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Here’s the list of the 7 best income producing assets that you can invest in to start earning passive income.
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Acquire safe income producing assets
These are conservative, low-risk income producing assets. The trade-off to its low volatility though is that you won’t earn as much as more aggressive assets. It’s still a good idea to have a few of these in your portfolio to ensure proper diversification.
Asset #1: Certificates of Deposit (CDs)
A certificate of deposit, or CD, is a low-risk financial investment offered by banks.
How they work is simple: You loan the bank money for a set amount of time known as a “term length” and you gain interest on the principal during this time.
A typical term length is anywhere from three months to five years. During this time, you won’t be able to withdraw your money without taking a penalty hit. BUT it’s pretty much assured that your money is growing at a fixed rate.
The interest rate varies on how long you are willing to invest for. The longer you loan money to the bank, though, the more you can earn.
And since CDs are insured by the FDIC up to $250,000they’re incredibly low risk.
But there are a few drawbacks:
- Inflation. The average inflation rate in the US over the past 60 years is 3.7% — which stands on the high end for most CD interest rates. This means you can actually lose money if you keep your money in CDs because of inflation.
- Low aggressiveness. If you’re young, that means you can stand to be a lot more aggressive with your investments (because you have more time to recover from any losses). Your potential for growth is much higher. This allows you more wiggle room to invest in riskier assets and…
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