Passive income thread

[Thoreldan]

You are still not getting it. People should be focusing more on capital growth than passive income.

+1 to this.


why do you need passive income now when you're earning a salary from your job? Shouldn't you be accumulating now since most of you have like at least another 20 years to go before retirement?

 

[starlight318]

+1 to this.


why do you need passive income now when you're earning a salary from your job? Shouldn't you be accumulating now since most of you have like at least another 20 years to go before retirement?

It's for peace of mind knowing that you don't have to rely on your salary if you lose your job. Some kind of passive income is good while you continue to accumulate. After hitting a passive income that's enough for basic living expenses, one can then focus full force on capital growth.

 

[TabascoSauce]

+1 to this.


why do you need passive income now when you're earning a salary from your job? Shouldn't you be accumulating now since most of you have like at least another 20 years to go before retirement?

firstly, it takes time to build a large passive income portfolio.

secondly, a passive income stream that generate 4% in dividend (i.e., returns) vs a capital growth stocks that generate 4% growth in value (i.e., returns). why would you consider the latter as wealth accumulation but not the former?

jus bcos the mode of returns come with different payment schedule (periodic cash vs one-time cash out) dosnt mean they are different. the ultimate objective of both approaches is still to achieve certain financial goals.

 

[Thoreldan]

It's for peace of mind knowing that you don't have to rely on your salary if you lose your job. Some kind of passive income is good while you continue to accumulate. After hitting a passive income that's enough for basic living expenses, one can then focus full force on capital growth.

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

 

[Thoreldan]

firstly, it takes time to build a large passive income portfolio.

secondly, a passive income stream that generate 4% in dividend (i.e., returns) vs a capital growth stocks that generate 4% growth in value (i.e., returns). why would you consider the latter as wealth accumulation but not the former?

jus bcos the mode of returns come with different payment schedule (periodic cash vs one-time cash out) dosnt mean they are different. the ultimate objective of both approaches is still to achieve certain financial goals.

Thks..i start to see the 2 viewpoints.

Agree that you need substantial investment to see large passive income.

 

[TabascoSauce]

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

personally, i dont compartmentalise my spending based on the source of the income.

all the cash that comes in (be it salary, bonus, realised gains, interest, dividends, angbao money) will go into the same pool for spending or savings (savings also double as warchest for investment)

 

[Sinkie]

It's for peace of mind knowing that you don't have to rely on your salary if you lose your job. Some kind of passive income is good while you continue to accumulate. After hitting a passive income that's enough for basic living expenses, one can then focus full force on capital growth.

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

 

[tangent314]

If you are depending on your passive income for your expenses during the wealth accumulation phase of your life in preparation for retirement, then you are doing something wrong.

Your working salary needs to be higher than your expenses. Ideally your balances should be invested in accumulating funds but if you can't avoid owning funds that have some distributions, these distributions should be reinvested back instead of being used to fund a more expensive lifestyle.

 

[revhappy]

If you are depending on your passive income for your expenses during the wealth accumulation phase of your life in preparation for retirement, then you are doing something wrong.

Your working salary needs to be higher than your expenses. Ideally your balances should be invested in accumulating funds but if you can't avoid owning funds that have some distributions, these distributions should be reinvested back instead of being used to fund a more expensive lifestyle.

I think people who are lovers of passive income are those who like to see the steady cashflow, even though they may not use it. Like house rent for example. They like money hitting their account and then they call it war chest blah blah. But they like to see something similar to regular salary.

People who are proponents of capital growth don't mind the opaqness or lumpiness of portfolio growth. Like 3 years flat and 1 year 50% return. But passive guys prefer steady 5% every year. They don't understand that the steadiness costs them with inferior returns Vs lumpy superior returns.

 

[BBCWatcher]

I think people who are lovers of passive income are those who like to see the steady cashflow, even though they may not use it.

Yes, it's a psychological phenomenon. That doesn't mean it makes any financial sense. Indeed, that impulse is financially harmful to some extent (higher costs, lower total returns net of costs).

 

[TabascoSauce]

If you are depending on your passive income for your expenses during the wealth accumulation phase of your life in preparation for retirement, then you are doing something wrong.

Your working salary needs to be higher than your expenses. Ideally your balances should be invested in accumulating funds but if you can't avoid owning funds that have some distributions, these distributions should be reinvested back instead of being used to fund a more expensive lifestyle.

I don’t think anyone here mentioned that they depend on passive income for more expensive lifestyle.

I save 70% of my take home salary (exclude dividends/interest).

Dividend warrior, another prominant dividend investor here, spend way less than he earns as well.

 

[TabascoSauce]

I think people who are lovers of passive income are those who like to see the steady cashflow, even though they may not use it. Like house rent for example. They like money hitting their account and then they call it war chest blah blah. But they like to see something similar to regular salary.

People who are proponents of capital growth don't mind the opaqness or lumpiness of portfolio growth. Like 3 years flat and 1 year 50% return. But passive guys prefer steady 5% every year. They don't understand that the steadiness costs them with inferior returns Vs lumpy superior returns.

Investment is always risk vs return. That’s chapter one of investment 101.

But somehow in money mind, ppl onli see return.

 

[Thoreldan]

I don’t think anyone here mentioned that they depend on passive income for more expensive lifestyle.

I save 70% of my take home salary (exclude dividends/interest).

Dividend warrior, another prominant dividend investor here, spend way less than he earns as well.

70% is quite remarkable.

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

 

[limster]

People who are proponents of capital growth don't mind the opaqness or lumpiness of portfolio growth. Like 3 years flat and 1 year 50% return. But passive guys prefer steady 5% every year. They don't understand that the steadiness costs them with inferior returns Vs lumpy superior returns.

I'm sure all REIT investors are getting inferior returns year after year! Do you have any link to any study to show how badly Singapore REITs have underperformed vs the STI ETF over the last 10 years? Of course indices for REITs may have issue because of all the rights issues and how investors like to huat excess rights...

 

[revhappy]

I'm sure all REIT investors are getting inferior returns year after year! Do you have any link to any study to show how badly Singapore REITs have underperformed vs the STI ETF over the last 10 years? Of course indices for REITs may have issue because of all the rights issues and how investors like to huat excess rights...

You can see this link for 10 year annualised total returns for STI components.

https://sginvestors.io/sgx-mygatewa...d-return-amidst-10-years-of-global-challenges

For REITs I am trying to find the figures.

 

[lasnoblur]

I'm sure all REIT investors are getting inferior returns year after year! Do you have any link to any study to show how badly Singapore REITs have underperformed vs the STI ETF over the last 10 years? Of course indices for REITs may have issue because of all the rights issues and how investors like to huat excess rights...

if u hop on to the right reit, passive income returns are great. coupled with capital gains.
eg. mapletree family.

of cost, if you hop on to the right stock, capital gains are great too.

Thus, there is no 1 way fit all for investing.

 

[Toni90]

Last 10 years REIT higher return loh. That’s why all the dividend investor blogger left right bottom everywhere.

 

[limster]

You can see this link for 10 year annualised total returns for STI components.

https://sginvestors.io/sgx-mygatewa...d-return-amidst-10-years-of-global-challenges

For REITs I am trying to find the figures.

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

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

 

[limster]

if u hop on to the right reit, passive income returns are great. coupled with capital gains.
eg. mapletree family.

of cost, if you hop on to the right stock, capital gains are great too.

Thus, there is no 1 way fit all for investing.

thats very true, but some people think there is one right way of investing, but dividend investors keep an open mind! For example, most dividend investors don't say investing in IWDA is lousy...

I think you can use whatever strategy you want, as long as you are able to make money and can fund your retirement with your capital gains and/or dividends. Just be aware of the risks and that the risks match your risk profile.

 

[windwaver]

Nice thread, read all the way from page 1.

Anybody investing in their health?