Financial education is scarce but extremely important. I was pretty good at saving but the interest on savings accounts are very modest.
I came across this book named “Cashflow Quadrant” by Robert kiyosaki. It really helped consolidate financial education in a way that I could relate to. Most of us are familiar with the four quadrants from math class. On the left side of the quadrant were the W-2 income wage workers and self employed workers who averaged about 60-80 hours a week. And on the right side were business owners and investors who routinely pulled in passive and semi passive income which is taxed at a much lower rate than those who actually worked hard for their money. I was floored to say the least. I was fascinated to say the most.
Those who take in earned income are in a higher tax bracket than those who receive passive income. How could this be? Most business owners and investors provide a service or help stimulate the economy in some form. If you’re a landlord, you provide housing and therefore can write off subsequent expenses. If you’re a charity, you provide a charitable service to those in need.
This rude awakening had me brainstorming on how i could possibly cross over to the right side of this thing. I was un college majoring in psychology one semester when I decided to start investing. So I took a few thousand from my student loan refund and put it in notes at LendingClub.com. Lending club essentially is a place where regular people go to apply for loans for various reasons. These are mostly high risk applicants who struck out at the bank. You get to be the loan officer who decides if people get funded after looking over their credit profile. I had about 3k spread out into over 100 notes in increments of $25 each. It took about a month and a half to start seeing results but I was taking in over $300 a month in passive income! I took a risk but I was finally starting to see how passive income worked and I liked it. It was fun and exciting to watch my money trickle in almost cents a day to add up to over $300 a month in income. Since then, loans have been paid off in full and some people defaulted due to the high risk nature of the loans but I still pull in about $100 a month at an almost 6% interest rate for doing absolutely nothing. Just making money while I sleep instead of it sitting in a savings account collecting dust. This first investment taught me to not only read and educate myself but also take action toward what I learned and so far the results have been surprisingly lucrative. It’s also given me the confidence to pursue other forms of investing such as real estate and stocks. You’ll never know what you’re capable of until you try.