PASSIVE INCOME THROUGH MUTUAL FUNDS

Work Hard & Work Smart: Let your Money Work for You

BY TIYO PILO

Part 1 of 3:

“You can make money work for you and earn passive income regardless of your educational background, business experience or investment capital.”
From: Tiyo Pilo
Cebu City, Cebu
 
Have you ever heard the saying:
 
“Don’t work for money. Let money work for you.” 

It has always confused me.

What? 

Money working for you? How great would that be! 
 
 
Just imagine yourself.. 
 
..sitting on the beach, feeling the nice sea breeze, drinking cold lemonade while your family is happily running around the shore. 

Yet..

Despite having a vacation, money still keeps pouring into your bank account. 

That’s how money can work for you.
 
 
Too good?
 
Well, here’s a case study of a young retiree who was able to accumulate: P3,024,548.42 (April 5, 2004). 

And then 6 years later..
 
 
Spent 1.8M for retirement BUT still has 3.2M in his investment fund! (money working for you.)
 
 
You see.. 

..the difference between the rich and the poor is education.

But not the normal type of education that after you graduate you become (no offense) a corporate robot. Dragging your feet to work every Monday and wishing it is already Friday. 

I’m talking about Financial Education: knowing how to handle your money and knowing where to put, invest and let it grow. 

 

You see, I’ve always been a saver.

When I was in college, my daily allowance was P100.  

– I eat 5 pesos rice and 5 pesos “monggo” for breakfast. 
– And for lunch, I eat 5 pesos “puso” (hanging rice) and 5 pesos “ngohiong” (Yes, I was skinny yet handsome.)

Less my jeepney fare, I can save more than half my daily allowance. And after I graduated, I was able to save a significant sum.

 
But the more I saved.. 

..the more I realized that my money is just sleeping in the banks. After few years deposited in it, it was just growing very slowly. 

I inquired in the bank on how to receive higher interest rates, they suggested “Time Deposit.”

I was happy! 

I was getting more than what the average depositor was earning in terms of interest rates. 

 

Then it made me ask myself:

“Where do the wealthy put their money?”

I started inquiring about investments from friends, I was referred to a financial expert, attended seminars – in short, I was financially educating myself. 

And there I found out that the secret of the wealthy is that they put their hard-earned money in what we call: 

Income-Generating Assets! 

 
Now, I don’t want to bore you the technical details of what an asset is, but it simply means: 
“Something that you acquire that puts money into your bank account.” 

Example:
 
You buy a condominium unit, you rent it out and it puts money into your bank account. 
 
That’s an asset!
 
Again, you acquire “something” and that something puts money into your bank account. And that my friend, is the secret of the wealthy!
 
 
Moving on..
 
There are four types of income-generating assets. These are businesses, liquid assets, real estate and commodity.
 
However.. 

..among these assets, there is that one asset that is easiest to start with which requires: 
  • NO business experience, 
  • NO educational background, 
  • and heck it does not even require you too much capital! 
As long as you have CASH, you can invest in it and start letting your money work for you.
 
These are Liquid Assets! 
 
 
An example of a liquid asset is your bank savings account
 
Let say for example you have P100 and the bank interest rate is 1% per year. 

(You wish, the last time I check a bank savings account, it only grows at 0.25% per year!) 
 
But let’s just assume 1% per year for simple calculations. 
 
Meaning:
 
After 1 year, your P100 will grow to..
 
*drumroll
 
..P101! 
 
You work hard for P100, but your P100 work for you to help you earn P1! 
 
 
After next year: 
 
Your P101 will grow to..
 
*drumroll again
 
..P102.01
 
 
Notice the 0.01 cent? Your P1 together with your P100 continued to work for you. That’s how money works! 
 
It works through the power of compound interest! 
 
Albert Einstein Compound Interest
 
In simple language: 
 
“Yung interest ng pera mo, kumita ng interest din!”
 
 
Now enough with this nose-bleeding Math (Hehe I know a lot of you hate calculations). 
 
Instead, let me show you one liquid asset that generated 25.50% interest yielding P55,010.40 in growth.
 
Mutual Funds Gain
 
That my friend is the power of letting your money work for you. 
 
 
Thus..
 
Regardless of your educational background or business experience..
 
..you can let your money work for you as long as you put it in a vehicle that earns interest rates. 
 
The next question is:

“What and where are these investment vehicles?”

In the next lesson, let me share to you how you can become a business owner of big companies like: 

  • SM
  • Ayala
  • BDO
  • Jollibee

For as low as P5,000 (latest I’ve heard is as low as P1,000 now!) And nope, it’s NOT franchising.

See you in the next lesson.

Tiyo Pilo

| Passive Income Seeker