9 min read
Earlier this morning I rolled out of bed, logged into my brokerage account, and saw that I had received $125 in stock dividends.
I didn’t have to do anything to earn those dividends. I didn’t have to commute to an office and spend the day in a cubicle to receive that money.
Instead, because I own dividend-paying stocks, I receive dividend payments every three months without any work on my part. I don’t even have to walk to the mailbox to collect the money.
This is the beauty of owning assets: they earn money for you while you sleep.
This is why the way to accumulate wealth is to acquire assets. When you own assets that earn money for you, you no longer have to spend your time at a day job you dislike just to earn an income. Your assets do the heavy lifting for you.
Dividend-paying stocks are just one example of an income producing asset. There are many others – from common things like savings accounts and CDs to more obscure things like owning timberland or mineral rights.
In this post, I share 19 examples of income producing assets that you can invest in to build wealth.
1. Savings Accounts
One of the most obvious examples of an asset that you can invest in is a savings account. This is the easiest way for the average Joe or Jane to start earning a little money from assets.
Currently most savings accounts pay close to 2% in interest annually, which means $1,000 sitting in a savings account will earn $20 in interest each year. This isn’t a ton of money, but it’s certainly better than earning a few cents in a checking account.
Most people don’t actually use savings accounts to build serious wealth. Instead, savings accounts are simply a place to put some money that you can easily access if you need it right away, while also allowing you to earn a bit of interest.
If you’re looking to open a savings account, CIT Bank is a great place to get started.
2. Certificate of Deposits (CDs)
Certificate of Deposits are similar to savings accounts, except your bank won’t allow you to access your cash in a CD for a specified amount of time without paying a penalty.
The reason people put their money in CDs is because they typically pay higher interest rates than savings accounts. They’re also easy to open – anyone can head to their local bank and open a CD for a specific duration of time.
Unfortunately in today’s low-interest environment, you’ll be hard pressed to find a 5-7 year CD that pays more than 2.5% annually. You won’t get rich with CDs, but they can offer a simple risk-free way to grow some of your money.
A bond can be a low-risk investment that typically pays higher interest than a savings account or a CD.
When you purchase a bond, you’re effectively loaning money to a business or government who agrees to pay you back the money you loaned along with additional interest after a certain amount of time.
There are tons of different types of bonds you can buy from different entities, including:
- Individual companies (corporate bonds)
- The federal government (treasury bills)
- State/local governments (municipal bonds)
- Foreign companies or governments (foreign bonds)
Many investors like to invest in bonds because they provide a low-volatile way to earn income.
4. Dividend-Paying Stocks
Another popular income producing asset that you can invest in is a dividend-paying stock.
When a company generates profits, they can decide to reinvest those profits back into the business to grow it further or they can pay out some of the profits in the form of dividends to investors. When you invest in a stock (or stock index fund) that pays dividends, you can expect to receive a dividend payment every three months.
Some companies even increase the amount they pay in dividends each year, which means you can receive higher and higher dividend payments without actually investing more money in a particular stock.
Some stocks are even known as “Dividend Kings” because they have increased their dividends for 50 or more consecutive years. A few examples of these companies include:
- Johnson & Johnson
Check out this post from Sure Dividend for a complete list of the 27 companies that currently qualify as Dividend Kings.
You can invest in individual dividend-paying stocks or dividend-paying stock index funds. Whichever method you choose, I recommend using M1 Finance, a site that allows you to build a custom portfolio of stocks and/or index funds for free.
5. Single Family Rental Properties
Another example of an income producing asset is a single family rental property. You can either buy a house specifically to rent it out or simply rent your own house when you decide to move instead of selling it.
The nice thing about rental properties is that you can receive cash in the form of rent payments from your tenants each month. This consistent income stream can offer a huge boost to your overall income.
If you’re ambitious, you can even own several rental properties. You may even be able to reach a point where you can cover all of your living expenses purely through rent payments from tenants. A real life examples of someone who did this is Chad Carson, who was able to retire early purely from owning rental properties.
6. Multi-Family Rental Properties
Along with single family rental properties, you can take things to the next level by investing in multi-family rental properties. My favorite example of someone who did this is 5AM Joel, who bought four fourplexes in 12 months.
While investing in multi-family rental properties can be a bit more complex and time-consuming, it offers the opportunity for a higher income.
7. Short-Term Rentals
Another way to earn rental income is to rent out a single room of your home to people who are traveling, or to rent out a vacation home that you own.
You can make great money through short-term rentals, but keep in mind that you’ll typically have more cleaning involved since you’ll have to keep the units/rooms prepared for new guests. One option you can use is to outsource this to a professional room-cleaning or property management group, which will lower your total income but also reduce the time investment needed on your part.
8. Real Estate Investment Trusts (REITs)
One of the most hands-off ways to earn money from rental properties is to simply invest in real estate investment trusts, or “REITs” for short.
A REIT is a company that owns income-producing properties. When you invest in a REIT, you receive dividend payments either every month or every three months. This is one simple way to earn rental property income without enduring the headaches that often come with owning physical property.
Similar to stocks, you can invest in individual REITs or REIT index funds.
9. Crowdfunded Real Estate
Another popular way to earn income from real estate is to invest in crowdfunded real estate deals. Instead of investing in a property by yourself, you can instead invest in properties with thousands of other people online, which is a hands-off approach that you can use to invest in real estate without dealing with any property management.
My favorite platform for investing in crowdfunded real estate is Crowdstreet, a site that provides you with three ways to invest:
Fund Investing: Make a single investment into a fund of 30-40 properties.
Direct Investing: Review properties on the Crowdstreet marketplace and invest directly.
Managed Investing: Let CrowdStreet invest directly in properties on your behalf.
Get started with Crowdstreet here.
10. Peer-to-Peer Lending
One relatively new way to earn income online is through peer-to-peer lending. The idea is simple: a peer-to-peer lending platform is one in which people looking to borrow money can match up with people looking to lend money. Both parties get to skip the bank.
Borrowers usually get better deals than they could through a bank and lenders are able to earn higher interest rates than they could through a bank.
While there is risk involved with peer-to-peer lending, you do have the ability to select your risk-level that you’re willing to accept when you choose to join the platform.
Another asset that you can invest in is a franchise. When you choose to open a franchise, you gain the rights to use a parent company’s trademarks, trade secrets, and business model in exchange for a percentage of your location’s profits.
The reason people choose to open franchises instead of opening their own business is because they get to run with a proven business model rather than trying out a business model that they’re unsure will work or not.
The cost to open a franchise varies based on the parent company and some companies only accept a small percentage of applicants. For example, Chik-Fil-A supposedly accepts less than 1% of applicants.
I personally know one couple who opened their own Mathnasium franchise location and is currently killing it. They made a great decision because they knew they wanted to open a math tutoring center, but they didn’t want to start completely from scratch.
Through opening a franchise, they were able to use the parent company’s tutoring materials, business plan, and proven advertising strategies, which increased their chances of succeeding.
12. Low-Maintenance Businesses
Another example of an asset that can produce income is a low-maintenance business. Examples include:
- Car washes
- Vending machines
- Storage Units
While it can take some time to get these businesses set up, many of them can be maintained with less effort than a traditional business. The activities that do require work can even be outsourced, so this can be a completely hands-free way to earn income.
My personal favorite example of an income producing asset is a website. A website can be monetized in the following ways:
- Banner advertisements
- Affiliate links
- Your own products
While it can take 6-12 months to see any income from websites, there’s virtually no upper limit on how much money you can earn once you’re up and running.
You can either build a website from scratch or you could purchase one on a marketplace like Flippa or Empire Flippers. Beware, though, that there are tons of scams out there and that investing in websites can be quite risky. For those who are able to make it work, though, it can offer an incredible income stream.
If you’re looking to set up your own website, check out my quick-start guide here.
14. Your Own Product
One example of an asset that you can create from scratch is a product. This could be an online course, a piece of software, an e-book, or a physical product.
There’s no denying that it takes an initial time investment to build a product. Once it’s built, though, you can sell the product (if it’s digital) over and over again for a profit without remaking it each time. I’ve personally made and sold a few different digital products online, including:
The Excel Genuis Toolkit – This is a collection of 17 Excel worksheets that show how I made the most popular visuals on this blog. Since people emailed me so often asking for the worksheets I used to create some of the visualizations in my posts, I decided to create a massive collection of worksheets that I could simply sell to people.
The Data Scientist Resume Pack – This is a collection of the exact three resumes I used to land various data science jobs. Instead of explaining how to create a resume that will attract data science jobs, I made this product so that people could purchase it and simply see examples of resumes that have landed real jobs.
Elements of Freedom – This is an ebook that encapsulates all of the big ideas that I’ve written about over the course of nearly three years on this blog. I decided to make this as a way to help new readers get up to speed on all of the topics I write about without needing to dig through the hundreds of articles in the archives.
Simple SEO for Bloggers – This is a course I created that teaches the basics of SEO (search engine optimization) that anyone with a website can use to increase the total search engine traffic they receive on their site.
Each of these products took time to create, but now I earn income from them each month without any work.
In most cases, a car is not an asset. It’s something that you buy that depreciates in value over time and produces no recurring income for you.
However, you can turn your car into an asset by enlisting it on a car-sharing platform like Getaround.
The idea is simple: you list your car on their platform as available for other people to rent, and you get to decide when it is available. This can be a nice way to earn some extra income during the times or days when you know you won’t be using your car yourself.
Similar to car-sharing, if you happen to have an RV then you can enlist it on an RV-sharing platform like RVshare. Depending on the location and the time of year, you could earn as much as $100 – $300 per day through renting out your RV.
While I wouldn’t recommend going out and buying an RV for the sole purpose of renting it out, this can be a nice option for people who already own an RV and don’t use it during certain times of the year.
One less common, yet potentially profitable asset to own is farmland. As Mark Twain once said:
“Buy land, they’re not making it anymore.”
Some pieces of farmland, like those in various Midwestern states, can sell for $10,000 or more per acre if they have the right type of soil. Less prime pieces of land can be purchased for as little as $1,000 per acre and can be rented for $50 to $250 per year.
Sticking with the theme of unconventional assets, timberland is another asset you could invest in.
If you have a large wooded piece of land, you may be able to make money by selling timber. Or, you could start planting and growing trees on your land with the goal of eventually selling timber in the future. This is only for those who are extremely patient, though, as it can take 15+ years for a tree to reach full maturity.
19. Mineral Rights
Another unconventional asset to own is mineral rights – the right to extract minerals from a specific plot of land.
When you own a piece of land that contains valuable minerals like oil and gas, gold, diamonds, coal, or copper, you hold the right to mine and extract those minerals from the land. This can be lucrative if your land contains the right minerals.
Advice for Accumulating Assets
Accumulating assets takes time. Don’t expect to become an owner of an impressive portfolio of assets overnight.
Keep in mind that some assets might make more sense for you to acquire than others. Perhaps real estate makes sense for you. Or perhaps you’re more comfortable with stocks and bonds. Or perhaps buying and building websites is a more realistic path.
Be patient and diligently seek to acquire more assets each year. Over time, your existing assets will grow and produce more and more income for you. Eventually you’ll reach a point where your assets can pay for your living expenses. At that point, you’re free.
- My 2020 Annual Review - December 27, 2020
- Be an Owner - November 25, 2020
- What if You Only Bought Stocks After the Market Had a Down Year? - November 4, 2020
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.