If you are new to my blog, I strongly encourage you to read the following posts, for these will give you a little more background on my story:
My Story 1 My Story 2 My Story 3 My Story 4 My Story 5
Also, nestled in between these are a plethora of other posts - some good, others silly.
But sure, have a read and let me know what you think in the comment section below.
Now, on with the show.
With so many conflicting ideas out there about how to build a sizable passive income, I thought I would share with you how I have earned over $38,000 this year from dividends.
So how did I do it? There are numerous factors, but for starters, here are three:
1. Work like a person possessed!
Being the owner of a SME, I'm consumed by my project.
The company does OK, but as as anyone who has owned a business knows... it could, if unchecked, eat up every moment of your life, leaving you curled up in a ball in the corner of a room, gasping for air.
There's a fine line between the business good times and frazzling your brain.
Imagine for a moment:
(Gasping like a fish swiped from the tank, hugging the kitchen table leg, sobbing)
'15 hours in the office for seven days straight! What have I done with my life? Is there no end? Am I the only one? Poor me! My life is over!'
Business owners... ever been there?
Or, probably a better question to ask is... been there this month?
You know the story. Pushing projects to the max, researching, managing staff, overseeing marketing, dealing with international customers, doing HR etc. etc... this and that, this and that ad nauseum!
On top of this you have the pressure of balancing the books, paying wages, keeping staff and customers happy, and most importantly, not losing the plot and ending up being dragged of to a mental hospital by men in white suits holding syringes full of powerful sedative.
Yes, indeed, life can be tough for us SME types, but we wouldn't have it any other way.
Or would we?
When the good times roll, and the cash flows like a river close to its source, it all feels worth it.
So, what are you going to do with your cash?
2. Buy dividend paying equities
I remember back to 2015 when I worked like a madman and deposited my money in the bank. For my pleasure, the bank paid me a pitiful amount in return.
At this time, the idea of investing was something reserved for the super rich - not for me.
Why would I get involved in that game? Poor people bet on chicken fights, the rich stocks.
How wrong I was.
I remember having the conversation with my wife. I was sitting reading a classic novel, probably late Victorian. Thomas Hardy or something, I can't remember exactly.
'I think we should start learning how to make our money work, you know?'
'What do you mean ''work'' sure our money's fine sitting in the bank. At least we have it safe, and when we need it...'
'I just finished reading a good book. You should have a read after your done with that one.'
'What's the book called? It better not be about money. You know I hate reads like that.'
Like all good husbands, after a flash of evilness, I caved.
My wife sent me a PDF of Rich Dad Poor Dad (so sorry Robert) and I read it in two days.
After finishing the book, my mind was seized with ambiguity:
How could I have been so blind for so long? Had I really been so idiotic until 35? As a reasonably well read guy, how could I have missed ideas like this? Why had none of the hundreds of people I had met throughout my adult life not have mentioned things like this before?
Perhaps all the answers didn't live in the minds of Hemmingway, Joyce et al. after all...
Perhaps I'd been living in the dark.
This epiphany, this awakening, this light switching on moment propelled me into action, and I began reading widely about investing. I'll save these details for a future post though, for I want to stay on track.
In the early days, I listened to the Motley Fool (USA) podcast religiously. In particular I liked (and still do) Chris Hill's Motley Fool Money show. This podcast opened my eyes and showed me that investing could be fun when talked about in an articulate and succinct way.
Inspired, I began researching US ETFs. Subsequently, I bought a few. To date this was one of my biggest investing errors. Again, I will blog about this in 2019.
Next, in late 2018, galvanized by the words of Dividend Mantra I began to read about divided growth stocks and got hooked. What inspired me was an intense desire to build passive income.
What could be better as you get older than a growing a collection of paying equities that pay you regular dividends?
The main reason I got out of US ETFs was the 30% tax on dividends. After some research, I discovered that companies listed in the Singaporean stock market are blessed with 0% on dividends!
This piqued my interest and started a period of aggressive investing that still continues to this day.
The first dividend paying shares I bought were Singtel, Keppel Corporation and SATS. Soon after, I bought Keppel DC REIT.
Since then I've invested heavily in a wide range of dividend paying stocks from a many different sectors.
I realized I couldn't sit on the sidelines for ever and wait for the next big crash; I had to make up for lost time.
3. Reinvest Dividends
If you want a big dividend paying machine, you need to reinvest your dividends back into your portfolio. This can be done every quarter or so. For me, I reinvest when my dividends hit $10,000 in my account. I usually look for an existing counter out of favor by the market and pick up some value. This type of dollar cost averaging is useful over the long run, for trying to buy during a correction could leave you sitting watching while valuable dividends pass you by.
As Peter Lynch says...
'It's not timing the market. It's the time you're in the market.'
Words to live by folks.
So, there you have it for now. That's all for the first of this weeks blog posts. I'll write part 2 over the next few days as I'm off work and have time.
And, by the way, what has worked for me mightn't work for you. These words are for entertainment purposes only. Please do your own research and find your own way.
All the best and Happy New Year!
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