Extracted from a reader's email:
Hey there ak,
I was just wondering if your willing to answer some of my questions.
A little background, I'm 32 this year. Yet to marry, planning to.
I was always interested in trading, have tiny experience while working part time in a stock training center. Anyway, I seriously want to achieve financial freedom. And stumbling upon your blog was super!! And I want to be an income investor!!
Been reading up and giving myself till 2018 to start investing. There is still so much to learn. I'm still currently "know nothing" phase. Haha.. I do intend to take up the Dividend Machines course, but only can do do after I return to Singapore.
I don't have much cash. Since my wedding is around the corner. Most of it is tied up. So I decided to take up the POSB invest plan, 500 for the next 4 years. Should end up with 20k roughly. Which I intend to invest in 4 counters (by 2018).
My aim is to get 50k passive income. But from my calculation, (assumption on 2014 dpu) I need 800k. No idea what I'm doing wrong. Anyway, since I can't amass such an amount, I was planning to, POSB invest plan to 20k (withdraw full), invest in 4 counters by 2018. And start OCBC BCIP 1.2k per month for 4 years get roughly 70k, invest as per my plan (counters to have by 2022) and again start another OCBC BCIP to amass cash for investing. (800k will kill me le :( , sianz)
From your view point, do you think I should do this way? As in invest every few years? My concern is, this will take me very long to achieve my 50k target. Your advice please.
Thank so much for blog, it's in line with my goals. And I'm reading it everyday at work.
Fellow investor (to be),
Welcome to my blog and I am happy to read that you are inspired to invest for income. Investing for income does help to provide a sense of well-being and therein lies part of its attractiveness. :)
OK, firstly, if you are going to put money in the OCBC BCIP or the POSB Invest Saver Plan, you have to understand that these are with long term investors in mind. They are investments too but in a basket of stocks. So, what about the idea of taking out the money in 2018 to invest in specific stocks? Be warned that there is no guarantee that the stock market won't be lower than what it is today in 2018. The ETFs are not meant to be places where we keep our war chests. They are investments.
I would suggest that you continue to spend time reading up and also to concentrate on your career move and your upcoming wedding for now. Congratulations, by the way. :)
Be frugal, save money and wait for opportunities to buy income producing stocks on the cheap. Hey, you could be buying the STI ETF on the cheap too. Of course, you could start nibbling at some stocks in the meantime. It is important to remember that there is really no rush. The stock market will always be there. ;)
How to achieve $50K in passive income from investing in stocks? I think I blogged about this before many times in the past but not in recent times. There is really no magic. In summary:
1. Increase our earned income.
2. Do not increase our expenses beyond what is reasonable.
3. Save the rest and invest for income.
4. Save the income from investments and invest again.
We can make money in many ways. As long as they are legal and ethical, we want to think of seizing opportunities to make more money. People often upgrade their lifestyles as their incomes are upgraded. Be meticulous in distinguishing between consumption and investment. Yes, people often mix them up.
A reader told me that he hopes to achieve a third of what I have achieved by the time he is my age because his circumstances are different from mine. He wants to have children and his wife stays at home. This is an important thing to remember. Our circumstances are all different from one another's.
So, I remind readers not to be fixated with numbers.
The important thing is that their quality of life improves. The important thing is that they feel financially more secure, year after year. Investing for income will help to do this for them and it will do it for you too. :)
1. $1m in liquid assets or $120K in passive income?
2. To retire by 45, start with a plan.
3. Seven steps to passive income from the stock market.
4. OCBC Blue Chip Investment Plan.
5. POSB Invest Saver Account.