[Financial Education for Kids | Part 3] If you had 100 million yen, would you never have to work again? The concept of "letting money work for you"

In the previous article, I wrote about how "in your 20s, you should invest in yourself rather than financial investments."

Suppose you invest 100,000 yen in yourself and, as a result, you are able to earn 10,000 yen more each month. If you save that 10,000 yen for 40 years and assume you can invest it at an annual return of 7.2%, it will grow to approximately 26 million yen.

Of course, things don't always go this well.
But,

Invest in yourself
→ Your earning power increases
→ Invest the money you've generated
→ Your money grows even more

If you can create a cycle like this, your life will change significantly.

So, this time, I'd like to talk about a slightly bigger dream.
What would happen if you had 100 million yen?

Now, here is a four-choice quiz for this time.

Please take a moment to think about it.

...

...

...

The correct answer is,

number 3, 5 million yen.

100 million yen × 5% = 5 million yen.

That's 5 million yen in one year.
If you try to earn 5 million yen yourself, it's quite difficult. You have to wake up every morning, go to work, and work for many hours. You do that for a whole year to earn 5 million yen.

However, if you can invest 100 million yen at an annual return of 5%, that 100 million yen has the potential to generate 5 million yen for you.

Even while you are sleeping.
Even while you are traveling.
Even while you are playing games.
Even while you are playing with your family.

Your money works for you.
This is the concept of "letting money work for you."

Money works for you even if it's just 1 million yen.

Of course, almost no one has 100 million yen from the start.
But, the mechanism is the same, only the amount is different.

At 5% per year,

• 1 million yen → 50,000 yen in one year

• 10 million yen → 500,000 yen in one year

• 100 million yen → 5 million yen in one year

That is how the calculation works.

At first, it is a small force. But as the money grows, the "money generated by money" also becomes larger.
That is why in the first part, I wrote about giving children 1 million yen to start investing.

1 million yen is not just 1 million yen.
It is the first employee that will work for you for decades to come.
That is the image.

So, if you have 100 million yen, do you not have to work?

"If 100 million yen generates 5 million yen a year, you don't have to work anymore!"
You would think so, right?

In theory, it is possible to create a state close to that.

For example, if someone has living expenses of 3 million yen per year and can continuously generate more than that from their assets, they may be able to escape the state of
"having to work just to survive."

This is one way of thinking about what is often called "financial freedom."

However, be careful here.
Actual investments do not increase by a clean 5% every year.
There are years when they increase by 10%, and years when they drop by 20% or 30%.
There are also taxes and inflation.

Therefore, it is not a story that "if you have 100 million yen, you can spend 5 million yen a year for the rest of your life and it will never run out." That is not what I want to convey here.

In this world,there are ways to generate money other than "working yourself to earn money."That is what I mean.

It is not just "you" who works for you

If you go to school until you are about 18,
"When you grow up, you join a company, work, and get a salary"
might seem like a normal life.

Of course, that is a respectable way of life. But if you look closely at the flow of money in the world, that is not all there is.I believe there are three main ways of working.

I believe there are three main ways of working.

① You work yourself

This includes company employees, part-time workers, and freelancers.
You use your own time and abilities to provide value, and receive money in return.

② Having people or systems work for you

You build a company and create a system where products or services sell.
It is not just what you do alone, but the entire company or system that generates value.
This is the world of business owners.

③ Having money work for you

By holding assets such as stocks, you earn profits from the growth of companies and the economy.
This is the world of investors.

You work yourself.
Systems work.
Money works.

I believe that just knowing these three things will significantly change your future options.

You can also choose "how much to work" for yourself

I don't necessarily want my children to become business owners.
I'm not trying to say, "You should quit being a company employee."
In fact, I think working as a company employee is a very good choice when you are young.

You can learn your job while getting paid, and learn from seniors and supervisors. Sometimes, you can use the company's money to experience big projects that you couldn't do on your own.

In fact, I also had a time when I worked very hard as a company employee.

I worked full-time, and when I was busy, I sometimes worked until around 2:00 AM every day. At that time, it was a period of just working, earning, gaining experience, and improving my own abilities.

But now, my way of working is completely different.
I work about two days a week. The rest of the time, I spend doing what I want to do, such as going out with my wife, spending time with my family, exercising, or reading books.

It's not that I don't want to work anymore. In fact, I still love working.

However, I am no longer in a state where I "must work every day to make a living."This is because not only do I earn money by working, but I also have the assets I have built up working for me.

So now, I can choose:
Work a lot if I want to.
Do only the work I want to do.
Reduce my work if I want to spend more time with my family.

I can make those kinds of choices.

I want my children to know that these possibilities exist.
What I want them to aim for is not a "life without work."
It is "a life where you can choose for yourself whether to work or not, what kind of work to do, and how much to work."

One of the means to create that freedom is "having money work for you". If you don't know it, you can't choose it. But if you do know it, your life's options will expand significantly.
I believe this is the great significance of learning about money.

It's okay to want to be rich

If a child says, "I want to be rich!"
I don't think I should stop them.

In fact, it's fine to say, "That sounds great. Well then, let's think about how you can become one."

I want to drive a luxury car.
I want to travel the world.
I want to live in a big house.
I want to buy whatever I want, as much as I want.

When they are young, I think those reasons are perfectly fine.

They become interested in money, research it themselves, and think about how to increase it.
From there, they might become interested in the economy, companies, jobs, and how investment works.

And as they study, I think they will eventually realize something.
That the real reason they wanted money wasn't the number "100 million yen" itself.

Being able to go to places you like.
Not having to continue doing a job you hate.
Being able to cherish time with family.
Being able to take on challenges you want to try.
Being able to help people in need.

In other words, what they really wanted beyond the money was
"the freedom to choose your own life."

But it's okay to realize that later on.
For now, it's enough if they think,"Money is interesting!"

So, how do you make 100 million yen?

Here, I would like to ask the children this question.

Earn a lot as a company employee?
Acquire amazing skills?
Start a business?
Start a company?
Invest?
Or combine all of them?

Of course, you don't need to know the answer right now.
It's okay to say, "That's impossible."

But I want you to try thinking about it once:"How could I do it?"Just by having this question, I think the way you look at work and money will change a little.

This week's assignment—What would you do with 100 million yen?

This week's assignment is simple.

There is no right answer.

It's okay to say you want to spend it all to travel around the world.
It's okay to say you want to buy a mansion.
It's okay to say you want to invest it to make more.
It's okay to say you want to start a company.
It's okay to say you want to play every day without working (laughs).

First, I want to start by having you freely imagine what kind of life would be possible if you had money.

Money is not something you learn about just to practice self-denial.
It is something you learn about to expand the possibilities of your life.

Next time, we will broaden that world even further.
Company employees, self-employed/freelancers, business owners, and investors.
In this world, there are many ways to earn money other than just "working for a salary."

Next time, we will think about "Being a company employee isn't the only way to live. The lifestyles of business owners and investors."
.

[Financial Education for Children | Part 4] Is a ramen shop owner a company employee? Self-employed? A business owner? An investor? — "Another way to choose a job" that schools don't teach you