In my years studying ways how to improve one’s financial status, I cannot suggest any other better way of achieving this than that of creating multiple income streams.
I mean suggestions like cutting down on your expenses, looking for better shopping deals and other similar measures, while certainly good, can only help you to some extent.
But soon this approach to one’s financial life will lose its power as we humans certainly will stop having a comfortable life if we keep forcing ourselves to live with smaller and smaller financial capacity.
Investing is just a multiplier of your wealth
I remember a good friend asking me what to do with his extra 50,000 money.
He said he just wanted to invest it in paper assets like stocks knowing that stocks can give better returns than what banks offer.
But when I started to dig down and explain to him the risks that stocks carry in the short term, he started getting confused. He suddenly became half-hearted to go with his plans.
Ultimately, the confusion can be seen to stem from his desire to get bigger return yet not wanting to be exposed to bigger risk. I wish I can share other financial instruments that has this risk-reward relationship, but this is simply not the case.
Instruments like stocks are riskier compared to savings accounts and bank deposits, but this greater risk is what makes stocks a good contender when compared to other instruments in the long run.
In the end, I summarized my point with a single line:
Investments are just multiplier of your income.
Your potential earnings from this will depend on the size of your capital.
Even if you earn 20% a year, one that is already spectacular, if your working capital is only 10,000 pesos, that would only give you 2000 after a year.
Compare that if you had 1M, then a 20% annual ROI would give you 200k after a year. Now we can start talking about changing the quality of your life. 😀
Shift your focus
So if you want to drastically change the quality of your financial life in a shorter timeframe, you have to shift your focus from investing wealth to creating wealth.
Especially for starting employees who are just starting out in life, this kind of mindset can really make a huge difference.
Unfortunately, our society has trained most of us to work our whole life only for one income stream – that of Salary. Specifically, it’s called an Earned Income. An active income too – one that exchanges your time for money. But since our time is limited to 24 hours a day, this, in turn, becomes very limited too.
Here’s the good news!
Other income streams are out there waiting for you.
Profit income is one that comes from buying and selling.
And with online platform, it’s now easier to do this and reach out to a wider consumer market. Here, you’ll have to learn some life skills like marketing.
Interest income is another income stream from lending money.
Interest payments from lending money to companies, formally called corporate bonds, is an example of this. Other ways of doing this are possible more informally.
For paper assets like stocks, mutual fund and UITF in the Philippines, one can earn cash Dividend income and Capital gains with their potential increase in value.
You can watch the video below giving details about receiving dividends when investing in the Philippine stock market.
Another good income stream is Rental Income from renting a real estate.
Owning a property can also have an attached capital gain.
And with the digital world, you can easily earn Royalty & Internet income from your ideas that can solve other people’s problems or give them some pleasure. My Youtube tutorial videos for example, which help people learn about how to start investing in the Philippine stock market, has started giving me a regular income from Google ads. It may be small now, but the fact that it’s passive is what makes it interesting for me. I don’t have to wake up in the morning, join the traffic rush and please my boss first in the day to earn this. I can sleep all day and money keeps coming the same.
The times have changed and our financial strategies have to adapt to these changing times. When we think about the richest people we have now living the good life, one common quality stands out among all of them – the ability to create giant multiple cash machines.
Our normal education trained us to be functional citizens of our society, which is actually good, but this initial education should only be the start of greater education that this life wants to teach us.
Be open. Explore. Focus on ways of creating multiple income streams… one by one.
Soon, you’ll thank yourself for sticking to this life game.
Have fun investing (and more funds to invest!),
PS: Two days left for your discount!
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