Who wouldn’t love the idea of earning money while you sleep? That’s the dream. Warren Buffett, the Oracle of Omaha himself, has built a massive fortune by doing exactly that. He invests in what he calls “forever assets.” These assets generate reliable, passive income year after year, regardless of market ups and downs.
If you’re ready to channel your inner Buffett and start building wealth, here’s a breakdown of 18 ‘forever assets’ straight from Buffett’s playbook.
Dividend-paying stocks
Buffett swears by dividend-paying stocks because they’re like a paycheck you didn’t even work for. Companies like Coca-Cola (Buffett’s long-time darling) offer steady payouts to shareholders. Dividend stocks can provide compounding returns when you reinvest your earnings. Look for companies with a long history of increasing dividends yearly and invest.
Real Estate Investment Trusts (REITs)
Buffett has mentioned the power of real estate, and investing in REITs gives you a slice of the real estate pie without having to unclog a single toilet. A REIT spreads your investment across commercial real estate properties, yielding rent-based income.
REITs like Public Storage (Buffett’s Berkshire Hathaway has invested in) offer high returns.
As of March 2024, the FTSE NAREIT Equity REIT Index had a 10-year average annual return of 6.93%.
Index Funds
“Keep it simple, stupid” might as well be Buffett’s life motto when investing. Index funds like the S&P 500 won’t surprise you with overnight riches, but they will grow your money reliably over time. Here’s the math to back it up—if you’d invested $1,000 in the S&P 500 in 1993, you’d have over $12,000 today (adjusted for inflation). Not too shabby, right?
Your Own Small Business
Warren Buffett is partial to owning businesses—hello, Berkshire Hathaway! Even if you can’t buy entire companies, starting a small business is a forever asset you control. Picture this—turning your side hustle into a steady income stream for decades. According to the Small Business Administration, about 50% of small businesses survive beyond five years, but the payoff for savvy entrepreneurs can be limitless.
Rental Properties
We’ve all heard, “Real estate never goes out of style.” Buffett has often praised real estate and rental properties as evergreen income sources. Focus on high-demand areas with strong rental markets. Zillow reports that rents have increased by 16% nationally year-over-year, which could mean big returns for property owners.
Intellectual Property (IP)
Write a book, pen a hit song, or patent an innovative product—boom, you’ve just created an asset that generates royalties forever. Buffett admires the snowball effect of owning IP rights, especially in industries like publishing or entertainment.
ETFs with Quality Dividends
Exchange-traded funds (ETFs) that emphasize dividend-paying companies? Game-changer. ETFs like Vanguard’s Dividend Appreciation fund offer diversification and income in one neat package.
Bonds
Buffett isn’t the biggest fan of bonds in a low-interest environment, but historically, they can offer steady, predictable income. Treasury bonds, in particular, are one of the safest investments. Currently, a 10-year U.S. Treasury bond yields around 4.6%, which is higher than your regular savings account.
Farmland
Warren Buffett once said, “Buying farmland is a no-brainer.” Farmland generates consistent income because, well, everybody has to eat.
Gold
Buffett has famously said he prefers businesses over gold, but in some cases, gold can act as a hedge against inflation. It won’t churn out cash like a rental property, but it holds value. Gold prices have been up over 400% in the past 20 years.
Preferred Stocks
Preferred stocks offer the best of both worlds—dividends like stocks and stability like bonds. Buffett has loved preferred shares in companies like Bank of America. Look for preferred stocks offering above-average yields, typically 4-7%.
Master Limited Partnerships (MLPs)
MLPs are partnerships that operate in high-demand sectors like energy and offer big-time distribution payouts. Buffett doesn’t shy away from energy investments, either—hello, Occidental Petroleum.
Collector’s Items
Buffett has emphasized items like rare stamps or classic cars as quirky, viable “forever investments.” These can appreciate over time and sometimes yield higher returns than traditional assets.
Mutual Funds
Just like index funds, mutual funds offer a hands-off investment approach. They typically provide a passive income in the form of dividends or interest.
Solar Panels
Investing in solar panels isn’t just environmentally friendly—it’s wallet-friendly in the long run. Many states offer tax credits, and solar energy bills can be reduced for decades.
Silent Partnerships
Want to back a business without actually running one? Silent partnerships are a sneaky way to earn passive income while letting someone else worry about day-to-day operations. Look for industries you understand—it’s not called a “silent” partnership because you have to stay clueless!
Stocks with Share Buybacks
Buffett’s portfolio is packed with companies that regularly buy back their shares. This increases share value over time, indirectly padding your wallet. Companies like Apple execute billions in stock buybacks annually.
Peer-to-peer lending
Platforms like LendingClub pair you with borrowers who need personal loans, earning you interest. Buffett hasn’t heavily publicized involvement in this area—but peer-to-peer lending aligns with his philosophy of compounding growth.
Disclaimer: This list is solely the author’s opinion based on research and publicly available information.
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