Are you wondering what type of assets is making people rich nowadays? If you are, then you are on the right page.
In this article, you will find a shortlist of the top assets investment that is helping people achieve their financial goals. Continue reading below for more valuable insights.
If you are interested to rather watch the content instead, click on the video down below:
What are Earning Assets?
There are all sorts of assets out there. However, what’s worth investing in, are earning assets. But, what exactly is an earning asset?
Earning assets refer to income-producing investments held or owned by an individual or a business. These have a base value and the ability to generate additional funds. They also provide a steady income helping you achieve your long-term financial goals.
Top 10 Assets that are Making People Rich
Now that you have a better understanding of what earning assets are, here are the top 10 earning assets that are making people rich:
1. Stocks
Stocks refer to a particular share of a company held by a business or an individual. Stocks are bought and sold in a process called an exchange.
There are several types of stocks out there. The most standard ones are common stock and preferred stock.
● Common Stock
This type of stock refers to securities that represent ownership of a corporation. Those who own it can be elected as board of directors, and they are given voting powers with regards to the decisions essential for the corporation.
● Preferred Stock
Compared to the Common Stock, Preferred stocks have higher claims to an asset or dividend distribution. However, those who own it do not have the power to make decisions regarding the governance of a corporation.
How to Acquire Stocks?
There are two common ways for you to buy stocks. The first is to purchase it individually. However, you need to have significant buying power for this. The second choice for you is to get a reliable broker. With that, you can start with lower capital with minimal risk, making it perfect for new stock trading individuals.
Bottom Line:
Many would agree that stocks are one of the fastest assets to help you get rich. However, you need to have a deep understanding of the stock market in order to be able to trade and profit from it strategically. This requires thorough research and trial and error.
Related: How to invest in stocks?
2. Bonds
There are a lot of people out there who often interchange the meaning of stocks and bonds. However, these are two entirely different assets. Basically, bonds are loans made from an investor to a borrower. This will eventually be paid upon term, tenor, or maturity.
Unlike stocks, especially dividend paying stocks paying you several times per year ideally for a longtime, Bonds have periodic payments to the investor during the loan duration before the debt is paid entirely. The borrowers can either be businesses, individuals, or states. However, the most desirable bonds are from states, specifically U.S. Treasury bonds.
The reason why U.S. Treasury bonds are more desirable compared to bonds from other states is that they are less volatile. It also comes with different maturity names that represent the length of loan terms. They are as followed:
● 1-2 months Treasury Bills
● 2-10 years Treasury Notes
● 10-30 years Treasury Bonds
How to Acquire Bonds?
There are two main ways to acquire bonds; buy them individually or through bond funds. The advantage of buying bonds individually is that you will receive a large sum as interest. However, you will need significant buying power. Meanwhile, with bond funds, investors can receive interest paid by underlying bond securities indirectly in the mutual funds.
Bottom Line:
Bonds are excellent earning assets because of their lower volatility compared to stocks. It is also much safer, especially if you choose to invest in bonds of a steady government such as the U.S. However, the returns are considerably lower, especially if the economy experienced recent inflation.
3. Index Fund
Next on the list are Index Funds. These are modest methods for investors to get into the stock market without much risk. It is a type of mutual fund with a portfolio designed to match or track the financial market index components.
An Index fund works by gathering a pool of money used to purchase a portfolio of assets that mimics a target index’s performance. The dividend, capital gains, and interest earned from this are regularly paid to investors. Here are some of the most widely used indexes:
● S&P 500
● Russell 2000
● Wilshire 5000
● MSCI EAFE
● Bloomberg Barclays U.S. Aggregate Bond Index
● Nasdaq Composite
● Dow Jones Industrial Average
The main advantage of Index Funds is that it does not require a lot of costs. It is also much easier to manage that because fund managers run it.
How to Acquire an Index Fund?
You can directly purchase index funds from a brokerage account or buy it from an index fund provider.
Bottom Line:
Investing in Index Funds is an excellent idea if you want to trade stocks in the future or try to grow your wealth over time. It can significantly help you gain the necessary knowledge that you need, but, it can be quite vulnerable to market volatility, which could result into gains becoming limited.
4. Real Estate
Another asset that has been proven to make people rich, is Real Estate. These investment properties can either be buildings, lands, air rights, or underground rights.
There are 4 main types of real estate. These are:
● Land (i.e., vacant lots, ranches, and working farms)
● Industrial Real Estate (warehouses, manufacturing buildings, power plants, etc.)
● Commercial Real Estate (educational buildings, hotels, offices, shopping centers, strip malls, etc.)
● Residential Real Estate (newly constructed and resale homes)
There are various ways for you to earn money through real estate. The most common method is through rentals. You can have your property rented and earn a fixed income out of it.
Another way is for you to resell the property for a higher value. You can achieve a higher value by waiting until the property is appreciated or by flipping it into a more desirable property.
How to Acquire Real Estate?
You can buy a real estate property through straight cash or financing directly to the owner or with a real estate agent acting as a middleman.
Buying a property with straight cash is the easiest way to acquire one. However, you need to have significant capital. Although financing does not require a lot of capital, it can significantly increase your monthly liabilities.
Bottom Line:
Investing in real estate can be profitable if you use your cards correctly. However, it does require much more management on your end, unlike bonds, Index Funds, and Stocks.
For example, you have a rental property. In that case, you have to think about how to entice renters to your property. You also have to deal with the occasional maintenance required for your property to stay in good shape.
5. Real Estate Investment Trust
Real Estate Investment Trust refers to a company that owns and manages real estate properties. By law, REITs are required to pay out 90% of their taxable income to shareholders as dividends. This is why they are considered among the most trustworthy earning assets on the market.
There are several types of REITs, such as residential REITs and Commercial REITs. Residential REITs include single-family homes, manufactured homes, student housing, and apartment buildings. Meanwhile, commercial REITs may consist of retail spaces, warehouses, office buildings, and many more.
How to Acquire a Real Estate Investment Trust?
You can buy REITs through these methods:
● Publicly Non-Traded REITs
These REITs are not traded on the stock exchange, but they are available to public investors. These may have higher returns, but they are less liquid due to a longer retention period.
● Publicly-Traded REITs
Contrary to the previously mentioned one, these are available on the stock exchange.
● Private REITs
The biggest difference of this type of REIT is that it is only available for accredited investors. These are those who have an annual income of $200,000 or a network of over $1M in the previous 3 years.
Bottom Line:
This is an excellent investment option for those interested in real estate but who does not want to deal with the process’s maintenance.
Related: How to invest money in general?
6. Farmland
Farmland is another asset that can be made as an excellent income-producing asset throughout history. Besides that, the success of Farmland is not reliant on any financial markets, which means that the income you will get from it is much more reliable.
How to Acquire a Farmland?
You can invest in farmland by directly buying it from the owner or have a real estate agent search for a property that fits your budget and requirements.
If you are an investor, you can own Farmland through crowdsource solutions such as FarmFundr, or FarmTogether. However, this is only an option for you if you are an accredited investor. To be one, you need an annual income of at least $200,000 or 1M net worth in the past three years.
Bottom Line:
There are several ways for you to profit from Farmland. However, it requires a significant amount of work to maintain. On top of that, it is not as liquid as other assets.
7. Business
Owning a business has been long proven to be an asset that can help you get rich. This is because instead of earning an employee’s salary, you get a larger income through the company’s profits which is commonly more significant.
A Business is an enterprising entity or organization engaged in commercial, professional, and industrial activities. It can either be; for-profit or non-profit. The difference is that for-profit entities do business with the purpose of earning money from it, while non-profit organizations operate to help champion social causes or fulfill charitable missions.
How to Acquire a Business?
There are two ways for you to acquire a business. The first method is to buy an already existing business, while the other one is to start your own from scratch.
Buying a Business
In the first method, you can get the rights over businesses that are already operational. The advantage of this is that you don’t have to deal with the nitty-gritty procedures of building a business. However, it also comes with its own risk.
For example, already existing businesses that are sold often face problems which is why owners want to wash their hands away from the responsibility. As the new owner, you are on your own to solve these problems. Or else, you are only investing in a sinking ship.
Starting a Business From Scratch
Here are the general steps on how to start a business:
- The first step into owning a business is to think of an idea and a name. During this stage, you must decide which industry and market you want to enter.
- The next step is to create a brand and company structure. This will give you a better idea of the documents and licenses you will actually need. At the same time, it will also guide you on how to recruit employees.
- You then have to figure out the financing aspect of your company. You need to figure out these questions: Do you need investors? Do you have to take out loans?
- After that, you need to file for the necessary permits and licenses. These are essential to ensure that your business is legitimate. The requirements needed during this stage differ according to what type of business you intend to start.
The steps mentioned above are just a rough overview of the things you need to do when opening a business. Other steps might be needed depending on what you plan to start.
Bottom Line:
Investing in a business can significantly help you achieve your financial goal. However, it requires significant effort and management on your part to become successful in that area.
8. Copyrights
If you have a copyrighted asset, you get money every time somebody uses it. If that particular work becomes popular, the chances of you becoming rich out of it also increase.
Copyrights are rights given to an individual or company for original work. Basically, it is owning something that you have created. As a copyright owner, you are entitled to the reproduction of the work, authority for the distribution of its copies, and how it is publicly displayed.
How to Acquire Copyrights?
You can have your copyright registered online through the Electronic Copyright Office or eCO. You just need to sign up and follow the steps recommended from their website. You will need to pay $35 as the basic filing fee. The result of your application will arrive within 3 to 4 months.
Bottom Line:
You can earn a lot of money from copyrights if you have popular work. Plus, it prevents competitors from profiting from your work. The copyright protection is valid until the death of the author plus 70 years after!
9. Patents & Trademarks
There are some who often interchange copyright with patents and trademarks. However, they are different types of intellectual properties.
Patents are designed to encourage the commercialization of technology and its innovation. It exists to incentivize investors to share their inventions with the public.
Meanwhile, trademark refers to the unique representation of a particular good or property. These can either be symbols, words, phrases, or designs—for example, logos, brand names, slogans, etc.
How to Acquire Patents or Trademarks?
You can acquire patents and trademarks by registering them to the appropriate government bodies. These may differ from one country to another.
Bottom Line:
With patents and trademarks, you don’t really need an investment. You can simply make money out of the ideas that you have in your head, if they are good and actually useful to others.
10. Digital Products
This type of asset on this list might surprise you. Digital Products refer to anything being sold online, not having a physical substance or form—for example, e-books or software programs.
Most digital products can be converted into physical products. For example, an e-book can be printed, or a video can be reproduced on CDs or DVDs.
How to Acquire Digital Products?
The best way to acquire digital products is to make them yourselves. You can utilize various skills such as writing, photography, and videography.
Bottom Line:
Compared to traditional brick and mortar selling, digital products only require effort and investment during the initial phase. Once it’s completed, it can be an excellent source of passive income for you. There are also several platforms that will help connect you with potential customers with little to no effort.
Final Words
Not all assets will help you achieve your long-term financial goals. In fact, some will depreciate in just a couple of years which means that the money you invested in acquiring it will be equivalent to nothing. This is why it’s vital for you to pick which assets to invest in.
On that note, you now know about the top 10 earning assets that are making people rich nowadays. You don’t necessarily have to copy them, but you can definitely take notes out from their successful playbooks.
