The Type of Income Every Person should focus on
May 11, 2008 by Admin · Leave a Comment
Overview: We have always heard of passive income. We see them on WebPages, on books about financial independence, magazine articles, and so on. But do we really understand what this means and its impact on us?
I have read many books about passive income but the best one describing this would be the one popularized by Robert Kiyosaki. And whatever I might write here would most probably be traced to one of his works.
Passive income is the income one gets when a person doesn’t even have to do work. A man can be on vacation and yet earns. He can be dating with some girls, and yet earns. He can be on a deserted island, and yet earns.
I will give you some examples of active income so we can differentiate the two. When a man works for a company, he gets up in the morning then he goes to the office, or he might even stay at home and turn on his laptop. But wherever he is, he works for somebody else. And if he doesn’t do his job, he doesn’t get paid. He can either lose his commissions, or even worse, he can get fired. Another scenario would be if the company gets bankrupt, and the owners would have to lay off its employees. Whatever reason it is, the man’s source of income depends on his employer.
Another example of active income would be a situation where one sort of employs himself. He could be a dentist with a small dental clinic. He gets up in the morning and fixes his patients’ teeth and gets paid for that. But when he decides to go on a vacation, he doesn’t get any patients or clients. It’s almost the same as our first example. He owns the business, but he still works for it. No work, no pay.
Passive income however lets him earn while on a vacation. Like an investor perhaps. He might have investments in funds which earn him substantial interest even while he does nothing. His own money does the work for him. It lets him earn more money, which in turn can make even more money for him. Think about it like having a company which is getting more and more employees to work for you, and your output becomes bigger and bigger, exponentially.
Another example of passive income would be when one has a business with a fully functional system such that the owner wouldn’t have to work and manage his whole business. It might have its own managers and workers already, all fully trained to do what they have to do. The business owner can do whatever he pleases, and then at the end of the day, his business still earns him the dough.
When one has all these passive income put together, a man can earn without having to work for the rest for his life. He has more freedom of choice on doing what he wants to do with his precious time. But don’t get me wrong, all this passive income started with some work on it. One must earn enough capital to build or buy a business, or one must save enough money to start in investments which yield high returns.
So focus on the end goal of earning passive income.
Saving for Survival
May 11, 2008 by Admin · Leave a Comment
Overview: Do you ever wonder why ants keep on collecting food every single moment? When the time comes, they have enough food for the colony during the year when food is scarce. I’ve had some thoughts on this regarding on what people should be doing with their money.
I heard my wise old uncle say that it’s always better to save up for a rainy day. But then I thought; “Why should I be doing that?” I thought that I will always earn money somehow, someway. I also thought I knew that when the time comes, everything will turn out fine like some magic will intervene and make sure everything will be alright. So there’s nothing to worry about right?
But then again when one looks around him or her, one can see a lot of dire situations that come up unexpectedly. One might get sick suddenly and will need some money for hospital bills. One might get into an accident and find himself, injured and unable to work again. Or a person might even find himself too old but with no retirement funds to take care of him. And it all seems to be because people have not saved well enough early on in their lives. They might have had or they might still have that old attitude I had when I was a brash young kid, always thinking that I can always manage to pick up the pace when the finish line approaches. But if you look more closely, they could have started saving early then let all that money grow through an investment. They can consistently add up to it slowly, but surely. Through the power of compounding interest, those savings would have grown to a size big enough to cover some emergency expenses, retirement, etc… buy without injectible a prescription hgh
Now, this might not always end up like a good story. Some investments turn out bad, others turn out to be a scam. But that’s another story altogether. Talk about the ant colony getting ruined by a flood or a forest fire right?
It always goes without saying that one tends to reap what he or she always sows. You can’t plant mango seeds in your farm lot and expect apples to grow from those seeds. You can’t expect to build a healthy and sexy body when you take in a gallon of fat per day. I know that might be too much, but I hope you do get my point.
You won’t get enough money in the future when you haven’t started saving up early. It’s pretty much like those ants I mentioned. With steady discipline and without thinking that they might one day die by flood or get eaten by an anteater, they just prod on, saving all that food for the coming days so that the colony will survive.
Each of us should be like those ants, saving diligently and with great discipline. And when something comes up and we need to use our money, we will be ready.
The Action of Protection
May 11, 2008 by Admin · Leave a Comment
Overview: Many people have always heard of insurance. They have often encountered the word from stubborn insurance agents always wanting sell those insurance plans for a commission or two. But what really is insurance and how is it used?
Protection in the world of finance is tantamount to having insurance. If investments help one grow one’s assets, insurance helps one protect those precious assets. Where is the reason behind this? Why does one need to protect assets? Assets are things or persons of value and they represent what a person considers as wealth. Let’s look at some examples. This could be a person’s life, his houses, his cars, a body part, his entire body, his job, his business, his jewelry, his investments, or even his loved one. All these things constitute things which a person values. And the loss of any of these has a great impact on a person’s life and the way he enjoys his life.
The job of an insurance plan is to make sure that when something unforeseen like an accident happens and triggers a loss of a valuable asset, the insurance company covers for this loss if it means a certain criterion by replacing it with something of value. This may be the same value as the asset or even less, but this depends very well on the plan holder’s discretion. And in most cases this represents an amount of money.
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Like a house worth five hundred thousand dollars can be insured for four hundred dollars. At least when the plan holders claim this insurance and get some cash out of it, they can use that money to rebuild another house. Hence, they will always have a back up on having a house they can call their own. Or if in the case of a business, one can use the money to rebuild a business if something like a fire destroys it. Hence this protects the source of income. synthroid tightness chest
For the case of insuring a life, it doesn’t mean replacing a person’s life with another life. That would be absurd. But if that person is a breadwinner, then a family could be losing a source of income if a horrible death results from some kind of unforeseen accident. Now, I just have to make it clear. No amount of money could ever replace any person’s life. But it would be practical and it would be a good financial strategy to have insurance for the breadwinner of a family.
A tricky situation would be to compute for the actual insurance amount. But a simple rule would be to make sure that it at least covers all the lost value as if that assed still existed up to the day it was meant to be operational or it could just be whatever a person can afford. And the price of protection or insurance increases as the risk of loss increases. For life, an insurance plan increases with the age of the insured person as older people have statically more chances of dying. I’m sorry to be that blunt. But that’s the logic behind it.
To end this, it would always be best to consult with a trustworthy accountant or financial planner regarding insurance coverage and affordability.
Planning for Emergencies
May 11, 2008 by Admin · Leave a Comment
Overview: No we’re not going to talk about one of those safety drills and evacuation procedures although those could also be very important. We are going to talk about the all important Emergency Fund.
An emergency fund is the pool of money that you will use when facing emergencies that can’t be covered by a set of insurance criteria or because there wasn’t insurance to begin with.
An emergency fund should be very liquid. What does this mean? It means that if one needs the money, he or she can readily take these funds and use them immediately. In most recommendations, they will always tell you to put it in a bank. Other investments have holding periods, but a simple savings account can readily be tapped into. All one has to do is go to the bank or even an automated teller machine and withdraw the much needed funds. That’s short and sweet, no complications.
Now how much one should set aside for emergency funds? Most would recommend three months to one year worth of living expenses. Why is that so? Normally, a person gets money from his job. He goes to work and gets paid for that work. Others get money from assets. But mostly in these cases, the assets have been insured in case of a loss. So there’s not much of a problem for those kinds of people. So it’s always good to build up assets. But anyway, if a person loses a job, that then can qualify as an emergency. He couldn’t use his insurance if it doesn’t fall into an insurance coverage. And in most cases, insurance like this covers for income if only a person gets hospitalized. He shouldn’t use his investments either as this would incur penalties or even disrupt his money from taking advantage of compounding interest. Where can a person go to for this type of situation?
This is where the emergency fund comes in. He can use the money from there to spend for his bills, rent, food, and other needs. So going back to our question, how much should one set aside for emergency? This depends on where you are and the economic conditions you are in. If you have a job that can easily be found in 3 months, then your emergency fund can be three months worth of living expenses. If it takes six months to get a job or find a business in your part of the world, then cover six months of living expenses. That is it. There is no one perfect answer to that question. Just remember that it should always be equivalent to how fast one can realistically recover from a loss of income.
To wrap it up, you should always remember these 2 important things:
1. Keep your emergency fund liquid, preferable in a savings account with a bank.
2. Make sure you know how much emergency fund you need, and this depends on a case to case basis. spasms zyprexa
The Geniuses from the Business World
May 11, 2008 by Admin · Leave a Comment
Overview: We all know that saving money is an important key point in one’s road to riches. But is it that simple? Not really, it takes blood sweat and tears if you ask me. And some are just plain geniuses in my eyes.
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To become rich one must accumulate large wealth. When one thinks of accumulation, it simply means that there is more inflow of money than outflow. There is more income than expenses. Hence, the net effect is positive, there is accumulation.
Having huge salaries, some people earn a lot of money. But that’s only one part of the equation. These very same people also spend a lot. Buying stuff they don’t need, stuff that are doomed to be thrown away or just become added expenses. What do I mean? Let’s say that you bought an mp3 player, then suddenly a new model comes up and then you buy that new one. Suddenly, you end up with a useless mp3 player. There is just this attitude of spending on wants instead of needs and wasting money away that can be used to build one’s assets. This could be an expensive car, an appliance, lavish vacations, and the list goes on. So despite all that huge income, the incurred expenses vastly reduce people’s wealth to nothing. And that’s how many famous rock stars who earned millions end up broke at a later time in their career when their income goes down along with their popularities. All this is because they refuse to tone down their expenses. effexor lexapro taken together
Now that we got that cleared up, let’s look at how some people have done the art of wealth accumulation successfully. These people think of ways, systems, investments, and businesses, to make money come to them. Most of these are entrepreneurs who find ways to orchestrate all the fine parts of business like marketing, sales, and operations into a financial masterpiece that can last throughout his life and even beyond his life, giving his children and grand children a legacy they would always treasure and remember. They now have more capacity to help his family and even other people in need by setting up foundations, which by the way can help one reduce his taxes.
Such is my admiration for these iconic geniuses, and only so if they got their wealth in without being dishonest and destroying their values. They have become my heroes. It would be nice to learn from these masters. Sometimes, I even imagine this to be like a young man wanting to learn kung fu from a great kung fu master. We should set ourselves eager to learn the ways and the art of building wealth. How do these people think? What would they be doing right now at this moment? What do they love doing? What is their passion? What is always on their minds and what would they do if ever they encounter problems along the way?
If you cannot talk to a master in person, you can find someone who knows of such a master or even just bibliographies about their lives in many bookstores all over. Just make sure you learn something then apply what you have learned.
How the Rich Became Rich
February 11, 2008 by Admin · Leave a Comment
Overview: I can list down many ways on how people became rich. They could have won a sweepstakes lotto. They could have inherited millions from a rich relative. They could have become very talented and well known in their field that people always seek their service as in the case of some doctors, actors, and the like. They could have discovered a secret formula that changed how the world works forever. But my topic will focus on people who became rich with their normal talents and more importantly their normal way of living. pinay sex how to build a grill out of a 55 gallon drum
First, they live below their means. They are frugal, which means they don’t like to spend unnecessarily. Actually they make more money than they can spend money. Is this a secret? Not really. But many can’t seem to do it. It makes one wonder why, but I think you do know why.
Rich people also try allocating their time, passion, and even yes their money efficiently. And they do this in ways that are focused on building and accumulating their wealth. What could you be thinking right now? You could be thinking of a martial arts movie, maybe the sexy Nicole Kidman, or even a tasty fried chicken. But when you ask rich people are they are thinking of, I’m pretty sure their answer would be on ways to make more money.
The rich also became rich because they believe that financial security is more important than displaying high social status and getting the admiration of your next door neighbors. Now this is very practical. They don’t have to parade around in expensive flashy cars, wearing designer clothes and glittering jewelry. A lot of them drive very affordable cars. A lot of them really look surprisingly very normal and ordinary. To some people they may even be plain boring. Think Warren Buffet for instance.
The rich are also very capable of zeroing in on opportunities that not many people see. Many people think that some people who got rich are just plain lucky for staying with the right business or discovering the right contacts. But I don’t believe that. They just simply trained themselves to spot opportunities whereas most people seem to be blind to them.
Now, the rich also love what they do. That’s right! Every morning they wake up itching to get things done and hitting their daily goals! Now think about that. No wonder they seem to work for hours and hours, but they actually are having the time of their lives.
Even as parents they teach their kids how to think like a money-making machine. Early on as kids, they didn’t receive much financial help from their parents thus forcing them to think of ways on how to afford the things they wanted and needed. This is pretty good training ground to establish the much needed behaviors required to become and remain wealthy. It’s no wonder that most rich families remain rich while others get poorer and poorer. I honestly think this is the best inheritance they can give, the attitude of becoming and remaining wealthy.
Now these are indeed simple truths, but the question remains whether many of us can consistently do them or not.
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Get a Financial Check?
January 25, 2008 by Admin · Leave a Comment
When you feel really sick what do you do? You go to a doctor. He gives you a check-up. He looks at your eyes, your ears, and your blood pressure. A good doctor will try as much as he can to pin down what is making you sick. It is called diagnosis. He tallies all his findings. He may even go back to his books and even consult with other experts until he finds out what is exactly wrong with you. He then prescribes the right medicine or treatment for you that can help you feel better. And if he doesn’t have the right treatment, he usually refers you to someone who can help you, and that usually is someone better at a particular field.
