11 Jan 2021, 13:00 — 4 min read
It takes money to make money.
Many people would say that having debt is bad. It is as if saying that you need to avoid it simply because debt takes money out of your pocket.
Robert Kiyosaki, the author of ‘Rich Dad, Poor Dad’, made the comparison of good debt vs. bad debt by creating wealth from debt and learning how to leverage it. From his book, he compared the two types of dads; the one who accumulated wealth through entrepreneurship and investment, while the other dad was working a 9-5 job.
‘Rich Dad, Poor Dad’ book advocates the importance of building wealth through investing in assets like real estate or starting your own business. According to Wikipedia, the book has sold 32 million copies across more than 109 countries that even American talk show host and media mogul Oprah Winfrey endorsed the book in one of her shows.
To put it simply, good debt gives you income on top of your borrowed money. What are the possible assets where you can invest or put your borrowed money? One example of assets where you can invest is the properties or rental properties. Usually, an individual investor or a business borrows money to acquire a property and this property will be used for lease. From renting the property, the investor or business can get the fund to pay for the mortgage. The remaining money after paying the mortgage will be your profit.
Also read: How to take advantage of short-term loan to jumpstart your business
The usual structure of renting properties can be considered as a business and you need to be registered as a lessor in your municipality. The SM Group is one of the biggest leasing company having more than 6.6 million square meters for lease. When it comes to business, you can also invest in a private company. It can be to someone you know or to someone who offers equity for his startup company and in return, you can get interest or dividends. The important thing when it comes to investing in other businesses is that you should be knowledgeable enough about it.
Passive income can be these types of aforementioned investments. It can cover your mortgage payment and at the same time have some profit on top of it. We can consider our acquisitions as bad debts when you are just paying for them without getting anything in return and it is easy to depreciate. Examples are houses and cars that you are paying monthly without getting any returns.
Remember, whether you have a high-risk or conservative approach when it comes to investment or business, your success will depend on your faith, courage, and trust in God. Give unto the Lord, O ye mighty, give unto the Lord glory and strength - Psalms 29:1.
Image source: Freepik
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Posted byCarlos Payumo Garcia
I'm Carlos P. Garcia. A Landlord and Business Development and Leasing Administrator of a Mercantile Leasing (Private Market) Business. I am offering stalls for lease to...
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