Paying off my debt enabled me to save a tremendous amount of money because most of my income wasn’t used to pay creditors. After I paid $40k of debt, it took me about two years to save $50k. That’s a significant amount of money. Although I was thrilled with the progress I made, I didn’t want my savings to dwindle because of inflation or spending.
I wanted to grow my savings to ensure that it never ran out again.
I continued to add to my savings account monthly, but I wanted my money to work for me. It was evident to me that if I stopped working, my savings account would stop growing unless I did something with it.
That’s when I realised that I needed to invest my money so that it would grow. But how? I looked at what rich people were doing and discovered that they used their savings to buy…
Assets
The difference between spenders and savers is gratification. Spenders need instant gratification by spending their money to treat themselves. Savers choose to delay spending their money and receive gratification from increasing their net worth.
Because spenders use their income for shopping sprees, they don’t have any money left at the end of the month.
Savers increase their net worth by buying assets that generate an income.
Instead of spending the money they saved, savers will only spend a portion of their profits after they have recuperated the entire amount of their investment. That enables them to have the original amount of their savings, as well as an asset that is generating profits. That’s a much better position to be in than a spender, who has no savings, assets or profits after spending his or her entire income.
What Assets Did I Buy?
While deciding the best asset to buy, I wanted my savings to grow. I found a high-yield savings account that pays 7% interest annually for keeping my money in the bank. That’s guaranteed, so it’s extremely low risk.
Instead of withdrawing the earnings, I kept them in the account. My initial investment and interest had earned interest. Every month, my balance was compounded. I still have that account, and it’s increasing my savings without me doing anything. It’s completely passive.
Eventually, I invested in coffee vending machines.
I found high-traffic areas and then set up my machines. I have to fill the containers with coffee and water but, for the most part, the income is largely passive. That’s because my customers put money into the machine, which makes them coffee.
Three Important Things I Learnt About Assets
Ideally, you want your product/service to be available globally and to be passive. An ebook published on Amazon is a great example of achieving both. But what if you’re not a writer or aren’t interested in an online business? What assets are best to buy?
The two factors I love the most about generating income from coffee vending machines are that I’m not location-dependent, and I earn while I sleep.
I can visit friends, work on projects or even surf the net while my machines make me money. I don’t have to be at a specific location to generate an income.
The other one, which is even more important, is that my coffee machines generate revenue while I sleep. As rich people say, if you’re not earning while sleeping, you’ll work until you die.
Every morning, I check my application and see that people bought coffee from my machines throughout the entire night.
If your asset cannot generate an income while you sleep, it limits your earnings to the time that you’re able to service customers. Your asset has operating hours, and it earns only during that period. My assets generate income 24/7.
Examples of Income-Generating Assets
Investing in stocks enables you to do it from anywhere in the world, and the investment is passive. Certain financial markets are open 24 hours a day, so you could potentially earn while you sleep.
Buying real estate and renting it is another great asset that generates income. You enable customers to book online and do a self-check-in. You’ll have to clean the place, repair damages and answer queries. But your real estate generates an income without you needing to be at a specific location, and an overnight stay means that you earn while you sleep.
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