Building a Passive Income Machine

Everyone wants financial independence, but it’s not always clear how this can be achieved by saving and investing in diversified assets that generate passive income. Simply put, creating a Passive Income Machine involves building predictable passive income that substantially exceeds projected expenses. In this way, a Passive Income Machine unlocks financial freedom without the need to sell assets.

With this context, I’m providing some ideas on 10 segments of publicly available passive income beyond staples like the S&P 500, treasuries, money markets, CDs, and corporate bonds. These are not recommendations or endorsements, and one should carefully evaluate the risks, industry dynamics, portfolio diversification, taxes, and fees involved in any investment. Further, I am not a registered investment advisor and the opinions I’m sharing are concentrated mainly in the U.S. which has serious structural challenges. Moreover, with stock markets near all-time highs, caution is warranted since nearly all publicly available securities are vulnerable to macro market corrections.

However, based on the collective insights of my own research and network, the ideas in these 10 areas are worth keeping an eye on:

1. Dividend Income: SCHD, FDVV, VYM
2. Private Credit Income: ARCC
3. High-Yield Muni Income: NHMRX
4. Covered Call Income: JEPI
5. Real Estate Income: RQI
6. Infrastructure Income: BIP
7. Renewable Energy Income: BEP
8. Traditional Energy Income: AMLP
9. AAA Rated CLO Income: JAAA
10. Global Dividend Income: GCOW

Perhaps an allocation to these sorts of passive income enhancers may be helpful on the journey to financial freedom. And for those that successfully build and operate Passive Income Machines, remember that to whom much is given, much is expected.