Majority of us, the main and only source of income is our job. Am I correct? In this case, we rely on the first type of asset: ourselves. Our physical self, that includes our strength and mental competence as in a sense "hired" by our employer for a certain salary per month or commission of the sales we make. The type of income that this asset produces is active income because it requires us to actively work for the money that we get.
If we are younger, this asset may increase the income it produces by working overtime, taking on jobs or sidelines that could augment our income. Of course, getting promoted in our jobs would also lead to bigger earnings through an increased salary.
However, our capabilities decline as the years go by. Why? We all know that our capabilities to do overtime work and other sidelines and our chances of getting promoted become less and less as our body grows older and approaches retirement age.
I am sharing to you an option on where you can invest your hard earned income on my first step approach... investing in paper assets.
A paper asset is not readily usable or convertible to cash.
A paper asset is a portfolio income.
Who among you invests in this type of asset?
Investing is preparing yourself to financial freedom.
Here are some examples of paper assets:
1. Shares of stocks
Shares of stocks are account units of a certain company. And if you owned a stock, it makes you a part owner of that company. You will become a shareholder.
Example: Hershey wanted to put up a coffee store and she needed 50, 000 pesos to install the business. But she only has 40, 000 pesos in cash and she needed an additional 10, 000 pesos more to complete it. Luckily, I have an extra 10, 000 pesos and I offered help to her by cash. Upon completion of the coffee shop, Hershey now owns 80% of the business and I owned 20% of it. Whenever there's a profit, I received 20% income from the business.
For formality, we can play in the stock market to acquire assets and earn an income. A stock market is a place in which shares of different companies are bought and sold.
There are two types of player who participates in the stock market: A long term investor and a trader. A long term investor receives profit from dividends and gains most on capital appreciation.
A dividend is earnings from the stocks of a corporation that you bought that is distributed to shareholders, you.
It can be a form of:
On the four types of paper assets that I briefly explained, one common thing they unite... you invest your money through a professional and let them multiply it.
What will you do with the earnings? Do you spend?
You should not! Not until you earn your first million! Your first million is the hardest to earn! So you must...
Put your earnings to cycle and after you pass the 1M target, it's time to spend wisely.
Except for our physical selves, the different types of paper assets have the potential to produce passive income, which could make one financially independent.
The secret therefore is to spend our active days learning to create or acquire assets and accumulating them through time.
Take charge of your finances. It's not forever that we're strong, regret comes when we missed the chance to change our lives.
Save. Invest. Multiply.
If we are younger, this asset may increase the income it produces by working overtime, taking on jobs or sidelines that could augment our income. Of course, getting promoted in our jobs would also lead to bigger earnings through an increased salary.
However, our capabilities decline as the years go by. Why? We all know that our capabilities to do overtime work and other sidelines and our chances of getting promoted become less and less as our body grows older and approaches retirement age.
I am sharing to you an option on where you can invest your hard earned income on my first step approach... investing in paper assets.
A paper asset is not readily usable or convertible to cash.
A paper asset is a portfolio income.
Who among you invests in this type of asset?
Investing is preparing yourself to financial freedom.
Here are some examples of paper assets:
1. Shares of stocks
Shares of stocks are account units of a certain company. And if you owned a stock, it makes you a part owner of that company. You will become a shareholder.
Example: Hershey wanted to put up a coffee store and she needed 50, 000 pesos to install the business. But she only has 40, 000 pesos in cash and she needed an additional 10, 000 pesos more to complete it. Luckily, I have an extra 10, 000 pesos and I offered help to her by cash. Upon completion of the coffee shop, Hershey now owns 80% of the business and I owned 20% of it. Whenever there's a profit, I received 20% income from the business.
For formality, we can play in the stock market to acquire assets and earn an income. A stock market is a place in which shares of different companies are bought and sold.
There are two types of player who participates in the stock market: A long term investor and a trader. A long term investor receives profit from dividends and gains most on capital appreciation.
A dividend is earnings from the stocks of a corporation that you bought that is distributed to shareholders, you.
It can be a form of:
- Cash - example, PLDT announces a cash dividend of 1.00 per share to its stockholders. If you have 10, 000 shares then you get earnings of 10, 000 pesos.
- Stock percentage - example, PLDT posted that shareholders will have an increase of 50% of their current stock. If you have 10, 000 shares you get additional 5, 000 shares for free.
- Rights - example, PLDT offered rights of 1:3 at 2 pesos per share, If you have 10, 000 shares, one-third of it can be bought with a lower price at 2 pesos. Let's take it that the current price per share at the market is 10 pesos, you gained profit of 8 pesos per share!
A capital appreciation is an increase of the market price of a stock that you bought.
Example: you bought shares of stocks from Emerson for only 25 dollars a share and after 3 years, the price went up to 150 dollars per share. You earned 125 dollars a share! Multiply that on how many shares you bought and I bet it is a big profit already.
Compared to a long term investor, a trader earns by buying low and selling high with a profit that depends on the dictate of the market. A trader is a short term speculator.
Example: the market price of MegaWorld is 2.00 pesos per share today and after a week, the price per share went up to 2.50 pesos. I gained 50 cents per share and multiply that on how many shares I bought. It's a profit again in short one week of waiting.
If you are interested to invest in this type of paper asset, you must find a broker and they will help you understand the methods of investing.
But first you save so that you will have money to invest. Save, invest, then earn afterwards.
2. Bonds
A bond is a certificate of security that entitles you to receive regular interest payments. This is a long term investment where you get a certain percentage of the amount you invested.
Example: You invest 100, 000 pesos for a 5-year term for 5% interest. After five years, you get an additional 5, 000 pesos.
If you wish to invest on this type of paper asset, approach a bank and a professional will assist you on your concerns.
Again, save, invest, earn.
3. Time deposit, passbook, or multiple account through banks
Most of us have its own savings account.
This 3rd type of paper asset represents a high yield savings deposit which will get a certain percentages on a monthly, quarterly, or annual basis.
Just approach a bank but be prepared because you need to save to invest, and earn afterwards.
4. Mutual Funds
This is a type of investment where you provide a certain amount and will earn percentages annually.
Example: You deposited 100, 000 pesos and after tedious one year of waiting, your money accelerates to 64% earning. You get 64, 000 additional income!
To achieve this, you must save, invest, and then earn.
On the four types of paper assets that I briefly explained, one common thing they unite... you invest your money through a professional and let them multiply it.
What will you do with the earnings? Do you spend?
You should not! Not until you earn your first million! Your first million is the hardest to earn! So you must...
Except for our physical selves, the different types of paper assets have the potential to produce passive income, which could make one financially independent.
The secret therefore is to spend our active days learning to create or acquire assets and accumulating them through time.
Take charge of your finances. It's not forever that we're strong, regret comes when we missed the chance to change our lives.
Save. Invest. Multiply.
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