There are 3 main asset classes that can be used as vehicles for wealth.

1) Real Estate
2) Businesses
3) Paper assets

At this stage of the game, I am experimenting with numbers 2 & 3, and so far I have successfully generated additional income.

Business

When it comes to business, I am trading used musical instruments.  This has been going reasonably well and I have generated several thousand dollars in 12 months.  However this is really a Self-Employed level of business.  That means that it only generates income when I am working at it.  What I need to do is step it up to the next level.   Robert Kiyosaki makes a good point in several of his books when he writes that your business needs to make you money even ewhen you are not there.  In other words you have to have good systems in place for people to follow in order to generate passive income from a business.

I am not very experienced in business.  I have run several self-employed enterprises over the years and both went well for me.  BUT, the majority of money was only made if I was putting in time.  Now I have to figure out a way to change that.

For my musical instrument business I have a few ideas.  I’ll keep you posted as I try some of these things out!

Paper Assets

Paper Assets relate to shares, mutual funds and other financial investment vehicles.  I have begun dabbling in shares.  To date I have made a few hundred dollars on a small initial investment.  However the market is incredibly unstable these days, and my share prices are going up and down very haphazzardly.

I need to develop a good way of cashflowing shares.  Right now I am looking at buying shares with a decent dividend yield.  It looks like there are several which will cashflow around 10% of their value.  If I utilize a DRIP (Dividend Re-Investment Program) I can use the cashflow to buy more shares at a discount.  Once they have been building up over a period of time I would then cancel the DRIP and use the dividend payments as monthly passive income.  Thats the plan.  First I have to pick some shares in a company I think will do well over the next few years.  Watch this space…..

Real Estate

This is an exciting asset.  The potential for returns is quite high, but I see several barriers to entry.  First and foremostly, you need downpayments.  If I was looking to buy a home to rent, and 20% downpayment is going to sting me $50,000.  Unfortunately I do not have that kind of cash around.

It is also very difficult to find cashflowing properties by the time you have paid your mortgage, taxes, insurances and the other fees associated with owning property.

There are ways to get around this, but I need to learn some of them first.  I am trying to organize another lunch meeting with my real estate investor friend to find out some more information about how to get started.