A Comprehensive Guide To Income Generating Assets

Income producing assets for passive income and active income are some of the best assets to build wealth.
For me, having assets that generate cash flow is a big part of my investing objectives. It’s all about building multiple income streams. That’s exactly how millionaire’s practice wealth-building.
So, if YOU are serious about making money and having more money, read on to learn about asset based income.
For me, it wasn’t until my early 30’s that I really clarified my investment objectives. Objectives that I believed in. And felt I could stick with through good times and bad.
So when it comes to my personal investments, I have three primary objectives.
Disclosure: This post contains referral links.
INCOME PRODUCING ASSETS & INVESTMENT OBJECTIVES

I invest money primarily to:
- Generate cash flow – also known as passive income
- Grow that cash flow to produce more passive income over time
- Increase my asset base through capital appreciation
Priority Based Investing
You can see that a current income and growth of that income top my list of investment strategies.
Other than my personal residence, I won’t own an investment asset unless it pays a regular and recurring passive income stream. In other words, I like to buy income producing assets.
This is why I like to say that I am an income investor. And I think that income producing assets are some of the best assets to buy.
My Favorite Asset To Buy: Dividend Stocks!
Dividend growth stocks are good assets to buy because they achieve all three of my investment objectives.
But many times I will sacrifice income growth and capital appreciation in the sole pursuit of objective 1, just plain old cash flow to increase my asset-based income. Who couldn’t use a little more cash?
ASSETS TO INVEST IN: SAVINGS VS. RISK ASSETS
Not all of the income producing assets I’m going to discuss in this article should be considered investments. Some are more appropriately referred to as savings. Savings products typically have less risk.
Risking Your Money

What does risk have to do with it? Well, generally the more risk you take the greater the opportunity for higher investment income from your assets and higher overall return on investment.
So we will start with the least risky income producing assets and move to higher risk income producing assets as we go.
Keep in mind that as you take more risk, you should have a longer time horizon.
For example, if you need the money in 6 months for a down payment on a house, then take less risk.
Related: 15 timeless investing principles
“What Do I Mean By Yield?”
We will also talk about the yield for some of the income producing assets.
Yield means the percentage of the amount invested and returned annually back to the investor or saver.
For example, invest $1,000 at a 3% yield and get $30 dollars of annual income. Sometimes yield is referred to as the interest rate or just rate for short.
With the onset of another recession, yields are falling. It is hard to earn more than 1-2% from the safest income generating assets.
That’s where investment risk comes into play again. If you want more cash flow from your assets then take more risk. Just be sure to understand the risks you are taking. After all, it’s your money.
Finally, 1 more thing before we get rolling. Just in case it is not obvious by now, let’s define exactly what an income producing asset is.
WHAT IS AN INCOME PRODUCING ASSET?
According to Investopedia, earning assets are income producing investments that are owned, or held, by a business, institution, or individual.
These assets also have a base value and the ability to produce additional funds beyond the inherent value for the investment holder. This allows the investment holder to maintain the assets as a source of earnings. Or, sell the assets for a lump sum based on its market value.
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THE DIVIDENDS DIVERSIFY LIST OF INCOME PRODUCING ASSETS
With that introduction in mind, let’s get to
- Certificates of Deposit
- US Savings Bonds
- High Yield Savings Accounts
- Money Market Accounts
- Bonds
- Peer-to-Peer (P2P) Lending
- Preferred Stocks
- Dividend Growth Stocks
- Growth Stocks
- Real Estate Investment Trusts (REITs)
- Exchange-Traded Funds
- Your Primary Residence
- Rental Properties
- Real Estate Crowdfunding
- Land
- Owning A Privately Held Business
- You And Your Time
Related: 60+ investment assets that appreciate in value
Buying These Assets As A Beginner With Little Money?
Also, you can get into many of these passive income options with $100 or even less. Yes, some of these options require large sums of cash.
But, if you are a beginner looking for your first assets to buy, you do not need a lot of money!
No excuses. Let’s start building our multiple streams of income. And saving a little money before we do is a good way to start. Let’s discuss that first.
Do You Need To Save Some Money First?
Saving money is the first step to building a base of assets that generate cash flow. If you need to save some money before getting started, consider Rakuten
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You should definitely check out Rakuten to save money by getting cash back rebates on every dollar you spend. Then, put that savings into income producing investments.
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No more delays, let’s dive into examples of income generating assets.
INCOME PRODUCING ASSETS – CERTIFICATES OF DEPOSIT
Our first income producing asset is certificates of deposit. Investopedia defines a certificate of deposit as follows:
A certificate of deposit (CD) is a savings certificate.
It has a fixed maturity date and specified fixed interest rate that can be issued in any denomination aside from minimum investment requirements.
A Guarantee To Get Your Money Back
A CD restricts access to the funds until the maturity date of the investment. CDs are generally issued by commercial banks and are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per individual.
My overall asset allocation includes a permanent allotment to cash. So I like to get as high of an interest rate as possible on that cash.
CDs are a solid choice for safe passive income. CIT Bank has an assortment of CDs you can choose from.
Build A CD Ladder
I employ a CD ladder strategy. I hold 5 CDs each maturing sequentially in one of the next 5 years. When the oldest CD matures during the year, I reinvest the balance into a new 5 year CD.
I search for the best CD interest rates on a website called Deposit Accounts. Most recently, 5 year CDs had interest rates of around 2%.
INCOME PRODUCING ASSETS – US SAVINGS BONDS

US savings bonds are another great choice as an income producing asset.
2 Types Of US Savings Bonds
They come in two varieties, series EE and series I.
Series EE savings bonds are low-risk savings products that pay interest for up to 30 years.
Series I savings bonds are also a low-risk savings product. During their lifetime, I Bonds earn interest and are protected from inflation. Source: TreasuryDirect
Savings Bonds Are Low Risk
US savings bonds are backed by the US government. But our US government is racking up tremendous amounts of debt.
Even so, it is unlikely that a saver would not get their money back when they want it. So this is a very low-risk savings option.
Another Bonus: Tax Deferral!
Another benefit of savings bonds is tax deferral. You do not have to pay tax on the investment income until you redeem the bond. Therefore your income compounds tax-deferred.
Tax deferral is a great feature if you are in a high-income tax bracket. Or just do not like paying taxes, like me.
I Prefer I Bonds
Finally, I personally prefer I Bonds among the different types of savings bonds available for purchase.
They are a great hedge against inflation. The income paid will go higher as inflation goes higher protecting your purchasing power.
Finally, I Bonds have been yielding anywhere between 1-4% in the recent past. The yield on an I Bond depends when you bought the bond. And it depends on the rate of inflation.
Related: Learn more about I bonds
INCOME GENERATING ASSETS – HIGH YIELD SAVINGS ACCOUNTS
High yield savings accounts have some similar characteristics to CDs. These accounts are also considered income producing assets.
Get Your Money Back When You Want It
They can be FDIC insured. However, unlike CDs, they have no minimum holding period. The saver can get his or her money whenever they want it.
Because of the flexibility offered, high yield savings accounts usually have a lower interest rate than CDs.
The Interest Rates On High Yield Savings
High yield savings accounts were a pretty good deal when interest rates were really low during the years after the great global recession. A saver could park their cash and get approximately a 2% interest rate.
Current rates are dropping again and will likely stay low for a while. CIT Bank offers some excellent online options if you are looking to build your savings.
Money market accounts are another type of asset that generates cash flow. So, let’s talk about money market accounts next.

INCOME PRODUCING ASSETS – MONEY MARKET ACCOUNTS
Similar to high yield savings accounts, with money market accounts, the saver has access to their cash whenever they need it.
Your Money Is Not Guaranteed
Money market accounts, however, are not guaranteed. They are comprised of very short term, high-quality investment securities.
Money market accounts carry an asset value of $1 per share owned. If you deposit $100 dollars in a money market account, then you are the owner of 100 shares at $1 per share.
What Is “Breaking The Buck”?
Only in very rare circumstances does a money market account share value differ from $1 dollar. This is called “breaking the buck”.
Even if the underlying assets in the fund do not support a $1 per share value, financial institutions that offer money market accounts will usually cover the difference. Breaking the buck would be a huge negative for the financial institution offering the money market account.
Once again, CIT Bank has it covered when it comes to money market accounts. Stash your emergency fund cash in a CIT Bank money market account today.
INCOME PRODUCING ASSETS – BONDS
I could write an entire article on bonds since they have so many different characteristics.
They come in different variations. And, they can be purchased through a variety of investment products.
Bonds As Defined By GenYMoney
To keep things simple, I’m going to borrow the definition of a bond from my friend GYM over at GenYMoney.
She has a talent for explaining things in simple terms. And recently GYM wrote an article on one specific type of bond called green bonds.
Here is GYM’s definition of a bond:
A bond is a fixed income investment whereby an investor essentially lends money to an entity like a company, government, or project for a defined period at a fixed rate of interest.
Keep Bond Investing Simple With Funds
I like simplicity and diversification when it comes to bonds. So I like to invest in bonds through mutual funds and exchange-traded funds (ETFs).
Mix And Match With Several Bond Funds
Then I mix and match my funds to achieve a nice diversified portfolio across these bond asset categories.
- Mortgage bonds
- Floating rate bonds
- Investment-grade corporate bonds
- High yield corporate bonds
- Municipal and government bonds
- International bonds
Bond Interest Rates And Risk
Because of the diversity in types of bonds and the risks associated with them, interest rates can really vary.
For example, high quality, short term municipal bonds can yield as little as 1.5%. On the other hand, speculative-grade corporate bonds can yield 6-8% and even much more.
The more risk that an investor will not get their money paid back by the borrower, the higher the interest rate the borrower must pay. As I said early on, more risk means more potential reward.
But One Bond Fund Can Be Enough
You may not be interested in selecting individual bonds, mutual funds, or ETFs. Then take the easy route and select one well-diversified bond ETF or mutual fund that holds bonds from a number of the areas mentioned above.
If you only want to own 1 bond fund, I give my favorite option in the article below. It takes a simple, set it and forget it approach to do it yourself investing. The 3 fund portfolio I discuss includes 1 bond fund and 2 dividend stock funds.
Related: How to build a Vanguard 3 fund portfolio
INCOME GENERATING ASSETS – PEER-TO-PEER (P2P) LENDING

Peer to peer lending is known as P2P lending for short.
P2P lending enables individuals to obtain loans directly from other individuals. The P2P lending process cuts out traditional financial institutions as the middleman.
Companies and their websites that facilitate P2P lending have greatly increased its adoption. As a result, P2P lending has become a viable alternative method of financing. And a source of passive income from another type of income generating asset, direct loans.
Interest rates on P2P loans vary depending on the risk profile. They can be as little as 2-3%. Or as high as 10% and even more.
You can read more about one specific P2P lending platform in this related article: Iban Wallet review – P2P lending made easy
INCOME PRODUCING ASSETS – PREFERRED STOCK
Preferred stock is a hybrid security that has a mix of bond and common stock characteristics.
Pros and Cons With Preferred Stock
The investor doesn’t have the capital appreciation potential like common stock. In exchange, the investor normally receives a high dividend yield.
In addition, the holder receives preferential treatment before common
Banks, insurance companies, and utilities are big issuers of preferred stock. Like bonds, you can buy individual company issues through your broker or invest through mutual funds and ETFs.
A Preferred Stock Fund Is A Good Way To Go
The I Shares Preferred and Income Securities ETF (PFF) is one example of a lower-cost preferred stock ETF.
PFF has many preferred stock holdings for diversification. It pays an attractive yield of 6.0%
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For a limited time, Webull gives you free stock just for opening your account. In that way, I guess Webull is an income producing asset. Why? They give you free stock!
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Resource: You can read my full Webull app review here
Let’s continue on with other more common types of stocks. Next, my favorite assets to invest in…
MY FAVORITE INCOME PRODUCING ASSETS – DIVIDEND GROWTH STOCKS
By investing in the common stock of a company, you are a part-owner in that business. And, participate in all the potential rewards and risks that go with ownership.
Get More Passive Income Every Year
The dividend stocks I’m talking about usually increase their dividend payments every year. They are referred to as dividend growth stocks.
The growing dividend helps your income keep up with inflation and increase your passive income over the long run.
While you, as the investor, focus on a rising stream of dividend payments, you can be less concerned about the day to day stock market volatility. Why? Because you receive a large piece of your investment returns in cash every quarter.
In addition, as the company raises its dividend year after year, the stock price will usually follow the upward trend.
The Simply Investing Report
To always pick the best dividend stocks, I use an advisory service called Simply Investing.
Simply Investing is delivered to my inbox every month. From its monthly dividend stock recommendations, I know I’m investing in stocks that provide safe income and represent a great value.
Learn more about Simply Investing by checking it our here.
Dividend Stocks Meet All Of My Objectives For Income Producing Assets

As I mentioned earlier, dividend growth stocks achieve all three of my investment objectives.
- Current income in the form of passive income
- Growth of that passive income
- Capital appreciation
I prefer my dividend growth stocks with yields ranging from 3-5%.
In my opinion, dividend growth stocks are some of the best assets to build wealth and become a millionaire.
Related: How to build a portfolio of blue-chip stocks paying dividends
ANOTHER INCOME PRODUCING ASSET – GROWTH STOCKS
First I want to say that growth stocks are not your typical income producing asset. Why? Because they either pay a very small dividend. Or, no dividend at all.
But many investors use pure growth stocks to produce income. Amazon stock is a perfect example.
Amazon stock pays no dividend. But some investors create an income stream from the stock anyway.
Here’s how…
Over the past several years Amazon stock has increased in value by more than 5 times. Let’s say you bought 10 shares for $400 per share 5 years ago. At the time, your total investment cost $4,000.
A share of Amazon stock now trades at more than $2,000 per share. So, your 10 original shares are now worth more than $20,000.
By selling 1 of the original 10 shares for $2,000 cash, you have created income. And still, maintain ownership of 9 shares valued at about $18,000.
So, growth stocks are another example of an income producing asset. They are very good assets to buy.
Morningstar
Morningstar is another one of my go-to resources. Whether it’s stocks, bonds, or ETFs.
Morningstar helps me find, evaluate, and monitor investments that best meet my needs. Check out a free 14 day Morningstar trial here.
Now, we have just covered both dividend stocks and growth stocks.
But there is one type of stock that deserves special attention. That is real estate investment trusts. Or, REITs for short.
ASSET BASED INCOME FROM EQUITY REITs
First of all, REITs are special because they allow you to participate in the real estate market. But, you do not have to deal with the responsibility of being a landlord.
We all know that real estate is finite. There is only so much real estate. And no more will be created. This makes real estate a great asset to buy.
But how does a REIT operate? An equity REIT owns, finances, and manages income producing assets. The assets are in the form of real estate.
When you purchase stock in a REIT, you will own a small portion of an office or apartment building that has been bought by a large company.
A REIT generates rental income from each property it owns. Then, it distributes the profit to shareholders in the form of dividends.
REITs receive favorable tax treatment from the government. That is, as long as they pay out most of their profits to owners as dividends. That makes REITs a great income generating asset.
You buy stock in a REIT just like buying any other dividend stock or growth stock in the stock market. You need a brokerage account to do this.
ASSET INCOME FROM EXCHANGE-TRADED FUNDS
Exchange-traded funds (ETFs) are one of the best assets to buy. Why? Because ETFs make investing in income generating assets easy.
What is an exchange-traded fund? An exchange-traded fund is a collection of securities that tracks an underlying index.
Many of the assets we have discussed thus far including dividend stocks, growth stocks, REITs, and bonds can be purchased through ETFs. By investing in ETFs, you get immediate diversification among many assets.
Furthermore, there is no need to research numerous individual assets to buy. Finally, ETFs pay income either monthly or quarterly depending on the ETF you choose.
An ETF is called an exchange-traded fund since it is traded on a stock exchange just like an individual stock. The price of ETFs shares will change throughout the trading day as the shares are bought and sold on the market.
All of these points make ETFs one of the best ways to generate cash flow from investments.
USE YOUR PRIMARY RESIDENCE AS AN INCOME GENERATING ASSET

Our homes are big investments. And they are one of the best assets to buy because paying your mortgage is like forced savings.
But, did you ever think of your home as an income producing asset? If not, maybe it is time to do so.
Tapping Your Home Equity For Cash Flow
Over time the value of your home should increase. Most home values will increase along with the annual inflation rate. But, some homes and areas of the country experience a much higher appreciation.
Furthermore, each month you make a mortgage payment. A portion of that payment serves to decrease the amount of your mortgage debt.
The combination of higher home values and lower mortgage debt is very profitable. They both serve to increase your home equity.
So, with mortgage rates at all-time lows, consider refinancing your mortgage. And take some of your equity out in cash at the time of refinancing.
By doing this, your home is an asset that generates cash flow. It is a reason that your primary residence is one of the best assets to buy.
Renting Out A Room In Your Residence
Renting out a room in your home doesn’t require you to make any extra investment. So, your home can be an income producing asset. This is a pretty passive income.
You can get a feel for managing a rental property and being a landlord without putting any money down. Or, making a long term commitment.
Services like Airbnb make it easy to connect with interested renters. And you can make a significant income depending on the size and condition of your place and the location.
RENTAL PROPERTIES FOR ASSET BASED INCOME

Beyond renting out a room in your own home, you can also invest in a stand-alone rental property. This has the advantage of separating your life from your asset that generates cash flow. Rental property is a hard asset to invest in.
On the other hand, a rental property may require a large investment. Especially if you are considering investing in luxury real estate.
It may take you some time to offset this cost. So this is a longer-term option compared to renting out a single room in your primary residence.
There are a variety of options when it comes to generating an income from rental properties. Here are the primary ones that are available to folks like you and me.
Vacation homes: Are you lucky enough to own a vacation home? If you are, rent it out when you are not using it.
Single-family rental houses: Many people start generating asset-based income from a single-family home when it’s time to move. They keep their old house and rent it out after moving to a new primary residence.
There are several advantages to bringing in cash from your former single-family home.
First of all, you know the property and its maintenance needs. Furthermore, there is only 1 tenant to manage. Finally, single-family homes will always be in demand when it’s time to sell or find a new tenant.
Multi-family rental properties: Think duplex or tri-level here.
Multiple tenants under 1 roof create cost savings through economies of scale. Also, if you need a place to stay, you can buy a multi-family rental property and keep 1 unit for yourself.
On the other hand, you are becoming a full-fledged landlord. With all the responsibilities that come with it. Your income becomes a little less passive and more active, in my opinion.
So, be prepared. And know what you are getting yourself into.
ONE OF THE BEST CASH FLOW INVESTMENTS: REAL ESTATE CROWDFUNDING
Real estate crowdfunding pools relatively small amounts of money from multiple investors to finance a property or portfolio of properties. Investor funds are invested in either debt or equity.
In return, the investor receives payments in the form of quarterly or monthly dividends. It is another form of asset-based income.
Furthermore, owning equity in a crowdfunded real estate deal allows for capital appreciation. The investor participates in the real estate asset appreciation when the property is sold.
LAND CAN BE AN INCOME PRODUCING ASSET

We are not quite done with real estate assets yet. Let’s bring it down to its most basic form, land.
Land can be an income generating asset. But you have to make the land productive in some way.
You can start small. Like, how about a corner of your yard for a hobby farm. If you grow the best tomatoes in the county, your land can be an income producing asset.
Or think big. Investments in farmland or timberland are assets that produce income from your investments.
CASH FLOW FROM OWNING A PRIVATELY HELD BUSINESS

How about starting a business by yourself or with one or more partners? Most businesses begin for the sole purpose of producing income for their owner or owners.
To start and own a business, figure out what you are good at. Understand what you are passionate about. And be great at it. It’s the best way to prosper.
So, private businesses are another example of assets that generate cash flow. Make your business more successful. And the income it produces will increase.
What types of businesses are successful? Those that:
- Provide useful products
- Deliver important services
- Provide information or entertainment
- Solve people’s problems
Look around at all the basic businesses you see each day. Notice that they fulfill one or more of these needs. What types of business will you see:
- Car washes
- Dry cleaners
- Retail stores
- Tax accounting offices
- Legal service providers
Websites And Blogs
Websites in the form of blogs have become a popular business form. Why?
Because of advances in technology combined with people’s desire to consume information and entertainment online. So, online options are no longer considered unconventional investment ideas.
I started Dividends Diversify years ago to tap into this trend. But just like any business, running a website is not a passive income. That is, if like me, you intend on running your website on your own. It takes work like any other business.
I enjoy it, so Dividends Diversify doesn’t seem like work. Like I said earlier if you want to start a business and run it, choose something you love to do.
Private Equity
Do you want to be an owner in 1 or more privately held businesses? But, do you not want to be involved in the day-to-day operation? Then private equity is the way to go.
Private equity is composed of funds and investors that invest directly in private companies. The private equity owners hire managers to run the companies. I worked in management at 4 different private equity-owned businesses during my working days.
When it comes to participating in private equity, there are a couple of issues. First of all, it takes a lot of money. Furthermore, that money is usually committed for at least 3-5 years. Finally, private equity funds do not normally pay a recurring passive income.
On the other hand, private equity shoots for large returns on your investment. At least 15% and oftentimes much more.
When a private equity fund liquidates after several years, you hope to hit the jackpot with a big cash payout. A payout that is much greater than your original investment.
Private equity is for the big money, big shots out there. But what about the little guys and gals like you and me?
One option is Business Development Companies (BDC). They operate similarly to private equity firms as I explained above.
But BDC’s trade just like stocks on a stock exchange. So, you and I can invest in them. And most BDCs pay high dividends.
The ongoing dividends make BDCs an income producing asset. And, a way to participate in private equity ownership.
BEST ASSET TO INVEST IN: YOU
You are your own best cash flow asset. Invest in your self to increase your income from your job or your side hustle. Make your credentials stand out among the crowd.
I saved this one for last because it’s not passive income. It’s what I call income from activity.
In this case, you are trading your time for dollars. Invest in your knowledge and skills to make your time more valuable to those who will pay you for your time.
Then, improve your resume. And get your name out there for a better, higher-paying job.
To repeat, this is not passive income. But, it is an important income source.
Funnel exess income from your activities into income assets.
SUMMARY – INCOME PRODUCING ASSETS
Most of the assets we have discussed today produce passive income. With the exception of owning and running a business. Or, more broadly, the income you earn from your time on the job or with a side hustle.
Running a business is a very active form of income. Unless, of course, you can afford to hire out the management of the operation. Or, participate in private equity.
How Do Millionaires Build Wealth?
As I said at the beginning, it’s about creating multiple streams of income. And then, growing that income. That’s what millionaires do to build wealth.
In 3 easy steps, this how to invest in assets:
- #1 Save some money
- #2 Put that money to work in income producing assets
- #3 Use that extra passive income to buy more income generating assets
I truly believe that assets that generate cash flow are an excellent way to build up your finances.
So, look at the list below as a summary of the best assets to build wealth. And start growing and managing your money today for multiple income streams tomorrow. Here is a summary:
Examples Of Income Generating Asset
- Certificates of Deposit
- US Savings Bonds
- High Yield Savings Accounts
- Money Market Accounts
- Bonds
- Peer-to-Peer lending
- Preferred Stocks
- Dividend Growth Stocks
- Growth Stocks
- Real Estate Investment Trusts
- Exchange-Traded Fund
- Primary Residence
- Rental Properties
- Real Estate Crowdfunding
- Land
- Owing A Privately Held Business
- You And Your Time
Related Articles About The Best Assets To Buy & How To Buy Them
- How to build a portfolio with income-generating assets
- 13 ways to increase passive income from income-producing assets
- Making money from real estate investing
- What are the first investments to make in your 20s?
- Timeless investing tips and techniques for long term investors
Resources For Cash Now & Improving Your Asset-Based Income Sources
- Get free stock from Webull & trade stocks for free
- $10 cash bonus and save money on every purchase with Rakuten
- Manage your finances for free with Personal Capital
- Dividend stock recommendations from Simply Investing
- Free Morningstar trial for stock, bond, and ETF tips
- CIT Bank for your savings needs
- Build a better resume with MyPerfectResume
Disclosure & Disclaimer
This article, or any of the articles referenced here, is not intended to be investment advice specific to your situation. I am not a licensed investment adviser, and I am not providing you with individual investment advice. The only purpose of this site is information & entertainment. We are not liable for any losses suffered by any party because of information published on this blog. See this site’s Disclaimer and Privacy tab for more information.

Miguel (The Rich Miser) says
Hi Tom,
I’m bookmarking this one. I need to diversify my safer “cash” investment options, and these are great choices. I especially like the preferred stock, which I keep forgetting about. Nice to know there’s a good ETF for it!
Cheers,
Miguel
Tom says
I just added to the preferred ETF (PFF) I mentioned a couple of weeks ago Miguel. I think with interest rates stabilizing, it is a good time to get in for higher yield with limited interest rate risk. ETFs are a great option for asset-based income Tom
desidividend says
Thanks for covering the other options to get income ,i was looking for this kind of stuff.If you have time,can you expand more on some of the items.
Thanks
Tom says
Sure thing dd. A few of these income generating assets I have covered in more depth in other articles like I Bonds and of course dividend stocks. But I will look to dive into some of the others in the future. Thanks for the suggestion. Tom
Simple Money Man says
I have excess cash in a MM account, but didn’t know that it is not guaranteed. The CD Ladder strategy sounds intriguing.
Tom says
On the MM accounts, SMM, very little risk but many are not guaranteed. They are still one of the many good cash flow investments that are available. Tom
Hopler says
Money markets can be FDIC insured or SIPC insured. It just depends on if it is a bank offered money market (FDIC) or offered by a brokerage firm (FDIC) insured. You may have more protection than you think, which is why you should meet with a professional to guide you.
Tom says
Thank you for adding a little more information to the article. Much appreciated. Tom
Helen says
Hi Tom, very good information. I like CDs and high yield savings account, and also shop around for better rates. The online banks seem offering much better rates than the local banks. I usually keep the CD term to one year, maximum 18 months.
Tom says
It definitely pays to shop around for rates Helen. Great job with the research, and it has paid to stay a little shorter term on CD terms the last couple of years. Tom
GYM says
Thanks for the mention Tom! How flattering that you think I explain things in really clear terms. Maybe I write better than I speak because usually I confuse people, especially when I start muttering during public speaking haha!
Great list, preferred shares- I bought at the peak and scaled way back my position at a huge loss. My fave are dividend stocks too 🙂
Tom says
You are welcome. My pleasure GYM. Of all the assets that generate cash flow, dividend stocks are definitely my favorite. Tom
Gentleman's Family Finances says
this is a very good summary of what options are available to investors.
I was in the same position as you and I’ve pivoted my portfolio towards investments that pay reliable dividends.
My preference is for dividend paying ETFs index trackers. The VWRL Vanguard World ETF pays around 2% dividend and the ISF iShares FTSE100 ETF tracker pays about 4%.
Of course one reason for keeping things simple and living off dividends is that you never need to sell – if you start selling to cover your expenses at some point you might run out! Who wants to do that?
Another reason for living off divis is that selling costs money (UK focused) and if you need to sell £1000/$1000 a month to get by, then the fees can be 1% of that. That’s a situation you want to avoid being in!
Tom says
Thanks for the thoughtful response GFF. Glad you liked all the income generating assets ideas in summary form. Of course, I totally agree with your strategy. It’s not for everyone, but it works for people like us. Tom
Renee says
I am thinking of investing in something. I have never invested in anything ever in my life! Thanks for the info! You should write an article for complete beginners, like me. I’m in my 50s’ and my retirement account is nothing to get excited about. I want to earn interest every month that I can use to raise my credit (I’m in a lot of debt). And how much do you have to have to invest?
Tom says
Hi Renee and thank you for your comments. You give me a great idea to write an article for beginners. And I intend to work on it! It will for sure be focused on how to generate cash flow from investments. Tom
Millionaire Mob says
Great article…this is a big help for people who wants to invest and make big money.
Tom says
Thanks, MM! Tom
Shake The Money Tree says
Thanks for the list. I am starting to think about how do I improve my return on the assets that I am building up…right now I only have an Ally Savings account at 2.0%
Tom says
Everyone has to start somewhere. Glad you are earning the benefit of high yield savings. Be patient and add to your assets as you generate more cash and watch your passive income grow! Tom
Greg Magnus says
Great info on increasing your rate of return for cash. We us Vanguard Prime MM account. Also, we open “new” online savings accounts that pay a sign-up bonus on a regular basis; increases our return to over 3% for cash. Last month we rec’d $500 from Citi Bank for an account we opened in Feb.
I posted the “math” and what we do for those interested:
http://www.bossmanjax.com/emergency-funds/higher-returns-for-emergency-funds-management-and-math/
Again, thanks for posting. Good read for sure.
Tom says
Thanks. Big fan of the Vanguard prime MM too. Tom
Cinthia says
Heyyy Im very very new at this, so ..stupid question, can this be done from any country ? I dont live in USA
Thanks!! Nice article ! I understood 98% of it searching for terms in the dictionary 😉
Tom says
Hi Cinthia, Yes. Most if not all of these passive income opportunities can be done from outside the US. Tom
Jason from MoreDividends says
Great article Tom. I love hearing that other investors are using some other investment vehicles. I recently posted about how I had begun purchasing a new 12 year CD every month in preparation for the next recession. Once they mature I will double the principal and reinvest with the added interest. That way when the next recession happens I will have access to capital every month, that hasn’t depreciated with the stock market.
This is a long term game so I am basing my strategies for the long term!
Thanks for sharing this article. I really enjoyed it!
Tom says
Thanks Jason. Your CD ladder strategy is a solid one to follow. I do the same with a portion of my money. Tom
Susan says
I’d like to start off with something simple but we’re money can be made I don’t have a lot so what would be best to start off with
Tom says
Hi Susan, I suggest you start off with either a high yield savings account or a money market account. Either option is a low-risk way to save money and earn interest. Save as much as you can each month (even if it is just a few dollars) and put it in your new account. Once you accumulate some money in the account, then start to consider some of the other options. This is exactly how I got started. My Dad helped me open a money market account when I first started working and my saving and investing just grew from there. Tom
BobA says
Schwab does not have a minimum dollar requirement to set an account up. Many of their mutual funds can be bought into $1 at a time with NO fees! I use Schwab. Low fees and many no-fee products. They also have excellent videos and articles explaining terminology, ETFs mutual funds, etc.
Tom says
Great tips. Thanks for the info Bob. Tom
Gerri Boddie says
Hi Tom, I would like to make dividends every month can you tell me how to go about doing that and what I need to invest in to start making money. I retired a few months ago and want to make extra money. I have about 5k – 6k to start with
Thanks Gerri
Tom says
Hi Gerri, I think the easiest way for a beginner to get started earning dividends is through the Vanguard High Yield Dividend Exchange Traded Fund (VYM). I got my millennial niece started in investing this way. Follow this link to an article I wrote about VYM recently and how to get started investing in it: VYM Review – Vanguard High Dividend Yield ETF
If you are a little more sophisticated now, or get that way in the future, this is a good article to read and follow: How to Build a Portfolio of Blue Chip Stocks Paying Dividends
Hope this helps. Tom
Cring Packer says
Generating passive income is great way to live financial secure life. The tips and tricks mention here seems great.
Tom says
Thank you! Tom
Financial Wolves says
This is a must read for businessman, investors, and maybe to some other people who wants to make passive incomes. A must share article to read!
Tom says
Thank so much for the kind words. I am glad you found the article useful. Tom
Willis says
You don’t mention stocks with monthly dividends like Blackrock health sciences which has a monthly .20 dividend.
Tom says
Great point Willis. Monthly dividend stocks are a great form of passive income. My favorite is Realty Income (NYSE: O) a real estate investment trust. Thanks for reading! Tom
Jim & Catherine says
Nice tips! Thanks for sharing!
Tom says
Thanks for reading! Tom
Carreira Finance says
Great piece of content! I got a lot of value from reading this article and I will make a few changes to my investing strategy to reflect what I learned. Thank you for writing this article!
Tom says
Glad you liked it and thank you for reading. Generating passive income is a great objective for your investment dollars. Good luck with your strategy changes! Tom
Kelsey says
Really great guide, very detailed & informative article Tom!
Dividend or mutual funds are actually good to start with. I’ve started investment in these around 8 months ago & they are going really good.
Tom says
Thanks Kelsey. Income-producing assets are a great wealth builder. Glad you started with dividends as they are my favorite income asset. All the best. Tom