We all participate in the global economy. Even someone who is living on welfare checks is participating in the global economy. If you are using money in any shape or form, you are participating in the global economy.
Most of trade our time and hard work for money. We work hard at our jobs to earn a living. As long as we are investing our time and effort at work, we are getting paid. If we stop going to work or doing work, we will be fired rather quickly and of course the employer would stop paying a salary. This is called trading time for money. In other words, a fixed amount for an hour or hard work.
We also have the option of earning residual income. Residual income is when you keep earning income for work you did once. For example, a salesperson lands a contract and as long as that contract is valid, he will continue to get a commission. So he worked once and keep making money from that effort. There are many ways to earn residual income. Create online content for advertising. Conduct research on stocks and then choose good stocks that pay dividends.
We all have the option to invest our time and effort in earning compounded income. Compounded income involves re-investing income from your investment (time and/or money) and re-investing it to earn more income. For example, a salesperson buys a parking spot with his one-time commission and then that parking spot keeps earning him a monthly income, which he then uses to buy more assets. A salaried worker invests a portion of his income in the stock market and keeps reinvesting his returns from the investment to buy more stocks.
Given enough time, returns from compounded income return more money than the income the person earn at from his job. Your take away from this article should be that:
- everyone can earn compounded income
- start thinking about how to earn compounded income
- keep working on compounded income and over time it will start earning more than your salary
- when your assets start earning more than you, you can think about retiring on the compounded income
