The stockmarket, in my personal opinion, is not for everyone. Many people think that it is a magical money making machine that makes people wealthy with minimal effort and time. It is not! It is a vehicle by which proper study, patience, and discipline are applied to take advantage of the vast opportunities that it presents. The rewards are high but so are the risks. In the end, it all boils down to mastery of the market and of yourself. You need to put in the required discipline and study if you do not want to lose your shirt, or even worse, the roof over your head.
It is as if by fate that I chanced upon this article this morning because I was planning to write on this topic today
The guy in the article is my boss. His story is true and that is why I currently work for him. His story is nothing short of amazing and I would like to follow his footsteps in building amazing wealth through the stockmarket. I think my boss, however, has changed a lot since his college-dropout days; aside from being richer than he ever dreamed possible, HE NOW WORKS HARD/ER. I think this is his secret. He reads voraciously, trades at least 3 markets, runs the stockbrokerage, trains traders, attends meetings, etc.
I'll stop here for now.. wait for part 2 on stockmarket investing.
I borrowed this term from Timothy Ferriss' book, The 4-Hour Workweek. It basically refers to a business which generates income automatically, (like on autopilot) without the need for the owners to spend time running or managing it. Robert Kiyosaki also favors this kind of business because the owners don't have to spend time running them, thus they have more time creating other businesses, or in Tim's case, living around the world and doing exciting stuff.
Wondering what kinds of businesses are set up like these? an easy example can be your friendly neighborhood Mcdonald's. Have you ever seen the owner/s bossing everyone around while taking orders and manning the cashier? Of course not.. The owners of these franchises use leverage and hire other people (i.e. managers) to do the "running" or operating part of their businesses. Robert Kiyosaki can't stress enough that SOLID SYSTEMS are vital for this kind of setup to work. Tim, fortunately for us, has shared his virtual architecture in his book. This is the basic structure or system that he uses for his businesses and I am a true fan of its simplicity and genius. I, however, will reserve the discussion of Tim's VIRTUAL ARCHITECTURE for another post.
So what kinds of businesses are suitable for MUSES?
here's a quick list:
1. Franchises - These businesses should have a proven system of operating smoothly and efficiently without its owner. As in my previous example, a Mcdonald's or Jollibee franchise are perfect examples. You will never see the owner/s manning or running the business. Their only job is to buy the franchise, turn the on switch, and watch their money work for them.
2. Rental Real Estate - Although I separated the discussion on this topic, it is indeed considered a muse because the owner/investor of a rental property will receive his monthly rents regardless of the amount of time he or she puts in. Once the proper investing part is done, your monthly cashflow from rents will be coming in like clockwork.
3. Online Business / Store - Tim's book, The 4-hour Workweek, has a complete guide on how to make your online business run on automatic. He goes into the details of outsourcing almost every aspect of operations and using existing cheap and available technology to drmatically make your life as a business owner easier. I'll discuss Tim's virtual architecture in my next post. Grab a copy of the book, it will change your life...
Okay, It's been too long since we continued our discussion on sources of passive income. So now I'll discuss the first one that I know of, namely REAL ESTATE. We are not talking of just any real estate, it has to be income generating, so in a sense it has to be real estate that we can rent out. This type of real estate can be in the form of an apartment, a house, a building, etc. as long as we can RENT IT OUT. Remember the most important criteria when buying is that THE AMOUNT THAT YOU WILL RECEIVE AS RENT SHOULD BE GREATER THAN THE MONTHLY AMORTIZATION THAT YOU PAY FOR THE FINANCING OF THE SAID PROPERTY.
In a nutshell, this is how it works..
1. You purchase a rental property with a minimum downpayment (20%max) and you finance the remainder of the purchase price via a bank or any other lending entity.
2. In exchange for financing your purchase, the bank or any lender will charge interest on top of your loan amount and will demand that you pay them a monthly amortization over the term of the loan (sometimes this can be as long as 30 years) to slowly pay off the loan and interest.
3. The monthly rental amount SHOULD ALWAYS BE GREATER than the monthly amortization for you to generate passive income.
That is the basic theory.. Below are books that show different strategies on how to implement your real estate investment program/s..
for financial intelligence basics, this is a must read...
to learn how to value and buy properties cheap...
this reveals how to buy foreclosed properties in the Philippines...
I was re reading the Fourhour Workweek by Tim Ferriss and stumbled upon his chapter on dreamlining. It's basically an exercise where you write down your true wants and desires out of this life and find out how much it will cost on a monthly and daily basis. Before you write everything down, he asks a few guide questions and I'd like to share them here.. here they are:
1. What would you do if there were NO WAY you could fail? If you were 10 times smarter than the rest of the world?
2. What would you do, day to day, if you had $100 million in the bank?
3. What would make you most excited to wake up in the morning to another day?
These guide questions are simple but, as i found out for myself, effing hard to answer! They all boil everything down to what u really want in this life, and most of the times, those things are the ones that really matter.. I highly recommend this exercise for eveyone 'coz it makes you think really hard of what you really want out of your life..
Anyway, here's a link to Tim's book.. HIGHLY RECOMMENDED!