I started serious Investing Journey in Jan 2000 to create wealth through long-term investing and short-term trading; but as from April 2013 my Journey in Investing has changed to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

Since 2017 after retiring from full-time job as employee; I am moving towards Investing Nirvana - Freehold Investment Income for Life investing strategy where 100% of investment income from portfolio investment is cashed out to support household expenses i.e. not a single cent of re-investing!

It is 57% (2017 to Aug 2022) to the Land of Investing Nirvana - Freehold Income for Life!


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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

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Saturday, 26 March 2011

Passive Income?

When we think of passive income; most commonly we will think of passive income coming from rental income from property and income from stock dividends.

For retail stock investors, such thinking of passive income coming from stock dividends may actually corner them into searching into REITs, Biz Trusts and other defensive counters that are known to pay consistent dividends. Since REITS and Biz Trusts are specially created for investors looking for stock dividends as passive income on regular basis e.g quarterly or semi-annually; probably it becomes the best place to look for high dividend yield. But, the best place may not be the most profitable place in the stock market in term of cash flow.

But, instead of thinking of regular passive income in our portfolio, we may want to change the idea of passive income into cash flow as income on yearly basis. In this case, it may open up more opportunities and not restricting yourself into REITs and Biz Trusts.

Try thinking of cash flow as income over yearly basis; the cash flow can come from realizing your gains from sales of stocks over a year. This cash flow may turn out to be as good as your regular passive income from stocks dividends.

At least, my experience is telling me so. To me, stock dividends is nothing more than just a safe net should I get it wrong. I don't purposely buy the stocks based its dividend yield.

Are you still in doubt? LOL

1 comment:

  1. Hi CW8888,
    If you bought REITS during the Bear Market, they can easily convert to cash-flow stocks when you are ready to sell them. Of course compare to other blue chips, others can give you more in terms of cash-flow when you are ready to sell them. But I think it's best to have both types in your portfolio because Reits usually continue to pay quite good dividends in a Bear market.

    ReplyDelete

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