When you’re looking to invest your money, it’s important to diversify. This can help you build a financial cushion over the long term. A portfolio of various investments spread across different assets is called “diversified.” You want to include stocks, bonds, real estate and other assets that provide income or growth opportunities.
Income-producing assets are a great way to do this. This can include real estate, investments, and even your bank account.
High-Yield Savings Account
A high-yield savings account can be a great income-generating asset, especially if you have excess funds you’re saving for retirement. They also provide a safe place to store cash for short-term goals like an emergency fund or a new car purchase.
A high-yield savings account is an FDIC-insured financial product that offers a higher interest rate than the national average, often 1.50% or more. This will help your money grow much faster than a traditional savings account, which earns an average of 0.07% per year in interest. If you have a high-yield savings account, you’ll see the extra interest you’re earning added to your monthly paycheck, which can motivate you to save even more.
Invest in Real Estate
Real estate investment is an excellent way to generate passive income and provide a natural inflation hedge. This is especially true when investing in real estate through a REIT.
REITs own and manage a pool of income-producing properties like multi-family homes and commercial real estate. These investments typically offer predictable dividend income and lower volatility than stocks.
If you’re looking for a hands-off investment, consider buying shares of a REIT through an online broker. There are also many REIT-specific mutual funds and ETFs.
Whether you invest in REITs, bonds or other investments, it’s important to consider your risk tolerance and goals. Your financial advisor can help you decide which options are best suited for your situation.
Become a Lender
A small loan with big implications can be an excellent way to diversify your risk portfolio, especially if you’re new to the game. With a little planning and research, you can find the best deal from a reputable lender.
It’s also a good idea to visit your local branch or two to get a feel for their unique lending styles and loan offerings. You can also ask your bankers for advice on the best online lenders in your area and how to apply for the most coveted credit card. After all, it would help if you showed them you’re serious about your personal finance needs before they even think about it.
Start a Business
If you want to make money with your money, you need to invest in assets that can produce income. The best way to do this is by starting a business.
Businesses exist in various industries, from small sole proprietorships to large corporations providing shareholder equity to their owners.
The definition of a business is simple: it’s any entity that seeks profits by providing goods or services. Profits may or may not come in the form of cash. Still, they can also come in the form of other securities (like stocks and cryptocurrencies), barter-style trades, and other forms of payment that can be traded with other entities.
While a business takes some upfront capital, you can start small and scale up later. To get you started, here are some business ideas that require less than $10k to begin with:
Start a Side Hustle
If you need help to make ends meet, pay off debt, or save for a big purchase, a side hustle is a great way to bring in extra income without taking up too much of your time. You can also use a side hustle to flex your creative muscles and gain new business skills.
Start with a list of your interests and skills, and think about how you can use those to create a side hustle that fits your lifestyle. This could include freelance gigs on sites like Fiverr or Upwork, helping small businesses grow their social media following, or creating T-shirt mockups.
Stocks
Stocks can be a good source of income, especially when buying at a discount (like in the recent stock market decline). However, they are risky because profits could take a while to return. That’s why avoiding putting all your eggs in one basket is vital.
For example, you want to put only some of your funds into a single company–especially for someone with a long investment horizon like retirement. Similarly, it’s important to avoid investing too much of your funds in a single industry–like pharmaceuticals or gas utilities.
Regardless of what you decide to invest in, it is important to keep your eyes on the prize: financial freedom. Income-producing assets can help you achieve this goal, but only if you put in the time and effort to learn about them and make informed decisions.
