As the name implies, productive assets are assets you own that generate returns on that investment. In a perfect world, these returns are always positive. Alas, we live in an imperfect world. While the goal is to generate greater profits from productive assets, the truth is that some productive assets generate more positive cash flow than others. Your mission, should you accept it, is to ensure your investment portfolio has more than its fair share of potentially productive assets to generate positive cash flow for your long-term financial needs.

Types of Productive Assets

Productive assets, either financial or physical assets, significantly contribute to an investment portfolio. Some of the most favored productive assets among investors include:

• Stocks and bonds.
• Investment properties could range from commercial and rental properties to vacation homes.
• Farmland.
• Small businesses and franchises.
• Certificates of Deposit (CDs) and money market funds.
• Savings accounts.
• Peer-to-Peer (P2P) lending or crowdfunding.
• Startups.
• Commodities investments.
• Real estate investment trusts.

There's a vast spectrum of productive assets, all of which have the potential to enhance your financial stability over time significantly. The primary goal should be to make informed investment decisions and minimize risk wherever possible.

The Value of Productive Assets

The obvious value of productive assets is that they can help you build wealth and create positive cash flow for your future. That doesn't mean that productive assets are without risks. It simply means that it is in your interest to make informed choices when investing in productive assets. Whether that means you need to invest in substantial self-study of your options and interests or invest in a wealth management firm to help walk you through the process, this isn't something you want to "wing."

Productive Assets and Wealth Building

Of course, the flip side of the coin is that you become paralyzed by analysis and never "pull the trigger" on promising investment opportunities. If this happens, it may cost you all the potential benefits productive assets could deliver. If your goal involves significant wealth building, productive assets are among the most useful tools you have available to include in your arsenal. Fortunately, there are plenty of online courses you can take, books you can read, and financial planners and money managers you can approach to assist you in accumulating and managing productive assets.

Managing Productive Assets

Because productive assets represent the potential to earn profits, managing them effectively and with great care is important. Failing to report your profits properly could cost you a lot in terms of fines, fees, and taxation. Whether you manage your productive assets yourself or have a firm handling them on your behalf, it is critical to have a robust record-keeping system in place.

Taxes and Productive Assets

Taxes are a fact of life. Unfortunately, the road map for navigating taxes is a lengthy document that few fully understand. You want to make sure you are working with people who do understand the tax implications of your productive assets and can help you maintain the appropriate paperwork and file your taxes in a way that reduces your risks of fines and fees while minimizing your tax liabilities at the same time.

Takeaways

Productive assets may be physical assets or financial assets. In either form, they are among the most important tools to keep in your wealth-building arsenal. Use them well, and always look for new opportunities to round out your portfolio with promising, productive assets.