6 Assets the Wealthy Use To Stay Rich Without Working
While many investors focus on growth, the wealthy are able to prioritize assets that produce steady income, preserve capital and require less day-to-day involvement once established.
While some of these strategies are reserved for those with a lot of capital to start with, financial experts explain that some of these are available to regular investors, too.
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1. Cash-Flowing Real Estate
Cash-flowing real estate is a big piece of many wealthy portfolios because it generates consistent income while appreciating over time, according to Blake DeWitt, co-founder and CFO at Investorade. These include multifamily properties, mobile home parks or niche holdings.
He said that a $2 million asset that generates $180,000 per year, taxed at 9% interest yield, "allows you to sleep at night because you aren’t constantly monitoring it,” he explained.
They can also grow this income without additional investment by raising rents annually from 5% to 10% each year. “Rich people love these types of investments because they compound quietly and require less than five hours of work per month.”
However, even non-wealthy people can purchase real estate and reap some of the same benefits.
2. Dividend Stocks and Funds
Dividend-paying stocks and funds provide steady cash flow while allowing investors to keep their principal invested.
“Dividends act like a rainy day fund. If I need to supplement income, I can rely on dividends from my portfolio,” DeWitt said.
While the average American isn’t wealthy, he said they can learn some things from the wealthy. “I think most Americans are overly concentrated in index funds or their primary residence. Owning passive stocks allows your wealth to grow, but doesn’t provide much flexibility with your income. If you need money from your portfolio, you have to sell stocks.”
Portfolios that rich people build usually have a large percentage of income-producing assets that make them $5,000 to $25,000 per month each, he shared.
3. Private Debt Investments, REITs and Institutional Funds
Private credit, debt deals and similar investments provide the wealthy with predictable income. The lender essentially receives quarterly income payments that act just like interest from a bank, DeWitt explained.
These assets are accessible through crowdfunding platforms and lower entry points, making them viable for non-wealthy investors too.
For higher-net-worth investors, private real estate investment trusts (REITs), mortgage investment corporations and institutional funds offer income without direct management responsibilities, according to Rae Ostrander, president and CEO of Contrast Asset Management.
However, to get this level of passive income, the wealthy must pay managers to handle these investments. Those roles also come with fees, but it’s worth the passive income.
4. Tax-Advantaged Investment Strategies
Beyond asset selection, wealthy investors focus heavily on tax efficiency to maximize income.
David Kang, taxation advisor and founder at Keeper Tax, said, “By balancing dividends with tax-advantaged accounts, a practical approach is to generate the most efficient income while keeping more earnings.”
5. Diversified Income Portfolios
Wealthy investors rarely rely on a single asset, building portfolios designed to produce multiple streams of income, DeWitt said.
He said an ideal wealthy portfolio would allocate 30% towards income-producing real estate, 25% dividend stocks, 20% private credit/debt, 15% private equity (growth-oriented) and 10% cash.
“Diversification in and of itself doesn't make you profitable. As Warren Buffett points out, being in three great assets is often better than being in ten mediocre ones.”
6. Passive Income Isn’t Truly Passive at First
While these assets can eventually generate income with minimal effort, building them takes time, research and upfront work.
“None of these income generating assets are truly passive at the time of purchase … It’s only after you buy the asset and have a management team in place that things start to work,” DeWitt said, which can take months to years.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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