INCOME GENERATING ASSETS INDIA
Updated: Mar 21
Article by Ayush Bangera
Assets are the resources that have an economic value attached to them. Personal assets include houses, automobiles, jewelry, 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.
There is a growth in its original value over the period of time, getting capital appreciation 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 annual interest payment period. Bonds are defensive assets as they are less volatile compared to other assets such as stocks.
3) Dividend Paying Stocks : The 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. A company usually pays dividends semi-annually or annually. Some companies pay quarterly dividends also. The dividend is one of the most followed Investing styles.
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 funds do as the profits are paid out to investors. People wanting to diversify portfolio for a reduction in risk and steady income opt for Dividend Mutual Funds.
5) Fixed Deposits : Considered to be the safest investment(Not after Yes bank and LVB), 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 its FD rates for a period of 7 days to 5 years (for investment less than 2cr).
6) Royalties : Royalties deal in payments for the right to use intellectual property, like copyrights, patents, and trademarks. Royalties are used to protect the owner and make fair use of intellectual property. These properties also include books, assets, pieces of works, etc. The owner gives his intellectual property for ‘fair use’ to another person and in return, 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 a middleman. P2P lending is a form of crowdfunding. P2P lending usually offers a 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 the limelight during the past few years. Eg. of P2P lending sites in India are: LenDenClub, Faircent and PaisaDukan
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