Money-Making Machines: Types Of Income and Investment Options

​If you're looking for a shortcut to building wealth, you have the wrong spirit. It's built gradually, layer upon layer.

As Warren Buffett said, "Never depend on a single income. Make investment to create a second source." ​There are three types of income you can generate:

Earned or Active Income

A type of income that is generated by working or trading your time.​

• Working a job
• Owning a small business
• Consulting
• Any other activity that pays base on effort spent

Portfolio Income

A type of income generated by selling an investment at a higher price than you paid for it. It is also known as "capital gains."​

• Paper Assets (stocks, bonds, mutual funds, ETFs, T-bills)
• Real Estate

Passive Income

A type of income that you get from assets you have purchased or created. An income you earned without trading your time for money.​

• Rental Income
• Business Income

Remember, it's not your salary that makes you rich, it's your spending habits. Learn how to save and then invest your hard-earned money. Here are some of the investment options that you may consider.

ATM Savings Account

Although the interest rate from a bank savings account is low (Gross Interest Rate Per Annum 0.125%), it is still better than keeping your money in a Jar or a Piggy Bank.

Time Deposit Account

It is almost the same as a bank savings account. The difference is it has a certain time frame also called maturity when you withdraw your money. You need to wait for the maturity period to earn interest.​

Stocks

Stock is a type of security that signifies share/ownership in a corporation. History has proven that investing in quality stocks can provide greater returns than most investment instruments. You can make money in stocks by "Price Appreciation and Dividends."

Crowdfunding

It is the practice of funding a project by raising monetary contributions from a large number of people.

Bonds

It is a debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period at a fixed interest rate. Visit your trusted bank for more information.

Mutual Funds

It is a pooled fund, affordable investments, invested in a basket of securities, professionally managed, and instant diversified. You can choose where to invest your funds: Equity Funds, Index Funds, Bond Funds, Balanced Funds, and Money Market Funds.

Unit Investment Trust Fund (UITF)

A UITF is an open-ended pooled investment fund handled by a fund manager. It is quite similar to a mutual fund, the only difference is that UITFs are offered by banks and are thus regulated by the Bangko Sentral ng Pilipinas (BSP).

Cryptocurrency
​
Cryptocurrency is a type of VC (virtual currency) that uses cryptography – a method of storing and transmitting data in unreadable form so that only the intended receivers can read and process it. This allows cryptocurrency transactions to be carried out in a decentralized manner by a group of users.

The first and most popular cryptocurrency to date is “Bitcoin”, introduced in 2009.

Exchange-Traded Funds (ETF)

A Mutual Fund that can be traded in a stock exchange.​ It is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, ETF trades like a common stock on a stock exchange.

PERA

Stands for Personal Equity and Retirement Account under Republic Act No. 9505. It refers to a voluntary retirement account established by and for the exclusive use and benefit of the contributor to be invested solely in PERA investment products in the Philippines. For more information, visit BDO, BPI, or your trusted banks that are already offering UITFs for PERA.

​SSS P.E.S.O. Fund

The SSS P.E.S.O. Fund (Personal Equity and Savings Option) is a voluntary provident fund offered exclusively to SSS members in addition to the Regular SSS program.

Through this program, members who can contribute more are allowed to save more to receive higher benefits in the future.

Modified Pag-IBIG II (MP2)

The MP2 Savings Program is a voluntary savings program for members who wish to save more and earn higher dividends than the regular Pag-IBIG Savings Program.​


Don’t be discouraged by your low capital. What matters more is that you’re already taking the first step towards financial freedom. Do it as soon as you can—right after you read this even—so you can make the most out of your investments.