investing in income-producing real estate has several advantages such as depreciation, tax breaks, and the ability to borrow against the property.

Real estate is a great way to build long-term wealth because it has a consistent history of appreciation.

2. Businesses

Owning your own business can be a great way to generate income and cash flow.

There are many different types of businesses that you can invest in, such as income-producing real estate or a franchise.

Businesses can be excellent income-generating assets because they have the potential to increase in value over time and pay dividends at the shareholder level.

There are many advantages of owning a business including tax breaks on interest, depreciation, and other deductions.

3. Peer-to-peer lending

Peer-to-peer lending allows you to invest in loans that are issued by individuals or businesses.

You can choose the level of risk that you are comfortable with, and you will receive a return on your investment based on the terms of the loan.

Peer-to-peer lending is a great way to generate income because there is no need to have a lot of money to get started.

You can invest as little as $25 per loan, and you will receive payments on a monthly basis.

4. Fixed income investments

Fixed income investments include bonds, CDs, and other types of debt instruments.

The main advantage of fixed-income investments is that they are low-risk investments that provide income on a periodic basis.

Fixed income investments can be excellent income-producing assets because you will have peace of mind knowing that your investment is safe and secure.

The downside to fixed-income investments is that they typically pay a lower interest rate than other types of financial instruments such as stocks or real estate.

5. Dividend-paying stocks

Dividend-paying stock pays income to the company's shareholders on a periodic basis.

Dividend-paying stocks can be excellent income-producing assets because you will receive consistent income over time from your investment.

The downside of dividend-paying stocks is that they are not guaranteed, and there may come a time when the income payment is discontinued.

6. Crowdfunding

Crowdfunding allows you to invest in products and services that will be launched by businesses on a crowdfunding platform such as Kickstarter or Indiegogo.

You can choose the level of risk that you are comfortable with, and if enough people contribute money, your investment could see significant returns over time.

Crowdfunding is a great income-producing asset because you will receive income overtime when the product or service launches.

The downside to crowdfunding is that it can be risky, and there are no guarantees in regard to getting your money back if the company fails.

7. Business development corporations (BDCs)

Business Development Corporations are companies that invest in small businesses.

BDCs can be excellent income-producing assets because they have a history of providing high returns to their shareholders.

The downside of BDCs is that they typically charge a higher fee than other types of investment vehicles.

8. Real estate investment trusts (REITs)

Real Estate Investment Trusts are companies that invest in income-producing real estate.

REITs can be excellent income-producing assets because they provide a regular stream of income to their shareholders.

The downside of REITs is that they typically have a higher fee than other types of investment vehicles.

9. Mutual funds can be a great income-producing asset

Mutual Funds are baskets of investments that are managed by a professional money manager.

Mutual funds can be excellent income-producing assets because you will have exposure to a variety of different types of investments.

The downside to mutual funds is that they typically have a higher fee than other types of investment vehicles.

10. Pensions

Pensions are retirement plans that provide income to seniors when they retire.

Pensions can be excellent income-producing assets because you will receive income for the rest of your life, and often times it is guaranteed income that does not change over time.

The downside of pensions is that there are strict rules about access to funds before you're eligible for retirement age.

Have more money by using good money management skills

It's important to limit the amount of consumer debt you have so that you are able to focus on income-producing assets.

You limit yourself by having too much debt and it will hold you back financially.

We paid off $460,000 in 4 years and that has allowed us to use our income to start building generational wealth by investing in income-producing assets.

Using the right money management skills will increase your chances of becoming successful.

Final words - Income-producing assets

Income-producing assets are investments that generate income over time. These tools can be excellent for building wealth, but they do come with risks and challenges as well.

You need to manage your debt so you have the income available to invest in income-producing assets like stocks or real estate.

The income from these types of investment vehicles will allow you to build generational wealth by providing a regular stream of income over time, which is not guaranteed with other forms of investing such as mutual funds or pensions.

Your ability to make good money management decisions is key if you want to become successful because it's important for limiting consumer debt and making sure your cash flow has enough room left over for income-producing assets like dividend-paying stock or crowdfunding platforms.

Article written by Neiko Johnson
Neiko is a personal finance expert and Co-founder of Secret to Finance. Along with his wife Alexis, they learned how to get out of debt and paid off $400,000 in 4 years.

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