Accumulating income-generating assets is a sensible practice of investing money. The concept of building a passive source of income through investment is attractive to many. People usually focus on generating enough revenue from money-making assets to pay their bills, replace their indispensable expenses, and even meet their day-to-day needs. If they do manage to fulfill this aim, it becomes easier to break free of financial chains, and explore their hobbies and passions.
Here is a quick rundown of the top 5 assets that generate revenues
Stock investing is an art, in essence, and an entire ball game altogether. In simple words, stocks are shares of a company that you assume will be successful, and will make profits sometime in the future. So, in order to own a portion of their profits, you buy shares in the company.
Thus, when and if the company produces profits, the value of your shares/stocks will go up, and so will your net worth too. Now, one thing to remember is that stocks, by themselves, are not true money-generating assets. This is because; technically you do not make any money till you sell the stocks. i.e. provided you sell it at a higher rate than you bought it in the first place. However, if you invest your money in stocks that pay you dividends (small payments from companies when they make profits), only then is it truly considered as a money-making asset
The only risk in the stock market is if the company files for bankruptcy. Once they file for bankruptcy the stock price falls down to zero, which means your shares are worthless. Avoid companies with a lot of debt (liabilities).
Just like stocks, bonds are money-making assets that have been around since a long time. They too are true passive investments, because whenever you purchase a bond, you do not have to keep a check on it. It is easily one of the safest investments you can secure. By holding bonds, you are giving a loan to the government, or a corporation. They take your money and give you back your principle sum along with a calculated interest, depending on the amount of money you first lent. However, the interest is pretty small, mainly because the risk is so low.
All in all, bonds are suitable ideas for people who hate risky investments and always fear from the phobia of losing money.
A mutual fund is an asset for people who lack the time, skills and patience to learn the varied investing policies. It is a professionally maintained investment fund that generates money from several investors in a bid to purchase securities. So, all you have to do is choose a mutual fund, that it’s. Thereafter, a professional fund manager will do the work of managing it for you. They will be the ones who will decide what types of investments (bonds, stocks, etc), how much of each, as well as whether to alter it or not, according to fluctuation in economy.
The reason why it’s a true passive investment source is because it’s very hand’s off. You can purchase mutual funds yourself with the help of a brokerage account, or else visit your nearby bank to consult an investment specialist.
Commercial Real Estate
Businesses, just like people need a space to establish themselves. Commercial real estate make for effective income-generating assets, simply because you can charge high amounts of rent at will. Then again, the risk is quite high, especially when there is recession. And if your tenant company’s growth falls, or becomes insolvent altogether, they may ultimately fail to afford your rent fees. That is exactly why a lot of investors are starting to rethink of office real estate as a suitable option.