What Are Income Producing Assets? How to Generate Income?
By Martin Hurley
Updated June 2023
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Income producing assets are things that make money. Done the right way, they help you get more money. Kind of like little digital oil wells that spit out money forever.
These income assets can come in many forms. That includes stocks, bonds, rental property, real estate investments, books, templates, ad revenue, business investing and more.
Note: It's always recommended to see a tax specialist regarding your income tax and-or taxable income before investing in any income generating assets.
Just so we're clear:
Net income is take-home pay after taxes, deductions, insurance etc.
Fixed income is any investment where the borrower or issuer makes payments of a fixed amount on a set schedule.
Income producing assets examples
Here are some examples of income generating assets...
Stock market
Stocks are one of the most common income producing assets. This involves buying shares in a company or corporation which entitle you to a portion of its profits.
You can buy individual stocks or invest in (my favourite) exchange-traded funds (ETFs) which will generally pay dividend income a few times per year.
Bonds
Bonds are another type of income producing asset. When you invest in government or treasury bonds, you loan money to a government or company and receive regular payments with interest.
This means that your principal investment is protected while you earn interest from the bond issuer.
Rental property
Rental property can also be another way to produce income. You buy a house or apartment and rent it out in order to generate money.
It may involve upfront costs to purchase the property, but you will eventually reap the rewards when your tenants make monthly payments.
Real estate investments
Real estate investments are another income producing asset. This involves buying properties and selling them for more than what you paid for them.
You can also make money from renting properties out to tenants.
Income producing assets to invest in
Let's look into it a bit deeper.
Real estate
Real estate investments produce income by allowing you to rent out your property, either as an apartment, house, or even AirBnB for short term rentals.
You can also choose to invest in commercial real estate, such as office buildings and shopping centres.
Through rental income, you can generate a steady stream of passive income from your investment. Real estate investment trusts are an option too.
Securities
Securities, such as stocks and bonds, produce income through dividend payments.
When you buy shares of a company, you become an investor in that company and are entitled to any profits it makes, either through dividends or capital gains when the stock price rises.
Crowdfunding
Crowdfunding platforms allow you to invest small amounts of money into startups or businesses projects.
You can earn money in the form of interest payments or profits if the projects are successful.
Businesses
Owning a business is one of the best income producing assets because it offers you the potential to make money by generating sales and profits.
Businesses also offer tax advantages, such as deductions for certain expenses, which can help reduce your overall taxes.
Peer-to-peer lending
This is a type of online lending platform that allows people to borrow money from each other.
As a lender, you can earn interest on the loan you provide and also benefit from capital gains if the borrower repays the loan quicker than expected.
Financial freedom
As you can see, you have an abundance of income producing assets available to potentially earn passive income from.
With careful research and planning, you can make smart investments that will help you achieve your financial goals.
Additionally, having a diversified portfolio of income producing assets can reduce risk and give you the potential for greater returns over time.
No matter what type of investment strategy you choose, always remember to diversify and, as they say, never invest more than you can afford to risk.
Other income ideas
1. Investing in stocks - buying pieces of a company and earning money when the company does well. (The share market is often a long-term game!)
2. Renting out property - getting rent payments from people who live in your house or apartment
3. Selling products online - setting up an online store (LINK) to sell items like clothes, toys, templates, PDFs, or books (etc) to generate income.
4. Starting a business - making something that people want to buy and then selling it for a profit.
5. Opening a savings account - putting your extra money into the bank so it can earn interest over time. There are numerous money market accounts worth exploring for healthy interest rates.
6. Writing articles or blog posts - creating content that people will pay you for writing, designing or editing to generate consistent cash flow.
7. Investing in bonds - loaning money to governments and companies and receiving interest payments as repayment.
8. Dividend paying stocks - receiving payments from companies each quarter based on how many shares of their stock you own.
9. Creating an app - building a software program that people can download for free but make purchases within the app itself, or alternatively run ads on the app.
10. Crowdfunding projects - raising funds through platforms like GoFundMe by asking people to donate money for a project or cause, or investing in startups like the Flower Turbines mentioned above.
11. Royalties, licensing fees (etc) - This can include things like certification programs, licensing (recipes, beverages etc), buying the intellectual property, book royalty deals, and so forth.
12. Building and selling tools - like worksheets, processes, calculators, frameworks, etc. Canva is a great example as it allows almost anyone to become a graphic designer!
13. Templates - things like Facebook ad templates, standard operating procedures, Youtube thumbnails, script templates, email templates, habit trackers etc. Templates are shortcuts and are valuable to those who could use them.
14. List building and email lists - if you can help businesses build their customer base then that's a valuable asset for anyone who needs to grow their business income.
Conclusion
Of course there's many other income generating assets out there... just take a good look around you next time you visit a capital city!
Using income producing assets is an important part of building wealth. You can use them to create a steady stream of income that will help you reach your financial goals faster.
By diversifying your investments and understanding the risks associated with each asset, you can make sure that your portfolio is well balanced and provides you with consistent returns over time.
Additionally, income producing assets can provide you with tax advantages that can help reduce your overall financial burden.
Whatever route you choose to take, make sure to do thorough research and ask relevant questions so that you understand the details of each asset before investing your money.
There is always an element of risk involved in any type of investment. The juice, they say, needs to be worth the squeeze!
Building out income streams can be really exciting. When you have a bunch of these chugging away 'at work' every month, things get really fun!
