Recently, Newtraderu.com shared a post, 10 Assets That Make People Rich and Never Need To Work Again. You can read the original article here.
The article observes that, “many aspire to financial freedom, but few achieve it. The key is to build a portfolio of assets that generate passive income and consistent cash flow.”
The piece then goes on to explore 10 asset classes promising to generate these passive riches.
This kind of thinking is why I’m writing this blog. Whether it’s losing 10 pounds or achieving financial security, too many are forever in search of a magic pill or secret formula for goal attainment without putting in the work. To achieve just about anything worthwhile in life will require resilience and grit. But telling people that doesn’t sell advertising space or make for good headlines.
Let’s explore those 10 Passive Income Asset Classes mentioned by Newtraderu.
- Real Estate. I’ve often said myself that real estate is the first, last and best chance for everyday people like us to achieve financial security. But is it passive? Real estate investing can become passive if you’re able to hire a property management company to run your properties. In exchange for a fee, the property management company interfaces with tenants, handles expenses and collections and even responds to the midnight emergency calls. The problem is finding a good property management company capable of doing the job. I’ve been in property management nearly 40 years and most so-called professional management companies are terrible. Conversely, we think we bring something special to property management, resulting in higher revenues, lower expenses and ultimately greater financial success. But it’s hardly passive, we’re gritting it out every day.
- This kind of investment would definitely be passive, but you need a lot of money to make a lot of money.
- Business Ownership. The idea that this is going to be passive is nuts, even for online businesses, with my apologies to Tim Ferriss and the 4-Hour Workweek.
- Intellectual Property. This category includes patents, copyrights, trademarks and digital products like online education, e-books and software apps. I could see that a mature intellectual property asset might produce a passive income stream. But there would be an inevitable pump priming process getting it started and without ongoing promotion or updating, the asset will eventually become out of date or obsolete and the income stream will dry up.
- REITS – Real Estate Investment Trusts. This is genuinely a passive way to invest in real estate. But again, it take money to make money pursuing this strategy.
- Peer to Peer Lending. This is just like it sounds, lending your money to strangers. Do that passively and you’ll experience plenty of bad loans.
- Dividend Stocks. Works just fine, but it take money to make money this way.
- Certificates of Deposit. An uncle to investing in bonds. Works great if you’re already sitting on a load of cash.
- Cash Flow Assets. Vending machines, car washes, laundromats parking lots and websites are cited as examples. Websites might be better categorized under intellectual property. The rest of these assets may be passive, but are also capital intensive, which is a way of saying again that it takes money to make money.
- Private Equity. This is like an episode of Shark Tank. It’s typically limited to Accredited Investors that can demonstrate a net worth of $1M or more excluding their primary residence.
There’s never been more opportunity than today for any enterprising, hard-working person to be wildly successful. So let’s get to work!