Passive income thread

[lasnoblur]

Nice thread, read all the way from page 1.

Anybody investing in their health?

health is wealth.

please take care of your own body!

 

[starlight318]

Thanks for the enlightenment
Just curious what do most people use the passive income for ?
Spending ? Reinvest ? Keep in bank ?

For me I don't differentiate as well, inflows - outflows = funds i can invest.

 

[starlight318]

I guess you would need a very big capital in the first place to have a passive income that is enough to sustain or maintain your lifestyle you have when you were working

That's only if the passive income has to come from investment/stocks. 70% of my passive income comes from rental. To achieve the same amount I currently get from rental purely out of stocks my portfolio needs to more than triple its current size.

 

[RRGALS]

Passive income is a dream.. tried to venture into that by doing a small biz.. but it's difficult to sustain. Haiz..

 

[Dividends Moderator]

Real Estate Justify

Nice to see folks revealing passive income stream(s).

Real estate seems to be vibrant especially Chinese FDIs flowing in - giving life to GST carrots for awhile..

 

[mummy1234]

Having 2 fully paid up properties is my strategy and I managed that by property investment in Sg.
Rent out Sg condo S$2700 per mth plus 2x ERS hopefully in future which is about S$4000 per mth.
Stay in JB semid with S$6k per mth after minusing property tax and maintainence. For a couple when we r 65 years old.
If semiretire now in JB also can.

But hubby and I have good jobs now and kids r studying still so stay in Sg and save more better.

Need to build up warchest to buy good bluechips when crash comes.

 

[Toni90]

That's only if the passive income has to come from investment/stocks. 70% of my passive income comes from rental. To achieve the same amount I currently get from rental purely out of stocks my portfolio needs to more than triple its current size.

Are you sure or not? what is your rental house price? more than triple the stock portfolio?

 

[BBCWatcher]

I have no objection whatsoever to those people who wish to pay the big stamp duties, property taxes, and income tax on rental income. You go do that, lots of it, and the more the better. That’ll keep my tax bills lower and support lots of wonderful government-provided goods and services that I’ll enjoy....

....And if the government wants to raise real estate taxes some more, that’s fine with me, too.

 

[mummy1234]

I have no objection whatsoever to those people who wish to pay the big stamp duties, property taxes, and income tax on rental income. You go do that, lots of it, and the more the better. That’ll keep my tax bills lower and support lots of wonderful government-provided goods and services that I’ll enjoy....

....And if the government wants to raise real estate taxes some more, that’s fine with me, too.

The stamp duties and commission and taxes r peanuts compared to my capital appreciation profit of more than S$1 mil dollars in my 2 previous Sg properties. An EC and a freehold terrace. That enabled us to own without debt 2 freehold private properties in our 40s now. A freehold 3 bedder condo in Sg and a freehold semi d in JB. Both of which will outpace inflation in their capital appreciation too.

 

[BBCWatcher]

The stamp duties and commission and taxes r peanuts compared to my capital appreciation profit of more than S$1 mil dollars in my 2 previous Sg properties. An EC and a freehold terrace. That enabled us to own without debt 2 freehold private properties in our 40s now. A freehold 3 bedder condo in Sg and a freehold semi d in JB. Both of which will outpace inflation in their capital appreciation too.

There’s absolutely no guarantee “both of which will outpace inflation.” How do you know that? You don’t. That’s a mere hope which may or may not happen. And the rest I don’t find particularly impressive for a high income earner. High income earners should be able to amass some wealth, and there’s nothing special about (highly taxed, as it happens) real estate in wealth accumulation. Indeed, as a high income earner you paid your top marginal income tax rate on your taxable rental income. On behalf of other taxpayers, thank you very much, we appreciate your contributions.

 

[limster]

https://www.businesstimes.com.sg/companies-markets/will-reits-continue-to-return-10-a-year

I only found the 5 year figure so far...

Here's a 7 year chart from 2010-2017
credit: http://www.lionglobalinvestors.com

Unfortunately, these 2 data points show that REITs outperformed. Still waiting for the data that shows STI outperformed REITS. It must be out there somewhere! Just have to find the correct time period to prove that dividend investing is inferior!

Coincidentally i think my REIT allocation is about 20% (not sure, could be bigger % if REITs outperformed, or a lower % if REITS underperformed). Random Walk Down Wall Street's recommended portfolio also contains a REIT allocation of around that level!

I'll go and count my dividends while waiting for the data to appear!

 

[mummy1234]

There’s absolutely no guarantee “both of which will outpace inflation.” How do you know that? You don’t. That’s a mere hope which may or may not happen. And the rest I don’t find particularly impressive for a high income earner. High income earners should be able to amass some wealth, and there’s nothing special about (highly taxed, as it happens) real estate in wealth accumulation. Indeed, as a high income earner you paid your top marginal income tax rate on your taxable rental income. On behalf of other taxpayers, thank you very much, we appreciate your contributions.

On the contrary, I pay very little tax due to Working Mother Child Relief as I have 2 kids. And had free S$10k to offset my income tax too. I also work only parttime so not that high income with an underemployed hubby too.

Though that has changed. Today is the start of my fulltime work so will top up my SA and maybe contribute to SRS to lower my tax.

I am confident with Population White Paper of 6.9 mil in tiny Sg, property prices esp freehold will definitely appreciate. I bought my condo at about S$1100psf and new surrounding leasehold projects r selling at S$1800psf average. How not to appreciate?

And the JB house also appreciated valued at rm1.5 mil when I bought it at rm950k.

In fact , I am thinking of buying other properties in developing countries with good rental yield. Either that or Reits.

 

[BBCWatcher]

Unfortunately, these 2 data points show that REITs outperformed.

Did you read the caption on that chart? The comparison is between:

1. 50% Singapore equities, 50% Singapore dollar bonds, and
2. 20% REITs, 40% equities, and 40% bonds.

Portfolio #2 is 60% equities — a REIT is one type of equity, and some of the STI stocks are REITs — and 40% bonds. So, guess what? If you raise the percentage of equities you increase total long-term real returns net of all costs. But we already knew that. This is not surprising information.

If you want to decide whether REITs have had (past tense; the past does not necessarily predict the future) higher returns than other types of equities in Singapore, then you’d compare total long-term real returns net of all costs for these two portfolios:

1. 100% Singapore REITs
2. 100% non-REIT STI stocks

So what do those numbers look like? Has anyone done that?

 

[BBCWatcher]

On the contrary, I pay very little tax due to Working Mother Child Relief as I have 2 kids. And had free S$10k to offset my income tax too. I also work only parttime so not that high income with an underemployed hubby too.

You have discussed and characterized your income figures previously, and they are well above Singapore’s median. You are a highly compensated individual according to your past representations. And that’s a complement, not a criticism! Congratulations!

Highly compensated individuals should be able to maintain an income surplus above day to day consumption, and that means a relatively high or higher savings rate. There are certainly many individuals who don’t do that, but you have. Congratulations again!

 

[mummy1234]

You have discussed and characterized your income figures previously, and they are well above Singapore’s median. You are a highly compensated individual according to your past representations. And that’s a complement, not a criticism! Congratulations!

Highly compensated individuals should be able to maintain an income surplus above day to day consumption, and that means a relatively high or higher savings rate. There are certainly many individuals who don’t do that, but you have. Congratulations again!

Thanks very much but sadly I had no savings from my income last year when I worked less. Only earned S$91k last year. I spend a lot.

That is why took up fulltime work now. Hopefully can save more with higher earnings. Basic S$15k with 43.5 hr work week. Can hit up to S$22k if I am good at selling vaccinations and health screening packages. Apparently some Drs can.

 

[limster]

Did you read the caption on that chart? The comparison is between:

1. 50% Singapore equities, 50% Singapore dollar bonds, and
2. 20% REITs, 40% equities, and 40% bonds.

Portfolio #2 is 60% equities — a REIT is one type of equity, and some of the STI stocks are REITs — and 40% bonds. So, guess what? If you raise the percentage of equities you increase total long-term real returns net of all costs. But we already knew that. This is not surprising information.

If you want to decide whether REITs have had (past tense; the past does not necessarily predict the future) higher returns than other types of equities in Singapore, then you’d compare total long-term real returns net of all costs for these two portfolios:

1. 100% Singapore REITs
2. 100% non-REIT STI stocks

So what do those numbers look like? Has anyone done that?

as a matter of maths, if adding reits to a portfolio increases return, then didn't REITs outperform?

the businesstimes link says on 5 year basis, REITs outperformed STI ETF.
haven't seen any that looks at a 10 year period.

 

[windwaver]

health is wealth.

please take care of your own body!

As much as we can do, we cannot fight aging. Instead, we need to embrace aging and accept the drop in quality of life as we become older; it'll just be worse as we age.

Passive income is a dream.. tried to venture into that by doing a small biz.. but it's difficult to sustain. Haiz..

Same with me buddy. Actually it isn't too tough as a small business but the problem always come when I try to scale up.

 

[BBCWatcher]

Thanks very much but sadly I had no savings from my income last year when I worked less.

That’s last year, not the last 20 years.

You’re having trouble accepting a complement, aren’t you?

as a matter of maths, if adding reits to a portfolio increases return, then didn't REITs outperform?
the businesstimes link says on 5 year basis, REITs outperformed STI ETF.
haven't seen any that looks at a 10 year period.

No, that’s not what the article says — or, if it does, it’s picking the wrong analysis.

A lot of people think “STI” and “REITs” are different. No, not really — or not as much as people think. The Straits Times Index (STI) includes 30 stocks listed and traded on the Singapore Stock Exchange. Several of those stocks are heavily involved in real estate and are either REITs or substantially REITs. So when you compare a 50-50 STI-bond portfolio to a 60-40 STI+REIT-bond portfolio, and when the STI is chock full of REITs (it is), all you’re really doing for the most part is figuring out that equities (including REITs) outperformed bonds. And this is not a surprising finding, especially over the historically low interest rate past decade we’ve just been through.

Yes, REITs are equities, too.

Anyway, the correct comparison for Singapore is to take a 100% portfolio of REITs (a basket of them) and compare it to a 100% portfolio of STI stocks with the real estate companies stripped out. So that would compare the past performance of real estate equities versus non-real estate equities. THAT would be a valid comparison if you’re trying to determine whether real estate companies outperformed non-real estate companies in the past.

 

[TabascoSauce]

That’s last year, not the last 20 years.

You’re having trouble accepting a complement, aren’t you?


No, that’s not what the article says — or, if it does, it’s picking the wrong analysis.

A lot of people think “STI” and “REITs” are different. No, not really — or not as much as people think. The Straits Times Index (STI) includes 30 stocks listed and traded on the Singapore Stock Exchange. Several of those stocks are heavily involved in real estate and are either REITs or substantially REITs. So when you compare a 50-50 STI-bond portfolio to a 60-40 STI+REIT-bond portfolio, and when the STI is chock full of REITs (it is), all you’re really doing for the most part is figuring out that equities (including REITs) outperformed bonds. And this is not a surprising finding, especially over the historically low interest rate past decade we’ve just been through.

Yes, REITs are equities, too.

Anyway, the correct comparison for Singapore is to take a 100% portfolio of REITs (a basket of them) and compare it to a 100% portfolio of STI stocks with the real estate companies stripped out. So that would compare the past performance of real estate equities versus non-real estate equities. THAT would be a valid comparison if you’re trying to determine whether real estate companies outperformed non-real estate companies in the past.

ur math is bad. give u a hypothetical example:

u have a portfolio with $100 STI ($40 REIT + $60 others) and $100 bond, and the return is 4%

and u have another portfolio with $100 STI ($40 REIT + $60 others), $100 bond and $50 REIT with return of 6%.

isnt it obvious it implies the return of REIT is higher in order to pull up the portfolio's return?

y do u need to do all the fanciful stuff like stripping out REIT?

 

[TabascoSauce]

70% is quite remarkable.

May i ask if you're married with kid(s) ?

no, im not married yet.