12 Income Generating Assets To Grow Your Cash Flow
By investing in income generating assets, you can start earning passive income while diversifying your wealth. And there are plenty of asset categories you can consider, including both traditional and alternative asset classes.
You don't need to be rich to start either. And this guide is covering some of the best income producing assets you can invest in to begin growing real wealth.
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The Best Income Generating Assets
1. Real Estate Rentals
Real estate is one of the most popular cash generating assets out there. And people commonly invest in real estate rentals, vacation homes, duplexes, and Airbnb units.
Buying your own rental property is one way to get started. But you can also use real estate crowdfunding platforms if you have less capital. For example, companies like Arrived let you invest in cash flowing real estate rentals starting with only $100.
We like the crowdfunding model at WebMonkey since it lets you earn on autopilot without the responsibilities of a landlord. But overall, real estate is one of the most popular assets that make money out there.
- Potential Returns: 5.4% to 7.0%+
- Timeframe: Medium
- Capital Requirements: As low as $100
- Pros: Can earn rental income plus through property appreciation
- Cons: Real estate isn't very liquid; expensive to buy your own rental property
2. High-Yield Savings Accounts
High-yield savings accounts are another popular category of income generating assets. And this is one of the best choices if you want to keep things simple while limiting risk.
The top high-yield savings accounts even pay around 4% to 5% APY these days. Plus, you can often snag sign up bonuses as a new customer.
Take Current for example. It pays 4% APY on up to $6,000 in savings. You also get a $50 sign up bonus. Overall, this is a great income producing asset where you can house your emergency fund or spare cash.
If you have at least $5,000, you can also open an account with SoFi. This lets you earn 4.60% APY, and you can also claim up to $300 in bonuses with regular direct deposits each month.
- Potential Returns: 4% to 5% APY or more
- Timeframe: Short
- Capital Requirements: As low as $0
- Pros: Funds are FDIC-insured; easy to start
- Cons: Some accounts have minimum deposit requirements
3. Bonds
Bonds are good assets to buy if you want to lock-in a fixed rate of return while limiting risk.
There are numerous types of bonds out there. Government bonds and corporate bonds are most common. And they're basically loans to companies that you can make to get a fixed interest rate paid back.
People invest in U.S. government bonds all the time, or treasury bills. You can also use companies like Worthy to invest in bonds starting with just $10.
We like Worthy since it's paying 7% APY on bonds right now and doesn't charge any fees. And the $10 minimum investment makes it super beginner-friendly.
Just note that many bonds pay under 7% APY. But this income generating asset class is popular due to its lower risk profile.
- Potential Returns: 2% to 5% APY or more
- Timeframe: Long
- Capital Requirements: As low as $10
- Pros: Low risk; provides a fixed rate of return
- Cons: Bonds can have a lower rate of return than the market
4. Dividend Stocks & ETFs
Dividend stocks and ETFs are also popular money generating assets. And this is a popular strategy people use to invest for income by buying companies that pay quarterly or annual dividends.
It's also super easy to get started. For example, you can start investing in thousands of companies with passive income apps like Stash.
Stash lets you buy fractional shares of companies, so you don't need thousands of dollars to begin investing. And new members can sometimes get a $5 sign up bonus too to hit the ground running.
We like Stash since it doesn't charge expensive trading fees either. Instead, you can begin investing for as little as $3 per month with its transparent plans.
Dividend stocks do offer regular passive income payments that you can choose to receive or to reinvest.
- Potential Returns: 6% – 7% annually
- Timeframe: Medium
- Capital Requirements: As low as $1
- Pros: Strong market returns on average; dividend income can snowball with compound interest
- Cons: Stocks and ETFs can be more volatile than some income producing assets
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5. A Side Business
Starting a new side hustle is one of our favorite cash flowing assets here at WebMonkey. And this is because even a small investment can turn into a massive income stream with enough time and effort.
There are also plenty of ideas you can try, including many low-cost side hustles:
- Starting a blog
- Starting a YouTube channel or podcast
- Opening an Etsy print on demand business or regular shop
- Publishing ebooks with Kindle Direct Publishing
- Launching an ecommerce side hustle with Amazon FBA or Shopify
- Starting an at-home business or service-based business
Starting a business or side hustle won't make you rich overnight. But you can reinvest your income into growth and scale your business over time.
With consistent effort, you'd be amazed at how lucrative a side hustle or business can become. Plus, plenty of hustles can generate quick money too if you need faster returns.
- Potential Returns: Varies
- Timeframe: Short
- Capital Requirements: Free
- Pros: Unlimited income potential; many side hustles payout quickly
- Cons: Most side hustles are active income instead of passive income; no guaranteed returns
6. Cryptocurrencies
Crypto has been one of the more popular income producing assets over the last few years. And this alternative asset class is something many people are adding to their portfolios.
Getting started is quite simple too. For example, you can use leading exchanges like Coinbase to buy cryptocurrencies like Bitcoin, Ethereum, and many others. Coinbase and other platforms also let you stake various coins to earn passive income.
This asset class can be quite volatile, especially if you dive into less-popular altcoins. The WebMonkey team always recommends doing your own research and speaking with a financial advisor if you want specific advice about which income assets are good buys.
- Potential Returns: Varies greatly
- Timeframe: Short – Medium
- Capital Requirements: As low as $1
- Pros: Can produce outsize returns; staking lets you earn passive income
- Cons: This is a very volatile asset class
7. Index Funds
Index funds are funds that try to mirror a benchmark index like the S&P 500 or Nasdaq. They're similar to ETFs in that they provide an easy way to get a broad exposure to a certain sector or market.
This income generating asset class is popular for hands-off investors. After all, it's quite simple to dollar-cost average your way into index funds with regular investments you set up on autopilot.
You can also invest through a Roth IRA or traditional IRA to get some tax advantages. But your regular brokerage account works too.
And again, you can use nifty platforms like Fruitful to get tailored investing advice and guidance if you need a helping hand.
- Potential Returns: 7% – 8% annually on average
- Timeframe: Medium
- Capital Requirements: As low as $10
- Pros: Easy to invest on autopilot; provides a more diversified portfolio
- Cons: Your portfolio balance can decrease during a bad market year or run
8. CDs
Certificates of deposit, or CDs, are time-sensitive deposits that are typically offered by credit unions, banks and other financial institutions.
When you invest in a CD, you're basically locking in that money for a certain amount of time. In exchange, you receive a fixed interest rate that's often higher than a regular savings account. When your CD matures, you get your investment back plus interest that's accrued.
CDs range in length from several months to 10+ years. Right now, some of the best CD rates are paying 4% to 5% APY or even more.
We also like CDs because they're FDIC-insured up to $250,000. Plus, many CDs only require $100 to $1,000 to begin investing.
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- Potential Returns: 1% – 5% APY
- Timeframe: Medium to long
- Capital Requirements: As low as $10
- Pros: Provides a fixed rate of return; incredibly safe
- Cons: CDs generally provide lower returns than the market average; you can pay early selling penalties
9. Money Market Accounts
A money market account (MMA) is similar to a high-yield savings account, except you often get check writing and debit card privileges too.
MMAs are popular money generating assets because they pay a fixed interest rate on deposits. Usually, money market accounts pay much more than basic savings accounts and are similar to high-yield savings accounts.
We like money market accounts since they're FDIC insured. And many banks and credit unions have MMAs paying upwards of 5% APY right now.
- Potential Returns: 4% – 5% APY
- Timeframe: Medium to long
- Capital Requirements: As little as $0
- Pros: Provides a fixed rate of return; incredibly safe
- Cons: MMAs can have monthly withdrawal limits; generally returns less than the market average
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10. REITs
A real estate investment trust (REIT) owns, operates, manages, and maintains different income-producing properties like commercial buildings or apartment complexes. It then pays a minimum of 90% of taxable income to shareholders as dividends.
REITs are a popular income generating asset class because they let people invest in income-producing real estate in a completely passive manner.
Plus, companies like Fundrise make it easy to get started. This platform lets you buy shares of properties and funds with as little as $10.
Fundrise pays investors with quarterly dividends. Historically, it's returned around 7% annually. And it's fully passive since Fundrise's team handles everything, from sourcing properties to managing the tenants.
REIT’s are well known for paying high dividends without the work of owning and managing real estate yourself. They be an excellent way to generate passive income.
- Potential Returns: 3% – 9% APY
- Timeframe: Medium to long
- Capital Requirements: As little as $10
- Pros: Completely passive; low barrier to entry
- Cons: Fees can be high; some potential tax disadvantages
11. Peer-To-Peer Lending
Peer-to-peer lending, or P2P loans, involve lending out money to businesses and individuals and charging interest. In other words, you're basically acting as a bank and lend out money yourself to generate returns.
People do this as angle investors or with P2P loan marketplaces all the time.
The main advantage is that you can often charge 6% to 10% interest or even more. Many loans also have short term lengths. However, the risk is that your borrower defaults and you never get your money back.
Online platforms like Upstart and Lending Club are popular P2P lending solutions. But people even make money on Reddit by lending through r/borrow. But again: this is a higher-risk cash flowing asset that needs careful consideration.
- Potential Returns: 6% – 11% APY or more
- Timeframe: Short to medium
- Capital Requirements: As little as $10
- Pros: Can produce outsized returns
- Cons: High risk of defaults and losing money
12. Alternative Assets
One more group of assets that make money you can consider are alternative assets. In other words, investing in assets that aren't your traditional group of stocks, bonds, mutual funds, and ETFs.
There are plenty of assets that fall under this umbrella term. Some of the most popular include:
- Artwork (you can use Masterworks to begin investing)
- Fine wine
- Collectibles
- Farmland
- Precious metals like gold and silver
- Royalties
- Private debt
- Commodities
- Digital assets
- Private equity deals
The downside is that many of these income generating assets require being an accredited investor. Some also have high minimum investment requirements and can be quite risky. Liquidity is also worth considering since many alternative assets are long-term investments.
- Potential Returns: Varies greatly
- Timeframe: Long
- Capital Requirements: Varies greatly
- Pros: Can produce outsized returns; helps diversify and provide downside protection for your portfolio
- Cons: Can be volatile; often has high investment requirements
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Final Thoughts
If you've been looking for good assets to buy, I hope this list of cash flowing assets helps you get started.
The beautiful part about these asset classes is that you have so many options. And many asset classes are fully passive and don't require much startup cash.
Ultimately, assets that make money let you make your money work for you. With time and compound interest on your side, this is how you can build real wealth.
Want even more income-generating ideas? Checkout:
