One day, during a church gathering-celebration, I brought my favorite bottle of wine to share. When Eddie tasted it, he laughed and called it Ribena and apple juice. It both embarrassed and tickled me so, so, so much.
In a good way.
When we were closer, back in the early 2010s, he shared stories about how he grew up so poor, he had to start working from a young age to support himself and the family. It was hard and hard, but it was what it was. Until he met his wife, they got married and kids, and he continued working.
Later, he started his own company in his 50s which I think is called ET (Eddie Tan) Marine Engineering. And it was fairly successful from the getgo from his previous networks.
He’s who I will call the cool uncle – often cool, steady, and ever ready to help and chat.
Unfortunately, from the busyness of life, we all had our own things going on, own struggles and wins, we drifted apart. I reached out a couple of times, but it seems like it was hard to breakthrough. Maybe it’s guilt, pride, busyness or just general awkwardness to broach and reconnect.
A shame, really.
Eddie passed away in 2021 amidst the pandemic. He fought a good fight against an aggressive cancer, and the Eddie I know, is a fighter. He doesn’t go down without a fight at all.
A reminder that one of the key benefits of the passive income lifestyle is to be less bogged down with busyness of life and work; freeing up time to spend time with projects, causes and people you care about. Or at least, have space for randomness and serendipity, which matters to me. I find that if I’m too busy chasing, I miss the random variance that brings spice and colors to my life.
Eddie, I miss you. Your laughters were one of the most disarmingly good. See you in heaven later.
PS: will be buying a bottle of Moscato later to sip on.
There are just so many ways to create streams of passive income, but my favorite way of passive income is still the good ‘ol dividend stock passive income.
Dividend stocks are public-listed company stocks that make regular distributions to their shareholders, usually in the form of cash payments.
How dividend-paying stocks work
their share price is X dollars
they pay a dividend per share you own
Example: Company ABC whose stocks pay out $0.25 per share, if you own 500 of their shares, you get paid $125. Usually dividends are paid twice a year (bi-annual) or four times a year (quarterly).
Beautifully simple passive income strategy
buy and accumulate dividend stocks
reinvest at least 50% of dividends
keep buying and accumulating dividend stocks
UNTIL your dividends per year are more than your living expenses
#1 problem of dividend stock investing
You need to have a big chunk of it to work (because the returns are 3-7%+ per year); so depends on how much you spend, you may need more. Say for example, if you spend $4000 a month, then if the returns of the dividend stock is 3% per year, the amount you need invested will be
($4000 x 12) / 3% = $1,600,000
No one has $1.6M lying around eh. It’d be nice, but most regular folks wont have that.
But if you only need $2000/month, that’d mean you “only” need $800,000, which is a lot more easy compared to $1.6M. Maybe you work part time to supplement the $2000/month, or you just spend much lesser.
4 ways to play the game if we dont have that big chunk of cash
Compounding interest works most magically with time, so the longer time you have, the more it can work its magic.
Example: Sally invests $1000/month for 30 years versus Adam who invests $2000/month for 15 years, will they yield the same amount? Assuming dividend yields are 5% and all dividends are reinvested:
After 30 years x $1000/month x 5% per year reinvested, Sally will have: $837,129.48
After 15 years x $2000/month x 5% per year reinvested, Adam will have: $543,779.80
Interesting right? It’s all compound interest magic…that runs on time. So invest as early as you can.
You can invest more by earning more, and one of the low hanging fruits are to negotiate for a higher salary. If you’re underpaid, it’s easier. Or look for what your competitors are paying in the industry, and switch.
If not, the other options are starting a side hustle:
quick money can be done by app-powered hustles such as Uber, Lyft, DoorDash and similar offerings
starting a blogging business is highly recommended, but man, it does take time (at least 12-24 months) and consistent action for it to yield good returns.
Save more / spend less
Saving more is doable when you have a lot of unnecessary spending already, such as if you’re already paying $3000 for monthly car installment, and then yes, you can either refinance or sell the car for a cheaper second hand options or take public transport.
This approach unfortunately do not work with individuals who have just enough.
Another method, is to look for higher yield dividend stocks
Instead of 3% return per year, can I get 6% per year? Or 10%?
If Sally invests:
After 30 years x $1000/month x 7% per year reinvested, Sally will have: $1,212,876.50
After 30 years x $1000/month x 10% per year reinvested, Sally will have: $2,171,321.10
Keep building more and more of that $100/month passive dividend income streams.
Yes, you can enjoy some of the dividends along the way (at least 50% of dividends should be reinvested, to grow your nest amount as well as counter inflation.
Keep going UNTIL you reach your passive dividend income goal.
My friends shared this article and I wanted to discuss this case study with you.
So according to the article, he earns $12500/month and he says:
he lives paycheck to paycheck as there are lots of things to pay for
when compared to his school mates, he’s doing well but in the tech industry, he’s at the lower end
he thinks most jobs are going to be the same: stressful and fast paced
thought about dying but dont want to be irresponsible for aging parents
What I will do if I am in his shoes earning $12500/month
I’m gonna put myself in his shoes and make some assumptions (I am NOT a psychologist) and this is based on what I’d do from a personal finance standpoint:
Hardcap spending to max $5000/month
He said that he lives paycheck to paycheck because of
rising cost of living eg food
I will revise all the expenses, and cut down aggressively.
If I live in a condo that takes a big chunk of my pay, I’ll downgrade. A HDB is fine. If I live by myself, co-living is not bad too.
If I have insurance that I dont need, I’ll cut back and downgrade
Medical expenses may need to be refinanced
If I eat out $2000/month, surely I can cut back to $1000/month?
I dont know the details, but that’s some rough idea.
The budget will be $5000 all in so that…
$7500/month to be invested into dividend paying stocks
dividend stocks pay 8% per year
reinvest every single dollar
In 5 short years, I will have $570,233.61. At 8% dividend yield, that’s $45,618.68 in dividends a year, or $3,800 a month of decent dividend passive income. I can live comfortably in a cheaper country such as Malaysia or live a bit more frugally in SG.
In 10 short-ish years, I will have $1,408,093.87. 8% per year is $112,647.51 which is $9,387.29. Based on hardcap $5000/month spending, I can retire on $6000/month and still have $3,387 “spare” to reinvest.
Note: it is likely when we stop working, we spend significantly lesser because we spend lesser on conveniences and transportation. Think about it.
Food in town hawker is about $8-10 a meal, with drinks; cafes around $20 and restaurants between $30-50. Watching a movie $15+. If we work part time or are retired, we’d likely be lessed stressed, which means less inclined to spend on conveniences like paying for food outside.
We may cook more at home.
Go for long walks or enjoy activities in an unrushed manner that doesn’t cost much.
We may even watch shows on computers.
We wont need to rush around in taxis or paying to rush food delivery.
I’m not saying to be a recluse when we retire, but I anticipate our costs just goes down significantly, and we may need less than we currently spend.
Burnout, stress and mental health
is stressed from the fast paced work and pressure
comparing to others down and up of him
Like I said earlier, I’m no psychologist or mental health therapist.
I’m also not going to say the cliche thing of “ah, you just gotta stop comparing” – it’s not so easy to stop that. It’s human nature.
I do think that he feels lost and that “it’d be like this forever”…because he doesnt have a personal finance and early retirement plan. That’s why , I’m pushing for you and me to do something that we can do:
save more (flat amount OR percentage) of income including bonuses
chuck all those into dividend passive income stocks
spend some dividends BUT reinvest most of those delicious dividends until your yearly dividends is significant enough to retire on
The reasons why I focus on this
Happiness not included in office/work
I dont assume that work or being in office will make me happy. If it does, great. But I assume work may never make me happy (who dies thinking of “I should have worked more…?” anyway). So I will not link happiness to work.
Optimize for dividend passive income
I assume happiness and contentment may be outside of work, so what I will need to do is to build a passive income portfolio that will pay me continuously, so I can choose to not work and instead, pursue projects and people that may be of interest to me.
Will it bring me happiness? I dont know. I can just explore and find out.
Regardless, once my dividends are more than my living expenses, I can then choose to work less, retire, change job or pursue other stuff that I may be interested in. Maybe draw, travel, marry, who knows? Maybe even when I’m financially independent and free, I’ll still be working, just that I’ll be more selective of the people and projects I want to be involved in and with much less stress.
The key here is I want you to take the steps to continue building streams and streams of passive dividend income from your salary. And reinvest all the dividends until the dividends are good enough for you to have more life options.
PS: dont consider or commit suicide, ever. That’s like choosing a permanent solution to a temporary problem…plus there’s so much things to do, places to go, people to visit…or even things to discover in life.
What do you think? Share you ideas in the comment below.
Most “regular” millionaires don’t drive supercars like Ferraris, Porches, Tesla and other performance cars.
What they do drive are
regular cars like Volvo, Toyota and Buick
4- or 5-year old used but reliable cars
The real question back is…why not?
Firstly, when you buy a new car, the value of the car depreciates 10-20% every year.
That could mean that by year 4, your car can be worth only 20% of what you paid for it the first time (80% capital loss or depreciation). So buying a car that is 4- or 5-year old, that could mean a 60-80%+ discount. Of course the used car needs to be reliable.
So instead of paying $100K for a brand new car, you may end up paying $20K for a 5-year old version of the same car.
Secondly, buying a reliable used car that is 80% discounted means that you can pay it off one-off or take a much smaller vehicle loan.
This means that you either pay zero or very minimal in car interest loan which translates to another layer of cost savings, like a powerful well-time 1-2 from a trained boxer.
Where does this lead you?
End up with more cash to invest
If you save up to 80% on the car price as well as interest on the loan, this allows you to invest more into investments that can appreciate in value as well as pay you a monthly or quarterly income. It’s a positive growth loop.
Conversely, the person who pays in full for a new car, takes a bigger car loan, and repeats it every 5 or so years – how much dividends and capital gains they can miss out? A LOT. This is exactly why
some get richer and the rich get richer* vs
middle class/poor get poorer
Simply by the consistent actions and decisions they make. Look, I dont want that to happen to you. I want you to be the one that can invest more and more into assets that make more money for you like the scenario in the asterisk*.
Step 1: main bank account receives all incoming money
Step 2: create digital savings account for one purpose – SAVINGS. No debit card to this account.
Step 3: every month when money from salary gets banked in, X amount goes into savings account.
Step 4: spend only from main account
I spend from main account only, and whatever is in savings account, I send majority if not all into income-generating-dividend stocks. Not only does my savings happen automatically, it is used mainly to grow my investment portfolio.
I thought everyone does this (because it’s second nature to me), and I realized that I’d been doing this intuitively/logically for years, but it’s not the most natural thing for everyone…because most people’s nature is to either
Spend all they have / can OR
They have too much bills and too little month
The 50% solution for problems #1 and #2
Problem #1: Spend all they have / can is more of an impulse problem
Problem #2: They have too much bills and too little month — can be a combination of impulse problem as well as not earning enough
I’m gonna write about dealing with impulse-buying.
Personally, I know that I am not very strong-willed, because I have finite energy. When I’m alert and well-rested, I’m super on the ball and I can make the best decisions….but conversely, I realize that I make really, really stupid decisions when I’m tired (such as end of the day) or when I have too much money (eg more than $1K in my bank account).
At the end of the day, my ability to eat healthily goes out the window. One tub of ice-cream? Sure, why not 2? Lol.
When I’ve $1K in my account, I get itchy and wanna spend. And once I’ve spent it, the next day, post-spending clarity sets in and I ask myself: why the fuck did I buy this rainbow sock?
I’ve too many examples where willpower is sexy but it doesnt work all the time. So I’d rather get willpower out of the way and make it a system. Make earning more money or investing more money automatic.
Then my approach will work for you ie automatic deduction into a hard-to-reach bank account. I make it even harder to squander that savings by immediately using the savings to buy income-generating dividend stock.
Well if I’m gonna use it, I’m gonna buy shit that makes me more money right.
Earning more is never wrong
Eemotional/brainless/impulse-buying is one thing, and I can circumvent that to an extent by auto-savings like above.
BUUUUUUUT 50% of the time, most of our money problems will be solved by simply earning more. In fact, let me take it one step higher:
Nothing, and I mean nothing, beats earning more – it just opens up more flexibility and choices be it in spending and investing.
I will write and share in a different post. Today, we’ll just talk about dealing with that monkey/lizard in our brain that just wanna spend and fuck.