How to achieve passive income?

sleepingcat

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Currently 25, and I wish to retire as soon as possible because I don't want to spend my life working miserably for “money" and end up not having enough time for more important stuff like family, and other things like travelling... I would like to start early to achieve this passive income.

I know REITs give good dividend which is a form of passive income but they might also cut it anytime
 
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SpeedingBullet

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Currently 25, and I wish to retire as soon as possible because I don't want to spend my life working miserably for “money" and end up not having enough time for more important stuff like family, and other things like travelling... I would like to start early to achieve this passive income.

I know REITs give good dividend which is a form of passive income but they might also cut it anytime

Then get good at investing to discern which REIT's payouts are sustainable vs those that are not
 

TiedInsurer

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Currently I only have around 20k saved up.
I haven't gotten into any investments yet..

I saw in a different thread that you say your monthly salary is $1.8k. That's low. And depending on your monthly unavoidable expenses, which will vary greatly depending on the number of dependants you have, this might mean you will never get to retire early, just by using safe dividend based investments, because you can't save much every month.

How are your career growth prospects? Do you have to support anyone? Parents? Future wife and kids? Your best shot might actually be to invest in high risk like forex and equities. You're still young, can afford to take the losses.
 

EricDraven

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When you are young, your best asset is yourself. So invest more in yourself, upgrade your day job to get a higher pay. That's the fastest and most efficient rate of return.
 

limster

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When you are young, your best asset is yourself. So invest more in yourself, upgrade your day job to get a higher pay. That's the fastest and most efficient rate of return.

the majority of those who retire early, they are mainly retiring on their saved salary rather than profits from stock market trading.

if you hate your job, it is unlikely that you are going to do well in it. as an employer, why would i want to promote anyone who hates his job. find a job that you like to do. If you are allergic to work, then i'm not sure how you are going to get enough money to retire early :s13:
 

sleepingcat

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I saw in a different thread that you say your monthly salary is $1.8k. That's low. And depending on your monthly unavoidable expenses, which will vary greatly depending on the number of dependants you have, this might mean you will never get to retire early, just by using safe dividend based investments, because you can't save much every month.

How are your career growth prospects? Do you have to support anyone? Parents? Future wife and kids? Your best shot might actually be to invest in high risk like forex and equities. You're still young, can afford to take the losses.

My career growth doesn't look good for me as I am only a o level holder with no other certifications. I have to give monthly allowance to my parents. Fortunately, they r still working so I don't have to support them.

I haven't learnt about forex.

Does equity mean buying a stock of a company?

I was thinking of buying airline stocks as their prices have dropped alot now.
 
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Passive income takes hard work to achieve. Short of gambling on 4D/toto, speculation or being born into a rich family, the fastest way to get there is to either work damn hard in your early yrs and earn a good salary or to run a successful biz.

No such thing as a free lunch.

It's never too late to start earning passive income. The earlier the better. The more impt qn is, how long it takes for you to reach the end of that journey.
 

limster

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I was thinking of buying airline stocks as their prices have dropped alot now.

If you want to make big money on the stock market, you have to take a contrarian view which turns out to be right. When everyone else is selling airline stock, you are the only one buying, if you turn out to be right, you will make $$$ big time. In other words, high risk=high return.

If you simply buy what others are buying, eg: Zoom (the Video conferencing company not the other one lol), you are unlikely to get rich because its a crowded trade.
 

TiedInsurer

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My career growth doesn't look good for me as I am only a o level holder with no other certifications. I have to give monthly allowance to my parents. Fortunately, they r still working so I don't have to support them.

I haven't learnt about forex.

Does equity mean buying a stock of a company?

I was thinking of buying airline stocks as their prices have dropped alot now.

Yeah equity means buying company stocks. But you need to know that it's essentially gambling. Nobody can know for certain which direction the stock market moves.

If your goal is to retire on passive income, some quick maths tells me that you will be generating $1,200/mth in passive income, at age 51, assuming you are able to save $1k/mth every month, and make a steady 3% ROI on your entire savings and investment.

If you can save only $500/mth, you will only hit this benchmark at age 64, at 3% ROI. Age 54 if ROI is 4%. If your savings every month is small, you will need high returns on your entire portfolio to make it to early retirement.
 
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If you want to make big money on the stock market, you have to take a contrarian view which turns out to be right. When everyone else is selling airline stock, you are the only one buying, if you turn out to be right, you will make $$$ big time. In other words, high risk=high return.

If you simply buy what others are buying, eg: Zoom (the Video conferencing company not the other one lol), you are unlikely to get rich because its a crowded trade.

But uh, saying this cos TS seems quite new to investing.. If you're looking to buy and hold equity for the long term, do be prepared to see short term ups and downs in your share price. Its a different ballgame from FD and holding cash.

Impt thing is to do your due diligence, and be confident in the potential of what you commit to. Don't panic and sell off at a loss once you see any dips in share price.
 

sleepingcat

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Yeah equity means buying company stocks. But you need to know that it's essentially gambling. Nobody can know for certain which direction the stock market moves.

If your goal is to retire on passive income, some quick maths tells me that you will be generating $1,200/mth in passive income, at age 51, assuming you are able to save $1k/mth every month, and make a steady 3% ROI on your entire savings and investment.

If you can save only $500/mth, you will only hit this benchmark at age 64, at 3% ROI. Age 54 if ROI is 4%. If your savings every month is small, you will need high returns on your entire portfolio to make it to early retirement.

Currently my average monthly spendings is around $600, on months where I buy things online will be more. So I actually save about $800 every month.
 

TiedInsurer

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Currently my average monthly spendings is around $600, on months where I buy things online will be more. So I actually save about $800 every month.

$800/mth is actually really healthy, and much higher than I was expecting given your salary, and you mentioning that you pay parent maintenance.

You can hit $1,200/mth (why $1,200? Because things that cost you $600 now, will cost you $1,200 when you are 53, assuming a inflation rate of just 2.5%) passive income at age 55, at a very achievable 3% ROI on your savings and investments.

What will you do about accommodation? All set to inherit one from your parents, that can last you til old age?
 
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tutonic

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People who put aside 2k/month for savings also not thinking about retiring early and living on passive income..

With your salary, retiring early is a pipe dream, unless you are willing to survive on couple hundred bucks per month because you don't want to work. Instead, you should consider your investment/savings plan as a means of providing you with a sizeable nest egg to help supplement your income during old age, not completely replace it.

To greatly simplify matters, if you can survive on 1k/month, that would mean at least 12k in dividends a year. Assuming dividends are about 4% return, loosely speaking, you need to have accumulated 300k in savings when you retire. If you save 1k a month, you'll need 300 months, which comes up to 25 years of saving 1k a month. Chances are your salary will increase over time, so it's quite doable. But if you're planning on getting married and have kids, your expenses will balloon significantly for the first 10 years or so. Then if having kids, don't want save money for their education ah?

Long story short: not feasible to expect to retire early and live comfortably off of dividends. If you want to retire early, expect a fall in your standard of living.

Like what others mention below. You're young. Instead of having ridiculous notions of retiring early, why not invest in yourself and upgrade (get higher certifications, or better job prospects). That will directly help your goal of accumulating more wealth, and might even help you achieve your goals much quicker.
 
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sleepingcat

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$800/mth is actually really healthy, and much higher than I was expecting given your salary, and you mentioning that you pay parent maintenance.

You can hit $1,200/mth passive income at age 55, at a very achievable 3% ROI on your savings and investments.

What will you do about accommodation? All set to inherit one from your parents, that can last you til old age?

I haven't really thought about accomodation. I'm not sure if I will inherit my parent's house as I have a brother too. But if I inherit from my parents, I might stay here till old age. Pretty sure my salary won't stay 1.8k forever too so my savings might increase in the future also.
 

kurtgoh

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My career growth doesn't look good for me as I am only a o level holder with no other certifications. I have to give monthly allowance to my parents. Fortunately, they r still working so I don't have to support them.

I haven't learnt about forex.

Does equity mean buying a stock of a company?

I was thinking of buying airline stocks as their prices have dropped alot now.

if i were you, i would upgrade myself.

get a diploma, get a degree.
yourself is the best investment.

i am also a late boomer but i work hard during my 20s.
but i am not rich, just contented with life.

jia you. :s12:
 
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