What Are the Best Cash Flow Investments in 2022?

If you’re looking for the best cash flow investments to augment your income this year, you came to the right place.

Top Cash Flow Investments in 2022

“Do not put all your eggs in one basket.”

There’s so much wisdom in that statement, especially when it comes to personal finance. Finance experts and advisors recommend that folks look for other income-generating assets on top of their main source of income to help them achieve financial freedom and beat inflation. This can be done by studying which cash flow investments are worth getting into. Cash-flow assets are no longer exclusive to the wealthy. They are now considered great resources for those who wish to earn passive income and improve their financial status.

What are income-generating assets?

Income-generating assets are investments that consistently produce recurring revenue and cash flow over time. Getting started in cash flow investments requires various amounts, depending on the type of investment. Some require little to no money to get started, others need a significant amount of capital to begin.

Why should you diversify your income stream?

Diversifying one’s cash flow investments has three key advantages:

It minimizes the risk of loss. Investments perform differently over certain periods. Some might do well during a certain time frame while others may not. If you choose to put all of your money into one investment vehicle and it bombs, you lose all of your hard-earned money. On the other hand, if you spread your money across several investment vehicles and one of them tanks, you still have other investments that might be doing fairly well which can help you recover from the loss.

It preserves capital. Investors have different financial goals. Generally, those who are near retirement are no longer after accumulation but instead are geared towards capital preservation. Diversification is a great way of protecting one’s savings.

It yields better returns. As mentioned earlier, investments don’t always perform as well as investors expect. Diversifying gives them more than one source of income growing at different rates in any given period.

12 Best Cash Flow Investments to Consider in 2022

When it comes to cash flow investments, here are some of the most promising routes investors can and should consider:

1. Real Estate Crowdfunding

Investing in real estate is probably one of the best money-making decisions any investor can ever make. Three main reasons come to mind why folks should greatly consider putting some money in investment properties in 2022.

• One, homeownership is always a good investment.
• Two, mortgage rates, although increasing this year, remain relatively low and very affordable.
• And three, investment properties, whether they’re single-family units, multifamily, or industrial, will continue to present opportunities for financial growth, according to The Motley Fool.

Understandably, not everybody can afford conventional real estate investing as buying a property often requires great capital. However, there are a few workarounds for folks who want a piece of the action. One of them is via real estate crowdfunding. This method allows people who don’t have access to tens of thousands of dollars to make a good amount of passive income from real estate investments with as little as $1,000.

2. Real Estate Investment Trusts (REITs)

Another route that prospective investors can take to add to their income stream is a real estate investment trust. REITs make it easy for investors to get into real estate investments because they neither have to buy, finance or manage any real property. All they have to do is invest a certain amount in a REIT and they become shareholders in income-generating properties.

REITs are mostly publicly-traded which means they can be bought and sold like stocks. This gives them liquidity, unlike physical real estate properties. While it doesn’t do much for capital appreciation, it does provide investors with additional sources of steady income.

3. Farmland

There are just plenty of ways a person can earn through real estate. Aside from residential and commercial properties, one of the better cash flow investments in real estate is farmland. While traditionally, this type of real estate investment involves mostly the ultra-wealthy, crowdfunding projects, such as FarmTogether, have made entry into this high-barrier investment a lot accessible to regular Joes and Janes.

As we said earlier, you can never go wrong with real estate investing, especially with farmlands. People need to eat and food production is why farmlands exist in the first place. They offer investors steady and reliable returns yielding consistent returns of over 10%. They also serve as good hedges against inflation because of their low correlation to stocks, bonds, and other traditional assets.

4. Short-term Rentals

One of the most lucrative and steadiest income streams in real estate is short-term rentals or vacation rentals. As mentioned earlier, real estate investment is one of the best — if not the best — avenues investors can put their money in.

Rental properties, in particular, give investors greater returns compared to long-term leases with a few tax incentives to boot. Plus, any time an owner decides to let go of the property a few years down the road, he or she will make a pretty good profit off of its appreciation.

While traditional rentals may seem the wisest way to go about it, given that the owner can just rent it out for a specific period and expect the check to come in regularly for that particular time frame, there is always the risk of getting bad tenants who can’t make timely payments. The best — and an increasingly popular — way to go about it is to have the property registered in short-term rental platforms, such as Airbnb.

Now when it comes to short-term or vacation rental properties, the down payment and mortgage rates are lower than for other investment properties, especially if you have an outstanding credit score. However, if you do plan to go down this route, make sure to read up on the local regulations regarding vacation rentals. Each county and city have different sets of rules for such businesses so performing due diligence is important.

One also has to conduct an extensive real estate market analysis and make sure the math checks out. Fortunately, technology has made things a lot easier for investors now as several reputable websites, like Mashvisor, have different tools like a property locator, real estate data analyzer, and investment property cash flow calculator.

Once you do all that and you find the right rental property that’s aligned with your goals, you will have a very powerful cash flow in the palm of your hands.

Watch this video to find out how to become a real estate investor in just a few steps:

Check out Mashvisor’s list of the best places to buy real estate properties in the US in 2022.

5. Alternative Investments

Investopedia defines alternative investments as financial assets that don’t fall under any of the more conventional investment categories, such as cash, bonds, and stocks. Some alternative investment examples include:

• Venture capital or private equity
• Real property
• Hedge funds
• Managed futures
• Commodities
• Arts, antiques, and other tangible assets
• Derivatives contracts

These types of investments are traditionally aimed at institutional or accredited investors due to their complex nature. They typically require higher initial minimums compared to mutual funds and exchange-traded funds (ETFs).

While alternative investments are ideal for more experienced and fully-funded investors, fintech services have given individual retail investors access to cash flows that were previously inaccessible. However, if you’re considering putting some money into alternative investments, we recommend you conduct extensive due diligence before pulling the trigger.

6. Certificates of Deposits (CDs)

Certificates of deposits, or CDs, are a great way for investors who have short-term financial goals. They are another form of savings vehicle offered by banks and credit unions where the money is locked in for a specific period. The longer the commitment period, the higher the interest rate and return.

The good thing about a CD is it is nearly risk-free and is insured for up to $250,000 in the US. Plus, the interest earned on the principal amount is significantly higher than that of a typical high-yield savings account.

7. Car Rentals

It may seem counterintuitive since cars depreciate the moment you drive them off the lot but they can still be one of the better cash flow investments a regular person can get their hands on. Renting a car out allows owners to recoup from their initial investment and generate income a lot faster than its depreciation rate.

Car owners and rental services operators can use online platforms for a wider reach. They can also use it for ride-sharing companies like Uber or Lyft to generate regular income.

8. Cryptocurrency

No list of investment options is ever complete without cryptocurrencies. Its popularity has continued to grow ever since it came into the picture, especially now that almost everything is done digitally. It has become more accessible to a wider range of younger and more tech-savvy investors. However, be warned that cryptocurrency, just like any other investment, has its own setbacks.

One, they are mostly unregulated and can be easily used for scamming and other illegal activities. Two, although cryptocurrencies like Bitcoin and Ethereum have great profit potential, they are extremely risky due to their volatility.

If you are considering investing in crypto, only invest what you can afford to lose.

9. Annuities

Annuities are a form of insurance and long-term investment that guarantees a person a steady amount of income when they retire. An investor makes lump sum or periodic payments over a certain number of years to ensure he or she has money coming in regularly even if they’ve already stopped working full-time.

They are designed to protect folks from the risk of outliving their income and provide a reliable retirement income stream.

10. Small Business Investing

It is no secret that the backbone of any thriving economy is its small businesses. In the US alone, they account for 48% of employment and 43.5% of the national gross domestic product (GDP). Investing in small businesses is a great way to diversify one’s portfolio while helping small business owners and the community they belong to grow and develop.

In most cases, small business owners put all of their assets into their business ventures. While putting everything they have on the line may seem noble, it is not a foolproof strategy as the risk of losing everything and going bankrupt is a lot greater. When a person decides to help small businesses out by investing in them, they are giving the business owners some form of relief from the unnecessary burden on their shoulders. Business owners, in turn, can continue to operate and provide not just quality products or services to the community but also jobs for the locals.

This way, the investor, the business owner, and the local community all win.

11. Online Business

One of the things that the global health crisis sped up is society’s transition to the digital world. What was initially projected to take place a few years from now happened within the past two years. The pandemic has caused companies to fully-embrace digitalization as they were left with no other choice. Almost all major corporations, multinationals, and even SMBs have made the transition to the digital realm. We’ve even heard of countless people who either got laid off or furloughed who have started their own online business to help keep the roofs over their heads and food on their tables.

The great thing about starting an online business is you can do it full-time or part-time, depending on your priorities. While most people are inclined to equate online businesses with eCommerce platforms, several other categories fall under this classification.

On top of selling various stuff online, there are other creative ways a person can make money online. There’s digital or affiliate marketing, content creation, online teaching and coaching, website creation and coding, writing and selling eBooks, and a whole lot more.

12. Traditional Businesses

Even if we’re already living in a digital age doesn’t mean that traditional businesses are out the window. While there has been a huge explosion in eCommerce, especially with the pandemic, there is still a great demand for certain types of traditional businesses, such as laundromats, car washes, automotive repairs, home repairs, pest removal services, and other similar lines of businesses that cannot cross over to the digital platform.

Folks looking to add to their income stream/s can get into traditional business ownership. They can build from the ground up or buy an existing small business.

Investors should be aware that starting a business from scratch will require not just a greater capital but also some serious amount of time dedicated to feasibility studies, construction (if needed) and repairs of the physical shop, and procurement of supplies and inventory.

It should also be noted that good money management is one of the main keys that make a traditional business successful. 29% of traditional small businesses fail because of poor money management. A business owner should have a cash flow formula that works best with his or her business model.

Calculating cash flow is essential in running a small business. It allows owners to make better business decisions, determine the business’ value, and have a good idea of their rate of return. And besides, a positive cash flow means the company is doing very well.

If there’s one thing the pandemic taught us, it is the importance of having multiple income streams to keep you and your family financially secure, especially during emergencies and crises. Diversifying one’s financial resources through various cash flow investments provide individuals and families peace of mind and greater confidence that no matter what happens, their needs will be taken care of.