Saturday, 16 February 2019

How To Use Passive Income So You Can Retire Without A Care

Photo from Bankingsense

I've been investing in property since 2013 and stocks/bonds since 2015, and I've found a way to generate around $40,000 Singaporean from equities.

I wrote about this in two parts: part 1 and part 2

This is only part of my passive income. I also have property: 3 houses, 10 apartments and something else I call my secret weapon. 

This I won't reveal today.

Thus, as you can imagine the passive income from the property side of the portfolio is decent as well.

It feels good not to rely 100% on the dictates of equity markets as I march into the latter stages of my 30s.

When I started out on this journey about 10 years ago, my plan was to retire by 40, but the way things are now, I feel 45 is more realistic. 

I'm happy with this actually as it gives me more time to shore things up and make sure all the pieces are in place for the next step.

Within the FIRE community a lot of people give property a thumbs down and say that REITS are the be all and end all for your portfolio.

I feel that you need both.

Having physical property and REITS adds diversity. Also, bricks and mortar, if purchased in a good area, appreciates in value considerably.

This is true of my properties so far. 

When I started out, I knew nothing about investing and the very word money was anathema to me.

I wrote about this in my story 1 and my story 2

The point of this blog is to show others that you don't have to be a genius to generate passive income.

However, you have to be committed to saving for a long period of time and invest your money aggressively.

Many people sit on the sidelines waiting for the next crash before they commit. 

This is foolish. 

Waiting for Armageddon means a big loss in passive income.

Why wait? Get in the game, but not all at once. Bit by bit; slow and steady wins the race.

Every six months I reinvest my equity dividends and let compounding do its thing.

I'm not interest in the daily mutterings online about this company or that CEO. In fact, I couldn't care less.

Just make sure you've invested in quality companies that aren't going to go pop in the next decade and free yourself from the incessant chattering.

All that speculating isn't good for your head. 

Why complicate life with trading, technical analysis etc. when you can spend your time learning a new skill, getting fit or reading fiction?

Of course, if you genuinely enjoy trading and technical analysis, then all the power to you. But really...?

I want people to invest while they are young, invest with a degree of clarity and invest for the long term.

This is a sure fire way to sleep easy at night and inch your way to early retirement.

You should avoid chasing ten-baggers and the next 'big thing'. Why bother?

Inject your hard earned cash into massive companies with proven track records and let them work for you.

Be super-careful not to pay too much for shares as well.

Paying a premium is dangerous. Keep a close eye on the price to book and don't get blinded by the dazzle of high yield.

I suppose most of this stuff is mindset.

How much pressure can you take before you crack?

Is a 30% swing enough to make you hit the sell button?

If it is, then you probably shouldn't be in the game. Go and out your money elsewhere.

See big swings as opportunities rather than the end of the world and invest like there's no tomorrow.

Be the aggressive one. Be aggressive safe in the knowledge that you are statistically going to win in the long run.

Don't let your judgement be muddied by short twitchiness. Stay in control. See the bigger picture.

Get in the property game young. 

Analyse your property investment the same way you would a stock.

Make sure you don't overpay. Make sure you generate passive income right away. Get the location right. Consult with people who know.

Anyway, I believe if you take the advice above you can boost your chances of retiring young.

Maybe your have tried all of these things and it didn't work out for you. If that's the case, tweak your system and try again. You'll get there.

Good luck folks.