How to earn money (without working hard)

Q: I've been working for the past 20 years, and frankly, I want to get out of the rat race someday. I don't want to continue working until I die. Aside from starting a business, what other ways can I earn money without working so hard? - Paolo

A: It sounds like a good deal - the idea of earning money without working so hard. After working in the corporate world for a long time, you may have a valid reason for leaving the work force. You may be tired, you want to take it easy, or just want to enjoy the fruits of your labor.

While starting a business can let you earn money on your own and let you have control over your own time, it does entail a great deal of work. Many successful entrepreneurs credit their success to working hard, maybe even more so than those employed full-time in the corporate world. Indeed, it takes a great amount of sheer guts, determination, and sweat to build a business from scratch. But the rewards in the long run will be sweet and fulfilling.

Is there a way to earn money without working hard? Yes, there is. It's called investment. You save an amount of money, put it in an investment product, then let it earn interest on its own over time. There are many financial products you can choose from. Let's go over some quickly:

1. Government securities. You can invest your money in potentially less risky securities issued by the Philippine government. Such papers include retail treasury bonds (RTB), treasury bills, and treasury bonds. Treasury bills or T-bills are short-term instruments with a term of less than a year. Treasury bonds may have a term of 3 years or 5 years, wherein you lock your money for that period of time. With an RTB, you can invest an amount as little as P5,000. T-bills and treasury bonds require a bigger amount of money. These instruments offer a higher interest rate than that offered by bank deposits, at potentially lower risk to the investor, meaning you are taking on the credit of the Philippine government in order to receive your principal back at the end of the term. Interest will be credited to your account regularly (e.g., quarterly) during the entire length of the term.

2. Bonds. You can also "lend" your money to corporations raising additional capital and you will get a regular interest income over the length of the corporate bond to be issued to you. There is some risk involved as there is the possibility of default on the part of the bond issuer; however, you will need to exercise prudence and in choosing which bond to invest, consider a number of factors, including looking at issuers which are reputable companies with good business track record in terms of product and service, creditable industry standing and solid financials in order to determine whether investment is appropriate for you. The rate of return may be higher than that offered by bank deposits and government securities.

3. Stocks or equities. You may "own" a piece of a company listed on the Philippine Stock Exchange by buying shares of stock. There is a minimum board lot (minimum shares to be purchased, in other words) and you have to deal with a licensed stock broker, thus you also have to shoulder broker's commission and other fees. However, stock prices may shoot to the roof anytime, thus it is possible to earn more income with this investment rather than bank deposits, government securities, or bonds. But bear in mind that with the volatility of the market, stock prices may also go down in value, way below your purchase price, which will give you a loss. The risk is high in this investment, but investors who are in it for the long term may reap the benefits.

4. Pooled funds. You can join a fund pooling investments from other small investors. These funds may be mutual funds run by mutual fund companies or unit investment trust funds managed by banks. With these funds, you don't need to monitor the markets daily; the fund managers do that and invest the fund as they see fit. All investors share in the gains and losses of the funds. The price of the mutual fund share or unit investment trust fund changes depending on the net asset value per share / per unit on a relevant day. There are funds that invest only in bonds (bond funds), equities (equity funds), money market (money market funds) or a combination of them (balanced funds).

5. Real estate investment trust (REIT). This is a fairly new investment vehicle, with the law being passed in December last year. However, REITs have been a regular in the investment arena in other countries. REIT makes it possible for investors to own a part of an income-generating property. This may be a good addition to one's investment portfolio.

So it is possible to earn money without working too hard? Yes – you just have to make your money earn for you via investments. Save money, then invest it to reap the results. Talk to your bank or financial adviser today to find out which investment/s you may consider that would suit you best.

Source:Inquirer.net

Save or pay off debt? What to do when money is tight

Q: I work as a freelance graphic designer. There are months when I earn a lot, and times when I'm not. Since middle of last year, my income has gone down mainly because my existing clients were all affected by the typhoons, and decided to cut down on some projects. Sometimes I earn just enough to get by. I have some savings, but I am having second thoughts on whether to continue saving at this time. My credit card debt is piling up, and I am afraid it will even be bigger unless my income situation improves. Will it be a good move to stop saving and just pay off my debts? But this will bring my savings back to near zero. - Julie

A: Working freelance gives you the opportunity to choose your projects and work at your own pace at your own time. The downside of this is that, as you have discovered, the income stream may not be steady. You don't have a fixed salary that you collect every 15th and 30th day of the month. You also don't know when you will be able to collect payments from your clients. However, the possibility of earning more than what you may earn as a full-time employee is there; you do not have set limits.

So there would be days when you have much work and much income, and less work and less income. For some people, they prefer this arrangement as it allows them to be their own boss. It's like going into business, which comes with risks.

It is good that you have built up some savings at this point. This will tide you over when you go through the lean months. However, with your debt piling up, it is indeed tempting to just pay off all your debts and start clean. After all, interest charges on unpaid balances can indeed be an added burden. But paying off all your debts now will also decrease
your savings greatly or wipe it out altogether.

Should you hold off saving for now and just pay off your entire credit card debt? We say no.

The purpose of saving is to sustain you during the times when you really need extra funds. This may happen when you lose a job, go through a difficult time when death happens in the family, or when you finally decide to retire. You have seen how important savings is; now that your income is not steady, there is a pot of funds readily available. But if you wipe out all your credit card debt now with your savings, you may not have enough funds left should something happen to you tomorrow, the day after, next week, or even a year from now. You have to be ready for what may happen and not just rely on the thought that you can rack up new charges on your credit card.

How then can you deal with your situation? Here are our suggestions:

1. Assess how much you exactly owe. Write down the amounts you owe on your credit card, including finance charges and interest charges, if any.
2. Find out how much is the interest rate used by your credit card.
3. Check with SSS or GSIS if you can get a loan for a much lower interest rate. If so, take out a loan and use the proceeds to pay off your credit card debt in full. The monthly amortization of your loan payment to SSS or GSIS will be easier on your pocket as you may access low-interest loans from these institutions.
4. In case you cannot get a loan from SSS or GSIS, call your credit card company and ask if they can amortize your existing balance over the next few months at a lower interest rate. If you have been a loyal customer with a good paying record, they just might accommodate your request.
5. Look for other ways to increase your income. Search aggressively for potential clients, ask for referrals, and show off your portfolio. Partner with another business, such as a web developer, in offering your services to potential clients. And look for possible sidelines you can do also, such as teaching, to augment your income. Then use this
additional income to pay off debt.
6. Sell off an asset you have but don't use. Maybe you have an extra computer that you don't really use much, or an antique table that just gathers dust in the corner. Turn that nonperforming asset into cash and use the proceeds to pay off your loan.
7. Cut down on unnecessary spending. If you like eating out, do it less frequently. When you're tempted to get gourmet cafe at a coffee shop, promise yourself you'll brew a good cup at home instead. Little things like this can help you free up more money for saving.
8. Continue to save. Set aside money for savings even before you spend the rest of your income for the month. This will be for your future.
9. Follow your budget. Experts recommend that debt repayment should be no more than one-third of your take-home pay so that you will have money left for your living expenses. Set a limit for your other expenses and live within your means.

By following the above suggestions, you will eventually find out that you have finally paid off your debt and still have built up some savings. Discipline is the key.

Source:Inquirer.net