In one of my financial literacy lessons back in my Nutriwealth Cooperative (a) business venture, I encountered the term "Living in Interest". In that lesson, you are to increase your income source (refer to my previous article "The X-Curve Concept") so you can overcome your financial responsibilities as you grow older. Once you have successfully overcome your financial responsibilities, you continue to add more income sources and in the process you gain a streaming passive income to the point your family up to the next generation will benefit from it. To explain it in another way, it is like multiplying yourself, your job and your salary to provide for the same family - and it has a good twist. And you keep that attitude of multiplying your source of income until even the upcoming generation in your family may benefit from it. Okay the good twist I was talking about awhile ago is that the other copies of yourself earns income while you are sleeping.
Okay to start explaining things I need you to participate on this to understand further. Try to look into your current status as an employee that is earning a salary - now try to picture yourself as an investor or an owner of a company. It looks like it is one big leap to do that and far realistic, right? WRONG --it is very realistic. Don't worry, we are almost there.
Okay to start explaining things I need you to participate on this to understand further. Try to look into your current status as an employee that is earning a salary - now try to picture yourself as an investor or an owner of a company. It looks like it is one big leap to do that and far realistic, right? WRONG --it is very realistic. Don't worry, we are almost there.
Basically, when you buy a stock in the market that means you own part of the company. So what I am trying to say here is that you will buy stocks. Wait, before we proceed further. Did you know that some stocks offer dividends? What is dividends? According to google;
Dividends - a sum of money paid regularly by a company to its shareholders out of its profits.
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| This is just a sample. I got this from millionairemob.com |
Yes, you heard it right. Dividends are paid regularly to shareholders/stockholders - it is also called profit sharing. If you are asking how to do this, the answer is by investing in stocks. I know, to some people stocks investing is not for them - it is quite risky or quite hard to comprehend - actually it is. If I teach you how to invest in stocks now, it will take more than one blog article to do that. So what I will do right now is to give you a perspective of an investor in stocks that yield dividends. Don't worry, this is worth your time I assure you.
The Jolly Meal Investment
Lets take one example, JFC or Jollibee (as of the date I made this article June 2020 during COVID season) is currently giving dividends of 1.81% per year (b). Current stock price is Php 108.70 and earnings per share in Php 1.97. The figures could change any time so please don't bother checking how accurate my data is but if you want to find out for yourself, go check it. Anyways, lets go back to our topic. What this means in figure, let us say you bought 1000 shares for Php 108.70 per stock which means the next year or dividends sharing time you can have a possibility of earning Php 1,970 just for buying their stocks and holding. Holding means you just let your stock sit there on your stock broker platform (eg. COL Financial). Of course that can also mean you have invested Php 108,700 in Jollibee when you bought shares from them. It also means, you are letting your Php 108,700 sit there earning you a dividend of Php 1,970 per year - yeah it may sound bad but it is actually better than what bank offers (time deposit max of 1.3% per year) and by the way Jollibee is just one of the companies that give dividends in the market, there are other more companies that offer bigger dividends. Believe it or not there are companies that yield more than 20% per year but with a higher risk of losing your capital or investment (which is your Php 108,700 money). But the other good thing in stocks investing is that the stock price changes from time to time. During this time of COVID, stock prices are going down. You may not believe it but a few months ago stock price for Jollibee was about Php 250. Imagine this, you bought 1000 shares for Php 108,700, next year it could go back to its almost normal price of Php 250 which could mean that your Php 108,700 is now Php 250,000 and aside from that you are earning a dividend of Php 1,970 which also could go higher (or lower). The stock price could also get lower but it is highly unlikely for a blue chip like Jollibee unless COVID extends until next year.
Lets take one example, JFC or Jollibee (as of the date I made this article June 2020 during COVID season) is currently giving dividends of 1.81% per year (b). Current stock price is Php 108.70 and earnings per share in Php 1.97. The figures could change any time so please don't bother checking how accurate my data is but if you want to find out for yourself, go check it. Anyways, lets go back to our topic. What this means in figure, let us say you bought 1000 shares for Php 108.70 per stock which means the next year or dividends sharing time you can have a possibility of earning Php 1,970 just for buying their stocks and holding. Holding means you just let your stock sit there on your stock broker platform (eg. COL Financial). Of course that can also mean you have invested Php 108,700 in Jollibee when you bought shares from them. It also means, you are letting your Php 108,700 sit there earning you a dividend of Php 1,970 per year - yeah it may sound bad but it is actually better than what bank offers (time deposit max of 1.3% per year) and by the way Jollibee is just one of the companies that give dividends in the market, there are other more companies that offer bigger dividends. Believe it or not there are companies that yield more than 20% per year but with a higher risk of losing your capital or investment (which is your Php 108,700 money). But the other good thing in stocks investing is that the stock price changes from time to time. During this time of COVID, stock prices are going down. You may not believe it but a few months ago stock price for Jollibee was about Php 250. Imagine this, you bought 1000 shares for Php 108,700, next year it could go back to its almost normal price of Php 250 which could mean that your Php 108,700 is now Php 250,000 and aside from that you are earning a dividend of Php 1,970 which also could go higher (or lower). The stock price could also get lower but it is highly unlikely for a blue chip like Jollibee unless COVID extends until next year.
The Smartphone that Yields Money
This is just one example of a company that yields dividends so if you invest your extra money to dividend-earning-stocks, you will get more income source. It is just like buying a new smartphone but you are not gonna use it to call somebody, you are gonna use it for earning you a dividend per year. Buy more of this smartphone that gives you dividend and if you want to retire, sell it to almost the same price or even higher value. But of course, as you progress and enjoy the fruits of your investments, a wise man buys more shares to gain more dividends. Before you know it, you may own more shares and more dividend-earning-stocks shares before you can retire. By the way, companies pay dividends in different times and some pay yearly, quarterly, semi-annual or even every 4 months so it means you can re-invest your money on the same stock by buying new shares or buy new prospects or start an offline business.
This is just one example of a company that yields dividends so if you invest your extra money to dividend-earning-stocks, you will get more income source. It is just like buying a new smartphone but you are not gonna use it to call somebody, you are gonna use it for earning you a dividend per year. Buy more of this smartphone that gives you dividend and if you want to retire, sell it to almost the same price or even higher value. But of course, as you progress and enjoy the fruits of your investments, a wise man buys more shares to gain more dividends. Before you know it, you may own more shares and more dividend-earning-stocks shares before you can retire. By the way, companies pay dividends in different times and some pay yearly, quarterly, semi-annual or even every 4 months so it means you can re-invest your money on the same stock by buying new shares or buy new prospects or start an offline business.
Visualizing Yourself
To conclude, you are currently an employee that earns a salary --that is you now. You decided to multiply yourself to earn more for the same family but the way you will proceed is by investing. You buy portions of company that will yield you dividends. One probable question that stops you is "Why do this?". Well that is because you can't do franchising with your current salary (how much do you think is a Jollibee franchise now? probably 10M or higher, and you have to provide business permits, business studies, seek location for the branch, look for employees, etc..). When you buy stocks, you are also a shareholder much like the franchisees and will share the same profit sharing like them as well without taking out 10M from your bank account which may currently NOT have --without the pain of preparing business papers and permits, looking for location to put up the business, computing your employee's salaries, expenses, return of your investment (yes your Php10M), etc.... you get the picture. For short, you are just waiting for your profit share and liquidity is much more easier if your financial is not doing great.
To conclude, you are currently an employee that earns a salary --that is you now. You decided to multiply yourself to earn more for the same family but the way you will proceed is by investing. You buy portions of company that will yield you dividends. One probable question that stops you is "Why do this?". Well that is because you can't do franchising with your current salary (how much do you think is a Jollibee franchise now? probably 10M or higher, and you have to provide business permits, business studies, seek location for the branch, look for employees, etc..). When you buy stocks, you are also a shareholder much like the franchisees and will share the same profit sharing like them as well without taking out 10M from your bank account which may currently NOT have --without the pain of preparing business papers and permits, looking for location to put up the business, computing your employee's salaries, expenses, return of your investment (yes your Php10M), etc.... you get the picture. For short, you are just waiting for your profit share and liquidity is much more easier if your financial is not doing great.
Living in Interest
By the time you retire, you can just wait for your dividends or passive income from different companies. Make that your attitude and before you know it, you are already earning more than your monthly salary and then more folds until you have reached the point where your grandsons/granddaughters and their children may benefit from what you did. And that is Living in Interest. Always remember, your best friend in investment is always TIME --start early, earn more.
I hope you get the picture. If you find this inspiring and helpful, please like it and subscribe and please share this - like and share button are just below this article. Thank you.
References:
a - Nutriwealth - one big cooperative in the Philippines which was ordered by the government to ceased and deceased order
b - dividend rate varies by the way, it depends on the stock price and the earnings per share they offer
By the time you retire, you can just wait for your dividends or passive income from different companies. Make that your attitude and before you know it, you are already earning more than your monthly salary and then more folds until you have reached the point where your grandsons/granddaughters and their children may benefit from what you did. And that is Living in Interest. Always remember, your best friend in investment is always TIME --start early, earn more.
I hope you get the picture. If you find this inspiring and helpful, please like it and subscribe and please share this - like and share button are just below this article. Thank you.
References:
a - Nutriwealth - one big cooperative in the Philippines which was ordered by the government to ceased and deceased order
b - dividend rate varies by the way, it depends on the stock price and the earnings per share they offer
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