The Three Kinds of Income: Ordinary, Portfolio and Passive

I work as a salesperson. Since I became a full time Insular Life Financial Advisor, I earn from every issued policy application that I am able to close, both from initial and renewal premiums for up to a certain number of years. That is my ordinary income. Also called as active income, it is man working for money. 

A couple of weeks ago, I received an email from Insular Life notifying me of dividends from my small investment allocated on the Global Multi Asset Income Paying Fund. 

And just today, I was surprised to find out that the value of the residential lot we purchased three years ago at pre-selling rates, payable in three years at 0% interest (talk about great deals!) have gone up by 25%!

These are our portfolio income.

 
Recently, with Insular Health Care and InLife Store, I am an affiliate marketer. I promote simple issue products available online, shared on my social media, and when someone makes a purchase using my unique affiliate link, I earn a small commission.

And with Insular Life's Recruitment, every time I have a recruit who passes the licensure exam and gets coded, I earn a referral bonus. In addition, I get a percentage from my recruits' closed businesses for the first 12 months, which is another bonus from Insular Life.

With regard to my personal production, aside from my commissions, as long as I meet the required number of submitted policies and persistency rate, I earn a Persistency Bonus every payday, also from Insular Life.

These are my passive income.

This made me realize what Robert Kiyosaki was referring to in his book Retire Young Retire Rich about the three kinds of income.

Three Kinds of Income

Ordinary Income

        Ordinary earned income is you working for money. The more you work, the more you earn. You exchange your precious time for this kind of income. This income earns in the form of a pay check. When you ask for a raise, bonus, overtime, commissions, or tips, you are asking for more of this type of income.

 

Unfortunately, this is the kind of income that many of us only know of. And very few people get rich through ordinary income. Remember that every time you get a raise, so does the government.

Portfolio Income 

        Portfolio income is generally income from paper assets such as stocks, bonds, and mutual funds. A vast majority of all retirement accounts are based on future portfolio income. In my case, I have started building my portfolio income through the ordinary income I earn.

Passive Income

        Passive income is income from a business, affiliate sales, real estate or it can also be a royalty income from patents or for use of your intellectual property such as songs, books, or other objects of intellectual value. This is money working for you so you can use your time in doing something else you love, or sometimes even enjoy the art of doing nothing.

While You Work For Money, Let Money Work For You, Too

I was exchanging messages with a client today and told her about the usual goal we hear which is "early retirement." Everyone wants to retire early. When I was employed, I wanted that, too -- so that I can spend more time with my kids.

In 2018, after 15 years of being employed, I quit my job before my 36th birthday. But I never retired from work. Instead, I chose a job that does not feel like work. How so? Providing content through this blog is part of my "job" of giving value. As I write this now, it is 10:54 pm. I can do this tomorrow, or next month, because I do not have a deadline for this. And yet, here I am, wanting to finish this tonight after spending the whole day engaging with clients. 

To add, the people I know who love what they do never retire either. Think of doctors for example. I remember one time while we were in Nueva Ecija on a weekend. My husband, who is a surgeon, received a call from a hospital in San Fernando, Pampanga. He left at 7pm, drove for two hours, did an operation, and was back in Ecija with us past midnight. No dragging of feet needed.

Long story short, work for as long and as much as you can. There is absolutely nothing wrong with that. But let your money work, too, even harder than you do. Remember that money does not sleep, get sick, or go on vacations. It works even while we sleep.

Use your ordinary income to grow your portfolio income. And look for ways you can earn passive income. 

Insular Life Provides Me With More Than Just One Income

Writing this post made me realize that my work as a Financial Advisor with Insular Life provides me with multiple income streams. Aside from the ones mentioned above, there are even regular sales drives for additional bonuses. 

True enough, love your business, and it will definitely love you back.

P.S. If you want to try being an InLifer, we are open for part time and full time Financial Advisors. If you are currently employed, you can start doing this as a side hustle. This used to be my side hustle back in 2013 and fell in love with it. You can email me at financialplanningforpinoys@gmail.com and I can walk you through the process, regardless of where you are in the Philippines.

P.S.2 Have extra funds sitting in the bank, and want to start receiving monthly dividends from InLife's Global Multi Asset Income Paying Fund? Email me at financialplanningforpinoys@gmail.com to know more. 

To financial freedom,

Joan

Stop Loading On Cheap Junk

Let me share with you a paragraph that struck me while reading Retire Young, Retire Rich by Robert Kiyosaki.

"Rich dad said people try to become rich by being cheap, being frugal, not spending money, living below their means, and scrimping. Most people do not become financially strong with that kind of behavior. A person needs to spend more if they want to become rich, but they must know how to spend and what to spend on in order to become rich. As my rich dad said, "There are good expenses and bad expenses." And most of us know that there is good food and bad food. Just as a person tries to lose weight by starving, a person who tries to get rich by being cheap only gets financially weaker, and then suddenly they too go on a binge. And as a binge eater will load up on junk food, the binge spender loads up on cheap junk."

It Is Smart to be Thrifty, But You Don't Want to be Cheap

Two weeks ago, I was having a conversation with a friend who wants to start investing in the stock market. He was asking me a lot of questions via Messenger so I thought that maybe he would prefer that we talk personally. Initially, he agreed. But when I jokingly asked where he will treat me for coffee, he changed his mind. LOL. (Though he knows that we can always do Dutch!) 

During one conference I attended, on the other hand, our stock market mentor Mr. Edward Lee shared that there was a time when he saw an old client while having dinner at an expensive restaurant. Before leaving, Mr. Lee paid for the old client's bill without telling him. The client appreciated the gesture. Unexpectedly, Mr. Lee received a call from him for a transaction that brought millions to his business. Paying for that dinner, no matter how much it actually cost, was definitely worth it. 

I think the key to wise spending is simple. Know when to be frugal, and know when to splurge.

If You Bought an Item You Don't Really Need at 50% OFF, is that Savings or an Expense?

Stop being a binge spender and loading up on cheap junk. Instead of buying too many clothes, or shoes, or bags every time there is a SALE that will only fill up your closet (wherein you would eventually need a bigger closet), why not shop for investments that are on sale to fill up your portfolio instead?

You can start by investing in the stock market. I challenge you to start filling your stock market portfolio with BIG companies. 

Take advantage of the election season and invest in the local equities.

Or take your investments to the next level through global investing -- YES! Even without converting your peso to dollars. The fund will do that for you!

It would be nice to own even a tiny part of BLUE CHIP companies, especially those which pay dividends!

If you want to learn how to invest directly in the stock market, and have the time to do so, click here.

Otherwise, you may invest through your favorite financial institution, and let the experts do what they do best -- both for your local and global investments.

Insular Life, the first and largest Filipino-owned insurance company, recently launched its GLOBAL MULTI ASSET INCOME PAYING FUND which allows you to buy shares of dividend paying companies across the United States, Europe, United Kingdom, Asia Pacific and the Emerging Markets; and a diversified portfolio, too, including equities, REITs, Fixed Income Fund, among others.

With this fund, you grow your money through capital appreciation and dividends which are given as monthly payouts deposited directly to your enrolled bank account.


I believe that the key to financial freedom is knowing where to spend your money on. Stop buying liabilities (which you thought were assets) and start buying real assets. Simply put, although many are still confused, an asset puts money into your pocket. A liability takes money out of your pocket. And again, financial literacy is very important.

Happy investing!



P.S.

Finally decided to start investing? Interested with InLife's Global Multi Asset Income Paying Fund? Email me at financialplanningforpinoys@gmail.com.

How To Live Rich For Less (Part 2)

In the previous article, I have shared a few tips to save money so we can invest more for our future. I believe that through the years of our existence on earth, millions of pesos have already passed through our hands. And I'm sure millions will pass through your hands in the years to come. The problem is just that we spend it all.

Below are few more strategies for saving money on entertainment.

1. If you enjoy movies

My husband is a movie buff but he would never invite me to watch a movie at cinemas even during pre-pandemic. He says its expensive. 

If you are my age, more or less, and have experienced renting at Video City and buying DVDs, that is what we often do. We have saved so much by doing that!

And with the availability of streaming platforms today, a month of subscription only costs one movie ticket! 

2. If you enjoy restaurants

Instead of dining at a full-price restaurant, hunt for a discount through a social coupon services. Even FoodPanda and Grab offer discount vouchers. But these limit your restaurant choices. How can you save if you want to dine at a specific place?

Going for Happy Hour is one option. Many restaurants offer great deals on specific menu items at off-peak times of the day. Call the restaurant you want to go to, and ask if they have either a Happy Hour or a Monday night or Ladies Night Special.

Another option is to go out for “inner” – that’s dinner without the “d” (without drinks and dessert). If the drinks and dessert are the part you love the most, then JUST order drinks and dessert and skip the dinner itself.

3. If you enjoy shopping

If you are like most people who love shopping for the sake of shopping – for its entertainment value – why not go without your wallet? Sounds crazy, I know. Or bring a certain amount with you, within your budget, so you don't overspend. Window-shop, admire handbags and shoes, gaze at jewelry, exclaim over this season’s new line of clothing.

Lately, I window shop at Shopee, just for the fun of it. Keep them in my cart, but I only checkout things I really need. And for the past two months, 1.1 and 2.2 already passed, but I have not made any purchase.

Just be cautious with window shopping because you might have the tendency to desire things that are beyond your budget.

One Thing I Do Not Scrimp

There is one area where I spend a lot. And that is personality development.

I buy books and attend seminars. The birth of this blog is from a five-digit online marketing course I enrolled to. As Warren Buffett said, "The more you learn, the more you earn." And the money I have invested in learning has already came back a hundred folds. 

By investing in personal development, we increase our value. So, the more value we have, the more we attract "symbols of value" (money) in our lives.


And the more money we have, the more we can bless others with.

How have you increased your value? Share it in the comments below!

How to Live Rich for Less

We all dream of achieving our first million and retire as millionaires. And the way to do this is to keep working for money, and also let our money work for us through investments.

We can have additional income sources and we can also lower our expenses. Let me share some of my wallet-friendly habits that you may consider trying.

Lower your Electric Bill

1. We sleep in one air-conditioned bedroom. 
2. We changed our lightbulbs to CFL. You'll use 75 percent less energy, and you will notice the decrease in your electric bill. CFL also lasts 10 times longer than regular bulbs, so that is additional savings.
3. We changed our really old appliances. Do you have ancient refrigerators and 15-year old airconditioners? You may think you're saving money by not buying new appliances. New refrigerators and airconditioners have energy-saver modes that save you 25 percent off your electric consumption. 

Lower your Phone Bill

     I have a postpaid plan which I renewed las June 2020 with a 10GB data allowance. Pre pandemic, I have never used up all of this data since most places I go to have wifi. And since I have been working from home and I rarely go out since the pandemic began, I only consume less than 1GB every month. I plan on getting a lower plan when I renew. 

Lower your Dining Expenses

1. When dining out with friends or relatives, suggest to order large meals to share instead of ordering ala carte. This way, you not only get to save a bit, but you also get to maximize money.
2. Save on drinks for yourself. I believe that water is the best beverage in the world, no sugar and no calorie. If I eat out five times a week, save P40 per meal, that's P200 savings per week or P800 savings per month. Invested for 20 years at 12% interest growth, that would make me P750,000 richer. 

Pay in Cash

     This is my rule whenever I shop. I do not like things I cannot afford. But if I really like it and I can't afford it yet, I will wait until my next income arrives so I can pay it in cash. Appliance and gadget dealers usually offer additional discount when items are paid in full. 

On another article, I will give you more ways on how to live rich for less.

Share your #tipidtips on the comment below! 

5 Reasons Financial Advisors Fail and Ways to Avoid Them

 

DISCLAIMER: This is not a post pertaining to anyone in particular. This is a post that helps identify problems and might provide solutions in helping Financial Advisors succeed in this career.

Being a Financial Advisor for eight years, which began as a side hustle and eventually became my profession, is a very rewarding career. As my mentor would often say, "Love this business, and it will love you back a hundredfold." 

And when you love what you do, like loving a person, you would do everything for this "relationship" to grow. But it is not always rainbows and butterflies. There will be days of rejection and "seenzones" that trigger the mind to withdraw from this situation and seek comfort. This is a basic human trait built upon our experiences and will to survive. We consider the easy way of giving up, telling ourselves that this may not be for us, and would rather try another path.

But believe it or not, we can overcome these challenges. And remember that failure happens the moment we stop trying. Below are the 5 reasons why Financial Advisors fail, and ways we can avoid them.

1. Lack of Process

This is the number one reason why Financial Advisors fail. We become REACTIVE instead of PROACTIVE in our daily routines. Many of us just wait for clients to reach out to us. Unfortunately, this rarely happens.

You must have a process for

• Prospecting
• Follow ups with prospects
• Closing cases
• Serving your current client base, and eventually become referable
• Answering message inquiries, calls and emails
• Training new Financial Advisors

Make a list of what consumes most of your time and build a process around dealing with it more efficiently. Delegate work if necessary. 

2. Lack of Prospecting

Remember those days in training when we were asked to list 100 names as prospects? While we can pick names from our list of Facebook friends, there is no sugar coating that prospecting is hard. 

When you go out of the training room, you first talk to your natural market. After which, who do you talk to next?

While you can do ads on social media, I think it is better to create leads organically. Instead of spending money on ads, spend money on paid trainings that will help you become a better Financial Advisor. Implement the following:

• Determine your most energetic time of the day. Block that time off to do prospecting. Write a sign on your door that says "Do Not Disturb" so that you remain in focus.
• Make a call or send a message to a prospect within 5 seconds. I read that it takes approximately 5 seconds for the brain to turn you off to an uncomfortable task. Use this time to accomplish your task.
• Focus on the successes, like getting a reply email from your prospects. One of my latest clients is someone who replied to my email. This encouraged me to build an email list and learned how grow this list.
• Repeat this process everyday. Expand your prospecting time and think of this as planting more seeds, and ultimately convert theses prospects to clients.

3. Lack of a Great Mentor

A great mentor in this field is not easy to come across. Find a successful advisor who is willing to share how they prospect, willing to caddy you during your first couple of client meetings, and willing to share their strategies with you. 

And when you find a great mentor:

• DO make their time worth it. Only come up with good questions. Tell them about your open cases and opportunities that you need help with.
• DO ask if there is anything you can help them with, even with the little things. Ensure that there is adequate compensation or something for the time they give to mentor you.
• DO be respectful, obedient and show gratitude for their mentorship. Be an asset of the team, not a liability.

4. Being Too General

Because there are so many generalists Financial Advisors, making this a reason to be on the list of why Financial Advisors fail.

If you are selling to everyone, you are selling to no one. Go after a particular market and focus on that market.

To identify your target market, check the questions below:

• Have I worked with this market before? Did you enjoy working with this market and likewise? How was the experience?
• Is there enough money in this market? Because this is a business you are in, if there is little to no money to target, pursue other opportunities.
• Is the market growing? It is important that your target market is meeting or exceeding growth, so as you, too, can grow with them. 

5. Not Knowing Anything About Your Prospect

A friend once shared a story that during the first lockdown, she received a number of random messages on Facebook, from people she doesn't know, offering insurance and investment. Obviously, these people who sent messages did not even bother to look at her Facebook profile. Because if they did, they would have known that my friend is also in the financial industry with her cover photo. 

The lack of information about your prospect will kill a conversation before it gets going. Thanks to social media, people openly divulge their life, careers, hobbies and everything else on the internet. Make the most out of this valuable information in connecting with people with similar hobbies, backgrounds, education, etc.

Final Note

Winston Churchill said, "Failure is not fatal. It is the courage to continue that counts." As we are on the second month of 2022, may this post be helpful in your journey towards success as a Financial Advisor.

Connect with me HERE. Be very blessed!