Passive income options

[Epps_Sg]

20years.. I really envy your diligence and achievement.
Is it too late to start now that I will be 35 years soon?
Well, I know ppl will say I have to start somewhere still, but how do pple like me begin?

It's not too late to start investing for you - 25 years till retirement is plenty of time to build nest egg, just you may need to invest more and learn quickly. And stick to a day job for constant income. I started real investing late too - previously for quite some time I didnt find or understood any investment style that I could like.

I can think of several ways to start investing, generally speaking:

1) start a passive investing portfolio. This is my favourite, less effort, relatively lower risk. You can look through my website for some understanding.

2) start a dividend investing strategy - this seems popular. Do you research about this strategy first regarding the pros and cons.

3) start a dollar cost averaging investing into stock index ETF. IMO no. 1 is a better way to invest than this.

4) market time - wait for major market corrections then buy when others are fearful, then sell when others are greedy. IMO this is the riskiest method. Market timing does not work for most people in long run, if you dont believe me, then you can pay school fees to find out... if you try, try with money you can afford to lose first...

5) if non of the above is comfortable for you, research about them first then interview a few people and select those who can help you do one of the above until you are competent to do it by yourself. It's important you know what is the investment strategy even if others are doing it for you. And if possible, avoid using unit trust with high fees, avoid emerging markets stocks (high economic growth not equal to high stock market gain), and always hold at least some govt bonds in your stock portfolio to reduce portfolio risk.

Points 1,3 and 4 are elaborated here:
http://forums.hardwarezone.com.sg/70505693-post16.html

Well, good luck if you research into each style of investing, and hopefully you can find one or two style that you can feel more comfortable with.

 

[lousylah]

A lot of people lose money in a market crash. To me it is a transfer of wealth from current investors to opportunists like yourself.

It is how those who are capital-rich get richer in a way, by snapping up assets at a discount. Buy when everyone is selling and sell when everyone is buying.

its just market-timing and not following everyone else bullishly.
there is however opportunity cost of waiting for a crash.

different folks, different strokes - we are all hoping our money can make us more money.

 

[sAVaGEmP5]

im sure u guys know that investing in stocks for passive income is a time game.

U guys know right ??????????????

U guys know right ????????

If u wanna strike it big and fast, like the list of ppl in "30 under 30", pls consider something else.

U guys know right ?????????????

 

[TheThirdHat]

Well, shares is a tool to help you make money without having to exchange your time for money. Of course there are other tools out there but they are also some sort of a time game.

Better start young than late, and later than never!

 

[archcherub]

whats your blog's link?

lol.. its in his signature!

 

[ochazuke]

I am going to tumpang this thread abit...I too am looking at passive income options to ultimately prepare myself for a "safe" retirement if possible.

I am an investment newbie, and am already in my early thirties so one can say that I started quite late. My original plan was to purchase a 2nd property for rental purposes by the time I am 45 but the rising property prices and constant changes in law makes this goal harder and harder to reach.

So, in the meantime I am looking at alternative means of investing and also to grow my capital, that does not involve me having to monitor it constantly.

From reading around, it seems that dividend stocks / permanent portfolio strategy (as Epps_Sg kindly described) would be a good option for me.

Currently, I have about $20,000 in savings and am contemplating creating a small permanent portfolio and the rest to be invested in dividend stocks.

My question now is, is now a good time to invest this money or should I wait, as it appears that the market is still on a high side but I have been waiting for a crash since early this year (didn't happen). Alternatively, should I do a dollar cost averaging method and slowly accumulate the stocks/portfolio?

Thanks in advance for any words of wisdom, it will be much appreciated.

 

[Genesisz]

found this from IM$avy from CPF website.....

Much has been written in The Sunday Times Invest pages about investing for yields in these uncertain and inflationary times. Based on the performance of Reits and high dividend paying stocks like the telcos and utilities, it appears that local investors need no further convincing.

However, buying a stock for its high dividend payout is only half the story. To make an investment work as well as it ought to, a good investor must complete the other half of the story.

And that is re-investing the dividend.

Re-investing income from an investment, be it dividend, coupon, interest or rent, is a simple concept but it takes a strongly disciplined investor to abide by it.

Many ordinary investors tend to be lax about their investment income. If you don't believe me, ask yourself this question: How closely do you track the interests and dividends that you receive? Even if you do track them closely, what do you do with them?

For some, investment income is treated as bonus money to be spent. A friend, J, who has a rental property, tells me that she uses the rent she collects from her tenant to pay for her overseas vacation.

As she is a wage earner, she considers her rent money as extra spending money.

Don't get me wrong. I'm not saying that investors must live like a scrooge in order to maximise returns or that J is wrong to splash cash on an expensive holiday.

The point I want to make is that expenses should not be premised on the belief that investment income is spare money. It is not.

This is because the value of our principal is constantly being eroded by inflation. The dividend cheques that come our way are nominal returns, that is to say, they are not adjusted for inflation.

So if you spend all the returns, your financial position will be worse off than a year ago because inflation would have reduced your buying power.

Ideally, J should peg her annual holiday expenses to her annual wages to ensure that she does not spend more than she earns.

This may seem pedantic - after all, money is fungible, so does it matter that it comes out of the investment account instead of from one's salary?

But I will argue that the distinction is important, particularly if your expenses are perilously close to your earned income.

When expenses equal earned income, there is zero savings. And if you have to dip into your dividend income to fund further spending, you are whittling down your reserves even if the principal remains untouched.

That is why the Government is very careful in tapping the Net Investment Returns (NIR), which reflects income from the investments of Singapore's reserves, in a sustainable way.

Although computing the returns under the NIR framework is far more complex than my own simple illustration, the underlying principle remains the same, that is, preserving one's wealth is more than just maintaining the principal.

It bears reiterating that re-investing one's dividend is key to preserving wealth.

The other benefit of re-investing is to harness the power of compounding - which can be likened to a snowball rolling down a hill.

Compounding allows your investment to grow at a quicker pace as a result of the interest or dividend you earn not only on your principal but also on the accumulated interest and dividend payments.

Take a person earning an 8 per cent annual rate of return on $10,000 and putting his dividends in a savings account that pays a measly interest.

At the end of 20 years, his money will have grown to slightly more than $26,000. But if he had re-invested the dividends at the same 8 per cent rate of return, the value of his initial $10,000 will have more than quadrupled to $46,610.

If your investments are managed professionally as part of a pool - such as insurance products or unit trusts - dividend re-investment is not an issue as the fund manager has economies of scale in re-investing cash dividends in shares.

However, dividend re-investment is problematic if you own shares directly because so few companies on the Singapore Exchange offer scrip dividend as an alternative to cash dividend.

To be sure, one can always take the cash to buy shares in the market, similar to what a fund manager does. But it is not a good idea as the transaction costs for small share purchases are prohibitive.

It is no wonder that scrip dividend is popular with small investors as reflected by a participation rate of well over 80 per cent at OCBC Bank when this option was offered to shareholders.

It's a pity the bank suspended the scheme in its last two dividend issues, saying that it has adequate capital.

In today's liquidity-flush climate, profitable companies will find it cheaper to pay their dividends in cash rather than in new shares that will dilute future earnings.

This is a short-sighted approach. Shareholders who elect to take their dividends in scrip are usually in for the long haul. Surely, these are the kind of shareholders that companies want.

Thank You for sharing this article. Very informative.

 

[Genesisz]

It's not too late to start investing for you - 25 years till retirement is plenty of time to build nest egg, just you may need to invest more and learn quickly. And stick to a day job for constant income. I started real investing late too - previously for quite some time I didnt find or understood any investment style that I could like.

I can think of several ways to start investing, generally speaking:

1) start a passive investing portfolio. This is my favourite, less effort, relatively lower risk. You can look through my website for some understanding.

2) start a dividend investing strategy - this seems popular. Do you research about this strategy first regarding the pros and cons.

3) start a dollar cost averaging investing into stock index ETF. IMO no. 1 is a better way to invest than this.

4) market time - wait for major market corrections then buy when others are fearful, then sell when others are greedy. IMO this is the riskiest method. Market timing does not work for most people in long run, if you dont believe me, then you can pay school fees to find out... if you try, try with money you can afford to lose first...

5) if non of the above is comfortable for you, research about them first then interview a few people and select those who can help you do one of the above until you are competent to do it by yourself. It's important you know what is the investment strategy even if others are doing it for you. And if possible, avoid using unit trust with high fees, avoid emerging markets stocks (high economic growth not equal to high stock market gain), and always hold at least some govt bonds in your stock portfolio to reduce portfolio risk.

Points 1,3 and 4 are elaborated here:
http://forums.hardwarezone.com.sg/70505693-post16.html

Well, good luck if you research into each style of investing, and hopefully you can find one or two style that you can feel more comfortable with.

I would probably need to know and learn more about Point 1 and Point 3.

I am still quite a newbie but have picked up a couple more tips from the helpful folks here who have been more than willing to share.

 

[Genesisz]

The power of compounding dividends is great. The growth of passive income is exponential.

Buy dividend stocks, reinvest dividends and buy more dividend stocks.

More dividends stocks will give u more dividends to re-invest and buy even more dividend stocks.

Rinse and repeat over 10 - 20 years.

The only challenge is to come up with the initial capital to start the ball rolling and to save aggressively.

I started with around $20k in 2009. Made some sacrifices along the way. No oversea vacations, no car, no fancy restaurants etc.

In order to buy the dividend stocks and get the "rewards", one needs to know the type of dividend stocks to buy, the information of the companies or entities, the history or background and other relevant information or details, the timing to sell (such as due to certain announcements being made) etc.

I am still at the learning or beginner's stage and would probably venture no further than the blue chips (including in years to come).

So I presume the dividend stocks you are referring to includes the blue chips.

 

[Dividends Warrior]

In order to buy the dividend stocks and get the "rewards", one needs to know the type of dividend stocks to buy, the information of the companies or entities, the history or background and other relevant information or details, the timing to sell (such as due to certain announcements being made) etc.

I am still at the learning or beginner's stage and would probably venture no further than the blue chips (including in years to come).

So I presume the dividend stocks you are referring to includes the blue chips.

Yes. Blue chips form the core of my portfolio.

But I also have REITs to give my portfolio a yield boost too.

 

[Genesisz]

Yes. Blue chips form the core of my portfolio.

But I also have REITs to give my portfolio a yield boost too.

REITs are totally new to me.

I guess I need to look around and ask for guidance from you folks.

 

[Dividends Wizard]

whats your blog's link?

its the link below .

__________________
Visit my financial blog:
http://dividendswizard.blogspot.sg/

I get S$1,000+/mth dividends .

 

[jq75]

Bookmarked

 

[jq75]

Yup. Basically, you need more people to join as member so as to get income.

Will it ever go forever?

Perhaps.

Join member? Pyramid selling/membership?

 

[IronMac]

Yes. Blue chips form the core of my portfolio.

But I also have REITs to give my portfolio a yield boost too.

From the looks of it, REITs form the core of your portfolio.

You've grown a very substantial portfolio in only three years. Congrats.

 

[Dividends Warrior]

From the looks of it, REITs form the core of your portfolio.

You've grown a very substantial portfolio in only three years. Congrats.

Maybe I should not use the word "core".

"Foundation" is a better word.

My portfolio consists of 50% blue chips and 50% REITs.

 

[Genesisz]

Maybe I should not use the word "core".

"Foundation" is a better word.

My portfolio consists of 50% blue chips and 50% REITs.

I would do the same.

Most of what I am investing are blue chips and I am interested to go for the REITs as well at the appropriate timing.

 

[Penance]

DW r u prepared to hold mostly cash when u sense impending crisis ?

obvsly no sector will be spared when somethin big hits

jus wanted to hear ur opinion on this

 

[Dividends Warrior]

DW r u prepared to hold mostly cash when u sense impending crisis ?

obvsly no sector will be spared when somethin big hits

jus wanted to hear ur opinion on this

Basically, I will hold on to those stocks that survived the previous crisis well (telcos) and sell the rest.

By the way, I have a 50k warchest coming in 2014. So, that will increase my cash position significantly.

 

[Penance]

Basically, I will hold on to those stocks that survived the previous crisis well (telcos) and sell the rest.

By the way, I have a 50k warchest coming in 2014. So, that will increase my cash position significantly.

thanks

for someone who has ~100% cash holding, do u recommend that i wait for prices to come down ?

i hope to adopt ur style of investing