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7 Income Generating Assets

Assets are the resources that have economic value attached to them. Personal assets include houses, automobiles, jewellery, antiques and many other things with monetary value. Some assets grow in value and some generate regular income.

Here are 7 regular income generating assets:

1) Real Estate
The most traditional asset for generating regular income. Get a piece of land and rent it out. Whether for commercial or residential purpose, real estate asset suits for everything. The value of land never depreciates. Therefore, there is a growth in its original value over the period of time, getting capital gains and also generates periodic income if the land is utilized or rented out.

2) Bonds
In simpler terms: a Bond is an instrument that represents a loan given to a borrower(can be a company or the government) by an investor. Bonds are issued by the borrower to finance their projects and operations. Bonds have a maturity date within which recurring periodic interest payments are done by the bond issuer. They can have a monthly, quarterly, semi-annually and annually interest payment period. Bonds are defensive assets as they are less volatile compared to other assets such as stocks.

3) Dividend Paying Stocks
Dividend is the distribution of a portion of the company’s profit to its shareholders. The dividend distribution is decided and managed by the company’s board of directors. Company usually pay dividends semi-annually or annually. Some companies pay quarterly dividends also. Big Blue chip companies have good dividend yield %.

Some BlueChip companies with good dividend yield %

For quick reference: Rs 1 Lakh invested in ONGC would give dividend return of Rs 8760 every year.

4) Dividend Paying Mutual Funds
Just like we have dividend paying stocks, we also have dividend paying mutual funds. Primarily, there are two types of mutual funds: growth and dividend. Growth mutual funds reinvest the profits back into the scheme whereas Dividend mutual funds pay the profits back to the investors from time to time(monthly, quarterly, semi-annually, annually). Dividend Mutual Funds invest in companies that have high dividend yield percentage. Dividend mutual fund’s NAV doesn’t grow as much as Growth Mutual Fund’s does as the profits is paid out to investors. People wanting to diversify portfolio for reduction in risk and steady income opt for Dividend Mutual Funds.

5) Fixed Deposits
Considered to be the safest investment, Fixed Deposits term varies from 7 days to 10 years. You won’t be able to withdraw your money without taking a penalty hit, but it is made sure that your money grows at a fixed rate. The longer you invest, the more returns you generate.

The State Bank Of India is considered to be the safest bank in India. Here are it’s FD rates for period of 7 days to 10 years (for investment less than 2cr).

6) Royalties
Royalties deal in payments for right to use intellectual property, like copyrights, patents, and trademarks. Royalties are used to protect the owner and make fair use of the intellectual property. These properties also include books, assets, piece of works, etc. The owner gives his intellectual property for ‘fair use’ to another person and in returns, gets income for the use of his property. Renting assets to other people can also be considered for Royalties.

7) Peer to Peer (P2P) Lending
Peer to Peer lending allows individuals to borrow money from other individuals without any financial institution acting as middleman. P2P lending is a form of crowdfunding. P2P lending usually offers higher rate of returns than other investment avenues. It generates monthly cash flow with interest payments. P2P lending is not a widely recognized investment avenue in India but has been catching limelight during the past few years.
Eg. of P2P lending sites in India are: LenDenClub, Faircent and PaisaDukan

So here were the 7 Income Generating Assets.

If you come up with any questions or doubts, please ask it in the comment section.

Thank you for Reading.

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