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Types of Income-Generating 

Investments

Income-generating investments generally refers to investments that promise to pay interest or a return on your initial investment. However, other investment products may also provide income.

Income-Generating Investments

Passive Income

Passive income, simply put, is money making money without any effort on your part.  This can come in the form of rent from real estate, interest from savings accounts, dividends from stocks and mutual funds, and interest from bonds.  If you ever want to become financially independent, then you better find a way to produce passive income.  Without it, you will forever have to work for your money, and unless you are super-human you will not be able to work forever.  I will show you how to start creating passive income.  Again, I will “show you”… I will not do it for you.  You have to execute what you learn.

Types of Income-Generating 

Investments

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Dividend-Paying Stocks

   Essentially, for every share of a dividend stock that you own, you are paid a portion of the company’s earnings. You get paid simply for owning the stock!  A nice way to grow your wealth.

 

   For example, let’s say Company X pays an annualized dividend of 20 cents per share. Most companies pay dividends quarterly (four times a year), meaning at the end of every business quarter, the company will send a check for 1/4 of 20 cents (or 5 cents) for each share you own. This may not seem like a lot, but when you have built your portfolio up to thousands of shares, and use those dividends to buy more stock in the company, you can make a lot of money over the years. The key is to reinvest those dividends!

Preferred Stocks

   The term "stock" refers to ownership or equity in a firm. There are two types of equity - common stock  and preferred stock. Preferred stockholders have a higher claim to dividends or asset distribution than common stockholders. The details of each preferred stock depend on the issue. 

 

   Preferred shareholders have priority over common stockholders when it comes to dividends, which generally yield more than common stock and can be paid monthly or quarterly. Preferred stock combines features of debt, in that it pays fixed dividends, and equity, in that it has the potential to appreciate in price. 

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Dividend-Paying Mutual Funds

   Dividend mutual funds are stock mutual funds that primarily invest in companies that pay dividends, which are profits that companies share with stock shareholders.

 

   Dividends can be received as a source of income or they can be used to buy more shares of the mutual fund. Most investors who buy dividend mutual funds are usually looking for a source of income, which is to say that the investor would like steady and reliable payments from their mutual fund investment.

Bond Mutual Funds

   A bond fund is simply a mutual fund that invests solely in bonds. For many investors, a bond fund is a more efficient way of investing in bonds than buying individual bond securities

   Unlike individual bond securities, bond funds do not have a maturity date for the repayment of principal, therefore, the principal amount invested may fluctuate from time to time. In addition, investors indirectly participate in the interest paid by the underlying bond securities held in the mutual fund.

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Real Estate Investment Trusts
(REIT's)

   A real estate investment trust (“REIT”) is a company that owns, operates or finances income-producing real estate. REITs provide all investors the chance to own valuable real estate, present the opportunity to access dividend-based income and total returns, and help communities grow, thrive, and revitalize.

   REITs allow anyone to invest in portfolios of real estate assets the same way they invest in other industries – through the purchase of individual company stock or through a mutual fund or exchange traded fund (ETF). The stockholders of a REIT earn a share of the income produced through real estate investment – without actually having to go out and buy, manage or finance property.

Investment e-Books

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