Editorial Invest in Slovakia
Some time ago, I wrote a two-part series on investor principles. It's time for me to finish these ideas because I think they are key to starting to live a fuller and richer life.
Before I introduce the 3. INVESTOR PRINCIPLE, I will remind you in a short recap what the first two investor principles were all about:
1. INVESTOR PRINCIPLE: Find find a passive income now!
The article talked about finding a source of passive income. It's really important. Without a passive income that you can increase over time, you will never begin to live a fuller and richer life. If your only income is what you exchange for your time at work, you will find yourself in a "rat race." Gradually, this will cause you to begin to let go of your dreams that you have clutched so tightly in your hands.
2. INVESTOR PRINCIPLE: Unfair advantage of the rich.
The article talked about making passive income at an amount that will start to build real wealth for you. If you are offered passive income by a bank in a savings account with 0.5 % or 2 % return per annum, get off your chair, turn on your heel and walk away. This passive income will only feed the bank and not you. ☹️
Now I'm going to share with you an idea that I'll develop in the 3rd PRINCIPLE OF THE INVESTOR. This is: Debt to riches. Or to disaster?!
Unmanaged debt can wreak havoc on families. Last Saturday I wrote an article about being careful where you put your own money and gave examples where two friends of mine lived thanks to different thinking completely different lives.
This is doubly true of debt. Well, if you learn to use your own money, you will learn to manage debt. With managed debt, you can multiply your passive income from day to day.
But let's get this out of the way.
On TV, on the radio, on the Internet, on billboards ... everywhere there are ads for loans, for credit and for taking on debt.
Have you given any thought to what these companies are forcing you to do? All these things mentioned are liabilities, which are losing value at an extremely rapid rate . They are recommending that you take on debt to cover these liabilities and go into debt. It is consistent with that, what I wrote HERE?!
How quickly the financial value of a Christmas present disappears for your loved one? For you instantly. For your loved one, gradually, as long as you you have not given a passive income under the tree with a first deposit of EUR 10 000.
You buy things on debt that immediately lose value and after 5 years you are only entitled to a fraction of what you invested in it. You are buying things on debt that will never put any new euro in your pocket. But the debt has to be repaid for years to come with interest!
With every one unmanaged debt, we cause ourselves further losses. I do not want to be a bad prophet, but Slovakia is one of the most indebted countries in the EU.
So why are we all surprised that we are living below the poverty line? This is exactly why we are where we are. Because of the set system and the distorted mindset of all of us. You don't need a Nobel Prize in economics for that.
I don't want to bring up any conspiracy theories now. I am not into that. But as long as, we Slovaks, we use debt on consumer goodsthat lose value immediately after purchase and never put any euro in our pockets, it will turn out very badly.
If we live this way, we try to pay our debts with overtime at work, or by working one job in the first half of the day and another job in the second half of the day. Eventually, we will wear ourselves out, end up in poverty, with the strong conviction that we are just slaves to this ill-conceived system.
Yes, we are. But only as long as we allow it!
Then there is a second group of people who think differently. Read again this article. It will help you understand what details in our thinking determine whether we receive €4,000 of passive income at the end of the month without working or a big zero for our daily drudgery at work.
☝️ Have you seen the adthat you borrow money at 4.9 % interest, invest that money in real estate at 9.9 % return and the difference of 5 % is your passive income? That would be ridiculous, wouldn't it? I guess we'll probably never see ads like that.
And yet, most millionaires got rich through managed debt. The rich invest! Either their own money or debt...it doesn't matter.
For an investor, debt is opportunity, for the average person a nightmare. For For the investor, debt is another opportunity to increase their wealth even further, or passive income.
Debt can be a powerful "lever" to increase your wealth by several times in a matter of days.
If an investor has the opportunity to invest his money well with a return of 9.9 % per annum, he will do it with his own money. If he does not have enough free money, starts looking around to see what "lever" will use it to increase their income.
If he finds a debt with interest of 4.9 % per year and invests it to yield 9.9 % per year, elementary school math or peasant common sense would predict that at the end of the year he will be left with a +5 % yield.
☝️ How much is it in face value? Depends on how much he borrows. At EUR 10 000, this is EUR 500 passive income. At EUR 100 000, it is EUR 5 000 passive income. At EUR 1 million, it is EUR 50 000 passive income per year.
And this is exactly the way the rich think. If debt, then managed. Never on consumer goods, liabilities that immediately lose their value or do not bring a single euro to your wallet.
If you spend your own money or debt on liabilities, you need to spend more time working to pay it all off, that you've spent money on.
As a result, instead of a passive income without a job, where your money is working to make more money, you start to work 12 hours a day until fatigue brings you to your knees. ♂️
Don't use debt until you learn to work with your own with your own money. It is the same money. First you need understand the investor's principles. Learn to think of an investor. Use your own money to build your passive income. If you are ready, then use the financial leverage that is debt. This will puts you in a turbo-charged cockpit that fires you up and speeds up the process of getting rich.
‼️ This article is in no way an advertisement or a recommendation to take on debt and invest. With this article, I just wanted to shed some light on the ways in which debt can work either in your favor or against you.
Only banks and institutions can legally afford to advertise for debt, as they influence people's opinion through various media to take on "advantageous" debt. Unfortunately, they do this by suggesting emotionally very pleasant needs (car, TV, holidays, gifts, ...), which ultimately make us the most indebted country in the EU, with a standard of living on the poverty line.
✊ Fingers crossed for you on your passive income journey.
