Passive income is all the rage these days.  Dont want to work?  No problem.  Just spend a little time building a few residual income streams and you can retire rich on the beach in no time!  Of course, its not quite that simple.  None of the following income generating opportunities are true set-it-and-forget-it money making opportunities in the true passive income tradition, but some of them do come close.

As an aside, I love these best of articles.  Why?  Because since its my site and my opinion, because I said so is actually a reasonable argument.  Today, I will be ranking the top 5 income producing assets ranked in descending order.

The 5 Best Income Producing Assets

5.) Real Estate

When most people think of passive income, they traditionally think about real estate.  Rental properties. the theory goes, are a great source of passive income since the tenants pay you to own real estate!  Oh, if only that were true.  In reality, real estate isnt all that passive as a general rule.  You may not end up routinely fixing a clogged toilet at 4 in the morning (then again, you might) but you will almost certainly have to perform semi-regular maintenance on your properties.  Whats more, youll have to fill vacancies, paint and perform repairs between tenants, and even hunt down the occasional late rent check.  Thats not to say real estate investing cant be immensely rewarding;  it can.  That the majority of American millionaires supposedly got that way via real estate is no fluke.  Its just that, if making money without working for it is your goal, real estate probably isnt your cup of tea.  Note: REIT mutual funds are an exception to this rule and I think everybody should own one.

4.) Blogging Income And Internet Marketing

Plenty of people are obsessed with making money on the internet but let me tell you, it aint easy.  Ive been at this about 5 years now (only seriously for 2 years, though) and Im still not at the point of generating a full-time livable income from it, although Im getting close.  That said, the internet is still young enough that online money making opportunities are not difficult to find if you know how to find them.  Dont expect to retire this time next year, but if you work intelligently and consistently at it for 4 or 5 years I see no reason why you couldnt easily make 6 figures online.  For an older example of how I have made money online in the past, check out my posts on creating online passive income and my niche mini site case study .  I no longer use this method myself because I have since found more lucrative methods, but it does work and is a great way for beginners to learn the ropes.

3.)  Bonds And Bank Certificates Of Deposit

It would be difficult to think of a more boring investment than a high yield CD. but when it comes to your money, the less excitement the better.  Short-term investment-grade bonds and FDIC-insured CDs are safe, convenient, and as close to a sure thing as youre likely to get these days (one worries even about treasuries lately) but their downsides should be obvious:  relatively low yields and no inflation protection.  If you invest $1,000 in a 5 year CD, you will get back exactly $1,000 in 5 years.  Meanwhile, the cost of living will have gone up, maybe significantly.  Thats why I really prefer:

2.) Income-Oriented Mutual Funds

There are literally hundreds of decent income-focused mutual funds out there (most balanced funds qualify).  Vanguard Wellesley Income. Vanguard Equity Income. even Vanguard STAR Fund are just a few of the best income producing mutual funds I recommend (because of their low cost, of course).  The really cool thing about these income funds is that if they contain stocks, they have built-in inflation protection .  Since corporate earnings tend to rise over time with inflation, so to do corporate dividends.  Thus, provided you dont spend down principal, you should get a modest raise most years.  Cant beat that.

And The Best Income Producing Asset Is

1.)  Immediate Annuities!