The increase in inflation in the world has always led to thinking of different ways to strengthen the economic potential. However, the most important and most efficient of them is to set aside a certain amount from the monthly salary in the form of an inviolable fund.
Since many people around the world maintain a standard monthly salary, it is easier for them to determine their monthly budget. For example, since it is difficult to determine the amount of profit when dealing with an individual business, it is not possible to determine in advance the value of the amount to be invested in the reserve fund. For this reason, individual entrepreneurs who get this kind of profit sometimes place the cashed amount they have in their personal bank accounts or give it to banks with a certain interest.
According to the British experience, passive income is the holy grail of investing for many Britons. However, reaching a position where it’s actually life-changing takes time.
As everywhere, plenty of British people put a bit of cash aside each month. But not all of them make that money work as hard as it could do. And unfortunately, that’s what they need to do if they want their savings to turn into passive income.
Making money out of money
Money is a capital that can be spent as an asset in any form. With money, it is possible to develop business, sole proprietorship, agriculture, real estate and even online business. However, the emergence of sharp differences in currency values in modern times has reduced the trust in paper bills. This is more widespread in countries affected by inflation, such as Turkiye, Russia and Iran. In Azerbaijan, after the devaluation, the number of people who turned to the US dollar was increasing, as the trust in the manat once decreased. Many have decided to protect their reserves by converting their cash holdings into US dollars. However, after a certain decline, the thoughts of the manat being able to maintain its value suddenly changed.
How do people in Azerbaijan manage their budgets?
Capital management in Azerbaijan is somewhat multifaceted. For this, the market economy is constantly under control, and business is organized here only on the basis of needs. This is possible not only by business management, but also by spending passive income in certain directions and making investments. For example, how do you think an Azerbaijani with passive income of 200 thousand AZN in the reserve fund can use it effectively? The answer is simple. Each citizen invests the funds he/she has either by buying real estate, land or object. According to a survey conducted among many citizens in Azerbaijan, the most reliable way of protecting cash is possible only in this way. According to the results of another survey, there is a lot of trust in real estate in the country because the impact of inflation cannot seriously affect the real estate market. Looking at real estate prices in the country in the last 10 years, it can be said that prices have increased by more than one hundred percent.
But how to increase wealth by putting a certain amount outside of our income – is it possible?
Many economic experts of the world note that getting rich by collecting money in the usual way is not as simple as it is said. In general, money is such an abstraction that its direction and management require deep knowledge and foresight. Another aspect of this is related to the ability to follow economic processes in the world from time to time, which is especially important for those who want to get rich. The amount saved by each individual from his income can only compensate for losses due to inflation over time. However, it is possible to convert the available funds into active income and increase it only by investing in certain profitable areas.
On the other hand, some experts think investing is more risky, but offers the opportunity for much better returns.
For example, while we expect a small result during the year from the monthly income, some new investors aim to get a 10-12 percent return on their investment. Thus, the income from that interest becomes compounded over time. It also means making interest on my interest or making money out of money. As the Scottish saying goes, Mony a mickle maks a muckle. Like drops in dry land make a large lake over time, it can also grow my wealth faster, as my earnings keep building on themselves.
Source: AZERNEWS
