Invest in income producing assets to have secured and beautiful life
This post topic is based on request made by Pankaj on “Suggest-a-topic” for income producing assets.
In this ever changing and highly competitive economy, a common man always wants to secure his two meals a day. The first question that comes to his mind is-“How can I secure my family in future so that they don’t have to strive for their daily needs”? Can I do something now; invest somewhere which will give me an assured income? What all assets can I buy for this “assured” income? One of the best ways for a common man to invest for a reasonable income in my opinion is to invest in “Income producing assets”. In this article, I would detail about what are income producing assets and how you should invest in them to secure your family future.
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What are income producing assets?
These assets are nothing but economic properties that give cash flows as long as we hold on to them. For example: Investment in a property that can give a fixed rental income or buying debentures that can give a fixed interest, etc.
Types of Income producing assets and its sustainability to individuals
I have tried to enlist some of the income bearing assets hereunder. This is an inclusive list and not exhaustive.
1) Stocks for dividend income
Investments in stocks and securities of good and prosperous companies give us dividend income. These dividend cash flows can be a decent income from income generating assets. But it is generally preferable for medium and high risk investors as the distribution of dividend is totally dependent on the discretion of the board of directors and the available profits of the company.
2) Interest bearing debentures/bonds
Purchase of fixed interest bearing securities such as debentures and bonds can be a good income producing asset for low risk investors. These are not like dividend income from stocks where it would be available only upon profits from the company. Debentures are fixed liabilities for companies and hence they are bound to pay this interest even if there are no profits from its operations.
3) Interest from Bank FD
This is my favorite income producing assets. Since banks are monitored by RBI, I felt investment of your bank FD would be safe and is the best income producing asset. This is favorite for all class of investors like high risk or low risk investors as every one want some money to be invested in such safe investments.
4) Rental income from real estate:
his is one of the best options for the low and medium risk investors, provided the pocket allows, a purchase of a real estate helps us in two ways:
• Fixed rental income
• Value/capital appreciation
So, even when a man has no business, no money in his pocket but a real estate property purchased in the yesteryears, he can live peacefully only with the rental money.
5) Mutual funds dividend
Dividend or monthly income funds give us regular income with medium risks. The chance of capital erosion is comparatively less in these kinds of funds.
6) Internet assets
Certain assets like blogs, domains, websites, etc. can also be a good income generating asset. Myinvestmentideas.com is a classic example. I have started this blog more than a year back. While it is helping me in fulfilling my passion towards analysing financial products, it also gives me passive income. The income may be small, but it adds to your total income. Various cash flows in the form of advertisements, commissions and registration fees come in easily. This source of income is again good for medium of high risk investors as the popularity and success of the site is not in ones hand.
7) Royalty income from intellectual assets
Books, movies and music can also become ones intellectual asset and earn handsome royalty income. These assets once created can actually make one’s life for generations to come. A royalty is made to the legal owner of a property, patent, copyrighted work or franchise by people who wish to use it for the purposes of generating revenues or any such desirable activities.
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This list as I said is not an exhaustive list. Anything for example an email account can also be an asset in network marketing. Many websites use this email list as an important tool to fetch vivid orders for their products. One of my friends got a 100 yr old sword as legacy from his great grandfather. Apparently this sword cannot be termed as an income generating asset, right? But, one day some Rajasthani man approached him for the sword to wear it in his wedding (A custom for Marwari weddings) and paid 50$ as rent. Since then my friend started giving it for rent and this sword is now booked for 20 days in a month. Hence, a simple thing like a sword turns into a cash flow asset J
This world is a very complicated place to live in. Nothing here lasts forever. A man dies, but his memories remain. Now it is on us how to live our lives peacefully. A penny invested tactfully now, can give us fixed income in years to come. At an older age, the capacity to earn diminishes, but the hunger doesn’t. Money is power in this world! If you have money, you can conquer the world. Everyone around will help you, care for you when needed. Therefore to be on a safer side, one should invest in some income generating assets as and when he has funds to invest. These cash flow assets are the best friends in bad times. One doesn’t have to worry for petty expenses. Everyone has ups and downs in lives. Be it a business or service, anyone can face a setback. The income from these assets can serve the basic needs of a family in bad times also.
Conclusion: One must take risks in life to flourish. But there should always be a balance between the profits and income. There may or may not be profits, but income will always walk side by side with us.
Finally, thanks to Pankaj who has requested this topic which I feel would be useful for many readers.
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Team – Myinvestmentideas.com
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Sir, your articles are very simple and understanding I also want an advice I am 24 now and can save up to 20k from my current salary. My father sold his land for my study and that land cost 50 lacs approx now I want to buy that land reviewing market hikes what u suggest I must do or how I must invest my savings so that I can acquire that property within next 5 years and if my savings are not enough then what must be the amount I must save
as in you article it is mentioned that by maitaining blog we can also add income . Sir can you please publish a article on this.
If some one want to earn by blogging how it work to create earning. And how blog works to earn money.
As you are also a blogger and have a good experince of its running.
So it would be a favor towards the professional who have ability to explore the limits but do not know how to do that.
I am also intrested to run blog on IT infrastructure management and ISO 27001 but do not now how to do that.
Hope you understand my concern .
Can you please tell me how should i enter into the stock market as i am very new to it.
Amar, instead of directly entering into stock market, invest in mutual funds to start with. Once you know how stock market funs, you can make an entry.
Sir, Your articles are nice and very helpful. I need a financial advice w.r.t purchasing a property. I am 30 and I along with my wife can save upto 70k per month from Jan2014 onwards. We are having a own flat and are planning to purchase an apartment or plot at a prime location in the city. So we have to take a home loan as we have meagre savings at present. Is it right to take a home loan to purchase a 40L to 50L property or to save 7-8 lakhs of our income annually from 2014 onwards till 2020 with compounding phenomena and target 80Lakhs-1 crore of savings by which we can purchase a property without any hassle even though the property price increses… ,
Hi Sankar, Before I advice, I would tell my experience. I had similar queries few years back and started saving money before taking up new property. I wanted to accumulate atleast 40% to 50% of property value. Now I have done it, but the real estate prices shoot up and I am back to square one. My accumulations would not even meet 25% of value. I am not saying that you should take entire amount as loan. My person suggestion would be to accumulate 1 year expenses and keep it aside and atleast 10% to 15% for down payment and balance taking loan. One more point is to have more than one income to mitigate risk. Since you and your wife are working, this part is taken care.