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The English Thinker

Monthly Archives: July 2012

Income Producing Assets

14 Saturday Jul 2012

Posted by Bill Holman in Money

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The most important thing you can own (other than excellent health) is an asset that produces income for you. For many people the only income they have is their weekly wage. What happens if you become sick, want to take a leave of absence, or are terminated by your employer? An income producing asset pays you money. It is silently earning money that is yours whether you go to your employer’s work, or not.

Basic examples of income producing assets include money deposited at a bank or a Certificate of Deposit sold by banks. In this example, the “CD” sits there earning money that you can use after income taxes have been paid on those earnings. For the sake of an example let’s say that you are able to scrap together $100.00 to purchase a CD from your local bank. In our example, we will say the local bank is very successful and willing to pay 3% interest on your account. After owning the CD for 1 year the bank gives you $3.00 to use any way you want. However, since this is income, there are Federal and State income taxes that must be paid in the approximate amount of $1.00 leaving you with $2.00 free and clear. You now have a choice of whether to spend the money or to plow it back into your CD to increase the amount that is working for you.

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