People think a bonus is a gift from heaven: I didn’t spend money talent for it. But with every income you make, you must make a distinction: Did I earn it because I spent time, money or sweat (active income) or is it because it’s a gift from heaven, earning from something off somebody’s sweat (passive income). That’s why your first choice investing is your passive income.
First, test the waters with a bank time deposit. It’s your safest most risk-free bet for storing extra cash.
When you find you have the appetite for it, put your money in stocks, ownership investments or government bonds. Investments and stocks and bonds are daunting, even scary terms. But in reality, certain types of instruments are available for ordinary income earners:
- Treasury Bills and Treasury Bonds these are promissory notes issued by the government. They call it bills for one year and bonds for more than a year. You can purchase these at the bigger banks. Before making any commitment, ask advice from the bank personnel. They can also sell to you existing notes, and the promissory notes can be traded. Prices may vary.
- Mutual Funds (MF) are handled by a private investment company which raises investment funds from selling ownership shares or institutional and/or individual investors. The funds received are then invested in either equities (stock market) or fixed income securities (bonds) or in both. An MF is managed by an independent and professional management company.
- Unit Investment Trust Funds (UITF) these are trust products of the trust division of a bank also managed by professional investment managers.
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