Passive income thread

[SBC]

SHHHH! DON'T TELL THEM. Rental income is subject to income tax*, but DON'T TELL THEM.

Many Song factors when collecting property rental. Haha

 

[Maeda_Toshiie]

for ILPs they also do charge annual account management fee as well at 1.7%?

When you buy an ILP, first off you have to pay a significant portion of your money to the salesperson (who sold it to you) and the insurance company, for the first few years. If there is an insurance component, another part of the money goes off to pay for the mortality charges. This can be followed by administrative charges, etc*. Only the remaining portion gets invested in the unit trust (who selected the fund? do you or the salesperson know how to choose? Hint: simply saying China, India, Tech, or whatever buzzword is not the right answer), subject to bid-ask spreads **. Unit trust funds typically charge 1+% per annum of management fee. In contrast, most passive index funds such as certain mutual funds offered in the US, or ETFs in remaining parts of the world tend to charge less, such as ~0.35% for the STI ETF, or 0.2% for IWDA. The higher fees of unit trusts can be justified if they beat market index returns, but most don't do so after fees. The other nice thing about passive index funds is that ETFs are subject to typical brokerage fees which are a far cry to the sales charges of unit trusts, or in the case of some large S&P index funds in the US, zero brokerage fees.


*Gotta pay all the middlemen.

**See how much money gets drained away before you invest?

 

[Maeda_Toshiie]

Many Song factors when collecting property rental. Haha

I get 3% annual dividends from STI ETF, and I don't even need to knock on doors to collect.

 

[NewInvestor]

Properties also have recurring charges like property tax, maintenance fee and others

Renting out properties, collecting rent and paying outgoings are pretty simple. Get a good agent, set up a system and it will be fuss free. I have done it for years. Finding tenants has been easy for me. It all depends on the location of your properties. The tenants renew their leases most of the time. It is common for a tenant to stay for 6 years or more.

In this climate in which people complain they can't find tenants - I don't understand cos I never had a problem. There are always ways to make your property attractive to them.

 

[NewInvestor]

I get 3% annual dividends from STI ETF, and I don't even need to knock on doors to collect.

What is there to knock? Rent is paid by GIRO and tenants are large multinationals. Lol.

 

[maple96]

Each passive income stream has its pros and cons, so long u are happy with it.

I am happy with my WL and endowment policies giving me 4-5% pa compounded returns todate. Just hold till maturity or surrender when the time is right

 

[existential_reality]

Same experience, assuming you have a decent property with facilities and a good agent (for me anyway). One of my tenants who was with me for 6 years even arranged contractor to replace a door that was damaged and I only needed to pay the bill.

Commercial ones my tenant ownself renovate and clear, I only had lousy tenant I had to chase money from and that wasn't too much work either. Note to self be wary of car dealers looking to rent lol

Renting out properties, collecting rent and paying outgoings are pretty simple. Get a good agent, set up a system and it will be fuss free. I have done it for years. Finding tenants has been easy for me. It all depends on the location of your properties. The tenants renew their leases most of the time. It is common for a tenant to stay for 6 years or more.

In this climate in which people complain they can't find tenants - I don't understand cos I never had a problem. There are always ways to make your property attractive to them.

 

[Maeda_Toshiie]

Renting out properties, collecting rent and paying outgoings are pretty simple. Get a good agent, set up a system and it will be fuss free. I have done it for years. Finding tenants has been easy for me. It all depends on the location of your properties. The tenants renew their leases most of the time. It is common for a tenant to stay for 6 years or more.

In this climate in which people complain they can't find tenants - I don't understand cos I never had a problem. There are always ways to make your property attractive to them.

YMMV. I have relatives who rent out and have their share of problems with tenants and ongoing maintenance issues. Furthermore, getting a steady stream tenants is often a function of location (location, location).

 

[limster]

Each passive income stream has its pros and cons, so long u are happy with it.

I am happy with my WL and endowment policies giving me 4-5% pa compounded returns todate. Just hold till maturity or surrender when the time is right

Its good that you are benefiting from the returns of your WL policy. Some people look down on WL policies. My view is that there are good and bad ones.

My WL policy (NTUC living policy) has also been generating 3.5%+ pa compounded returns for a long long time. The surrender value is always going up and the surrender value has never gone down. So its even better than a bond as there's 'free insurance' and also bond can go down in price.

Thats why I never understood why people would bother with a low return bond fund like A35

 

[limster]

I am one who look down on WL policies - too low return lah!
Also, insurance coverage too low and you like lost control of your money for 20 years (or so)!

Different investors have different target returns. Those that can stock pick will of course not be satisfied.

Myself, I'm ok with 3%+p.a. for a product that doesn't drop in value. It still beats the 2.5% interest that my CPF-OA funds are earning...

 

[lionsroar]

I am 22 yo and currently having a $2k gross pay and have about $4k liquid assets to invest. 11k in FD.. I plan to invest about $400 to $500 of my pay every month to accumulate wealth. I have small capital but I wish to invest early and start accumulating and compound my earnings. How can I do that? Is venturing into stocks a good option for me? Or etf is better? From what I gathered in this thread, more people mentioned about etf than stocks..

Sent from HUAWEI LYA-L29 using GAGT

If u are new to investing, i suggest u spend ur free time over the weekends reading up on stock investing books that can be borrowed from the library. Within 6months, u can gain knowledge to answer ur questions properly and know the pros cons of each method. Its much easily this way, compared to online forums where many info are contradictory

 

[Maeda_Toshiie]

If u are new to investing, i suggest u spend ur free time over the weekends reading up on stock investing books that can be borrowed from the library. Within 6months, u can gain knowledge to answer ur questions properly and know the pros cons of each method. Its much easily this way, compared to online forums where many info are contradictory

Let me put it this way: reading different books on stock investing will also result in receiving conflicting information about investing. If you have read a sufficiently wide range of books, you'd realized this.

Investing is not like programming in Python, where there is One True Way. Investing is like programming in Perl; there is more than one way in doing it.

 

[limster]

Let me put it this way: reading different books on stock investing will also result in receiving conflicting information about investing. If you have read a sufficiently wide range of books, you'd realized this.

Investing is not like programming in Python, where there is One True Way. Investing is like programming in Perl; there is more than one way in doing it.

Obviously not all sources are of equal quality. Some books, which never last past the 1st edition, are basically just one-off books to take advantage of whatever market fad is prevalent at the time. "Dow 40,000" anyone?

Then there are books are worthy of followups a 2nd or 3rd or more editions. These seem to have passed the 'test of time' by being worthy of a further edition or followup book.

(1) Random Walk Down Wall Street (14th edition) (the edition I have, he recommends holding REITs as part of investment portfolio, wonder if REITs are still recommended in the 14th ed. )
(2) Dividends Don't Lie, and the followup Dividends Still Don't Lie (if there are other dividend investing books that make it to a further edition, pls let me know, interested in borrowing from Library to read..)
(3) Millionaire Next Door (2nd edition)
(4) Capital ideas and the followup Capital Ideas Evolving.

 

[Geeezz]

Its good that you are benefiting from the returns of your WL policy. Some people look down on WL policies. My view is that there are good and bad ones.

My WL policy (NTUC living policy) has also been generating 3.5%+ pa compounded returns for a long long time. The surrender value is always going up and the surrender value has never gone down. So its even better than a bond as there's 'free insurance' and also bond can go down in price.

Thats why I never understood why people would bother with a low return bond fund like A35

of course the surrender value don’t go down, once the yearly bonuses are declared it will form the guaranteed portion. wl is fr coverage nt a replacement fr bonds, bonds still hv a role to play. wl returns are non guaranteed anyway n that’s a risk hence the higher return

 

[Kitaro9202]

Yep. I think all the banks (except cimb) will give terrible rate of 0.05% if u auto roll

Oversea bank got better interest rate

 

[chopra]

What whole lot of nonsense is that?!

When ETF buy and sell the shares they hold, they are also incurring trading commmissions! Then, they charge back to you via deducting from your ETF!

Not only that, ETF charge you annual management fees, to the tune of 0.3% to 1% (which you don't need to incur if you own individual stocks)!

If according to people here that you should buy and hold forever, and assuming you investment $1M in stocks (vs ETF), and both get return of 6% p.a. before ETF management fees, then after 30 years:

Future value from stocks (return p.a. = 6%) = $1 * (1+0.06)^30 = $5.7435M

Future value from ETF (return p.a. = 6%-1%) = $1 * (1+0.05)^30 = $4.3219M

Wow! Over a 30 years period you lost = $4.3219M - $5.7439M = $1.422 MILLIONS investing in ETF

es3 and iwda not so high ma

 

[bubbleteajanjee]

Obviously not all sources are of equal quality. Some books, which never last past the 1st edition, are basically just one-off books to take advantage of whatever market fad is prevalent at the time. "Dow 40,000" anyone?

Then there are books are worthy of followups a 2nd or 3rd or more editions. These seem to have passed the 'test of time' by being worthy of a further edition or followup book.

(1) Random Walk Down Wall Street (14th edition) (the edition I have, he recommends holding REITs as part of investment portfolio, wonder if REITs are still recommended in the 14th ed. )
(2) Dividends Don't Lie, and the followup Dividends Still Don't Lie (if there are other dividend investing books that make it to a further edition, pls let me know, interested in borrowing from Library to read..)
(3) Millionaire Next Door (2nd edition)
(4) Capital ideas and the followup Capital Ideas Evolving.

Thanks for sharing and this seems to be a great advise. Great to look at it every day!

 

[chopra]

es3 and iwda not so high ma

assume etf is ard 0.26% mgmt fee for es3. iwda is 0.2%, even lower.

1.03^30 = 2.42
1.0274^30 = 2.25

just 100k difference at 30th yr based on 1million injection at 0th year. and i get to invest in everything via IWDA.


wo pls ni la.

 

[tangent314]

When the factsheet of ETFs specify a Total Expense Ratio, this is inclusive of all expenses. "These costs consist primarily of management fees and additional expenses, such as trading fees, legal fees, auditor fees and other operational expenses."

https://www.investopedia.com/terms/t/ter.asp

So no, an accumulating fund will not 'detect from the ETF' for trading fees beyond the TER.

 

[Maeda_Toshiie]

When the factsheet of ETFs specify a Total Expense Ratio, this is inclusive of all expenses. "These costs consist primarily of management fees and additional expenses, such as trading fees, legal fees, auditor fees and other operational expenses."

https://www.investopedia.com/terms/t/ter.asp

So no, an accumulating fund will not 'detect from the ETF' for trading fees beyond the TER.

What is detect from the ETF? :thinking: