I bought a 20 year treasury bond last year. This bond pays me a gross coupon of 18.5% per year. The coupon or interest is paid every six months. When I receive a coupon I don’t eat it. Instead I reinvest it in another bond with a different maturity and yield. So I am effectively building a so called bond ladder with various rangs of bonds with varying interest and maturities. This way I spread my coupon payments across the year and eventually I will have a coupon every month. Now this smaller coupon from my reinvestment I use it to buy shares on the Uganda Securities Exchange. So I am in a way converting my bonds into equities or ownership of actual businesses. This allows me to diversify the risk of bonds which are mainly inflation and credit default. The shares I buy pay a dividend which I then use to buy more shares.
So I am slowly building a small fortune which will provide me with passive income for years to come. So while hardwork is looked upon favourably in our culture, there are easier and faster ways to build wealth without sweating too much!
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Interesting way of looking at the passive income question. My strategy is the exact opposite (maybe because our objectives are different). I go the equities way to get to the bonds way and ultimately stop at treasury bills. With age I will deal with a steadier income from bills. Now I can afford a relatively big risk appetite on the USE (UMEM , SBU. BOBU and MTN) from short to long term horizon for recovery of investment.
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