Start your 5%+ dividend passive income journey

Most people’s eyes will glaze over when they ask me how to start building their 5% dividend portfolio, and I realize that sometimes, we overcomplicate things.

As usual, keeping things simple is still the best way. Here’s how I build my 5% dividend portfolio on a simple basis:

  1. Set aside 25-50% of my income for investing
  2. Go through my country’s index fund and look for all dividend paying companies that made it into the index list AND pays at least 5% dividends
  3. Shortlist these to the top 10
  4. Invest the set-aside 25-50% regularly (monthly, quarterly or half yearly)
  5. Collect and reinvest at least 50% of dividends

That’s it – dont overcomplicate it.

Passive income manifesto: Build streams of passive income on autopilot

I LOVE PASSIVE INCOME, but you know, passive income isn’t made automatic.

I mean, once you’d created the stream or the passive income portfolio, then the passive income comes automatically…but have you thought about

How to automatically create streams of passive income?

This is a couple of steps higher than just looking at the end result of passive income, and this is how I frame and structure my decisions such that it automatically creates more and more passive income for me.

Sounds complicated…but it’s really easier than you think.

Workflow and framework

You know, freewill is often touted, and it’s best applied when it comes to love and God, where God gives us full free will.

But when it comes to investing, I dont want too much free will involved because it can cause issues such as

  • overthinking
  • overdoing
  • not doing

And that’s why I prefer to not use freewill when it comes to creating streams of passive income. The easiest way for me, is to

Simplify, simplify…simplify

Every $1 that comes to me (be it $1, $100, $10K or more), there is a flow in terms of %.

  1. max 50%-75% to spend on living expenses
  2. min 25% to max 50% to invest into dividend stocks (or global index funds, whichever rocks your boat)
  3. reinvest at least 50% of dividends into dividend stocks

These are just 3 conditions I set myself, so whenever I get any forms of income, be it from consulting, management fees, treating patients, dividends, they are split into two groups #1 and #2 above.

Rinse and repeat.


#1 If I earn $5000/month.

That’d mean:

  1. at least $2500 to max $3750 goes into living expenses
  2. at least $1250 to max $2500 goes into dividend stocks

#2 If I get $1000 in dividends

  1. $500 goes into living expenses
  2. $500 goes into dividend stocks

That’s it.

I like to keep things simple.

LeanFIRE: A worthy goal for any man


I’ve been sharing FIRE and leanFIRE for years

FIRE meaning financial indepedencen, retire early….and it’s even more important today, in light of

  • COVID-19 that up-ended the entire world
  • Russian’s illegal invasion into Ukraine and terrorizing Europe and the world
  • China’s extended zero COVID policy (and not keen to bring in “western” vaccines)
  • the great resignation
  • how so many companies shrunk and terminated so many employees

If you have started your leanFIRE journey for at least 10+ years:

  1. you’d have an overall lowered and leaner lifestyle of lower expenses
  2. you’d have amassed an amount of cash-paying assets, be it dividend stocks, REITs, rental properties etc

which would help to make you a little more resilient towards these sudden world changes past couple of year.

Mathematical assumptions

Assuming you’d been living off $2K/month (so total $24K/year) and investing $2K/month (so also $24K/year) into dividend stocks.

Assuming the dividends are 6% per year, and you reinvest every single dividend dollar, by the end of 10 years, you’d have: $335,319.42

Your dividends of 6% of $335,319.42 from year 11 onwards will be $20,119.16. Divided by 12 months, that’d be $1,676.60 dividends a month.

That’s not bad, if you’re “only” spending $2K/month, because $1,676 is “only” 16% short.

Is 16% short okay, Nigel?

I take an optimistic approach, because frankly, you’d already have 84% of living expenses sorted out with your dividend income. The shortfall is around $330 bucks. A MONTH.

ANY part time job or side gigs can cover that short fall, because you’re very close to leanFIRE / coastFIRE.

So yes, 16% short isn’t too bad in my books.

So even if I lose my job, I know and am assured that 84% of my expenses are sorted, I just need a little part time work to cover that shortfall. If I still have a job, I’ll keep investing $2K/month and reinvesting the dividends for a good 3-5 years (up to a buffer of at least $3K/month in dividends).

$10 investments anyone can and MUST afford (Part 1)

I allocate 80% of my savings into stable passive income cash paying assets such as dividend stocks, but I allocate 20% to higher risk higher return stuff.

Many of these high-risk-high-return stuff can be affordable to speculate / invest in


I’ve been speculating into blockchain projects such as Bitcoin and Ethereum since 2017; and it can be very volatile. The nice thing about crypto is that you can buy in fractions.

For example, as of today, Ethereum is about USD $1,200 for an entire ETH, BUT you can own 0.01 of ETH at $12 as well, and slowly work your way up to buying more ETH over a period of time.

I use app as my main crypto platform because it’s so convenient when it’s on my phone. It takes time to register and for them to do KYC (know your customer) process, so register there as soon as you can.


I mentioned earlier that 80% of my savings are invested into passive income assets such as dividend stocks, and you can also purchase fractional stocks from your stock broker.

As I’m kinda lazy, I still use my traditional stock broker Lim & Tan =)

Domain names

This…is a painful area for me, because sometimes I want a specific domain name and someone has bought it and is squatting on it, and even trying to make me spend thousands of dollars for it. Do you know how much a domain name cost to buy?

If it’s from a standard registrar, you can buy one for about $10 bucks man…but a very popular wanted domain name, it can fetch a pretty penny.

How much?‘s $12M domain name purchase is an anomaly of course, but you can see how entrepreneurs and businesses can be willing to spend a good shiny penny on a good domain name.

Of course…you need to be good at picking potential buyable domain names, which can be hard. I use this platform to purchase my domain names.

How much is enough to retire (your leanFIRE or coastFIRE number)

CoastFIRE and leanFIRE are very different in nature, and I’ll cover them separately, and then you decide which camp you fall under.


This financial independence retire early approach takes a “leaner” way of lifestyle to save enough money and retire as soon as possible. Mostly, you will choose to live very, very minimally and save/invest the rest, and your retirement will be more frugal overall. This gets you to retire earlier than most (late 20s or 30s) BUT you trade-off with a smaller investment portfolio due to less time involved.

LeanFIRE approach may mean that the passive income from your portfolio may not allow you lavish lifestyle (so no expensive cars / holidays / spendings) ie retire earlier frugal lifestyle.

The average number to calculate leanFIRE is to take your annual expenses and multiply that by 25.

So if your monthly spend is $3000, then annually you spend $3000 x 12 = $36,000. 25x of this will be $900,000. Assuming you

  • save and invest $1,000 a month into 6% returns per year stable assets
  • reinvest that 6% every year

You can reach your target $900,000 in 28.5 years.

This is a common strategy for people who are wired to retire earlier and/or have overall lower spending expenses than  other households for example people who have no kids / single, senior citizens, living in tiny homes / vans etc.

LeanFIRE is generally about being willing to live simpler in retirement, and people who follow this approach usually try to live on less than $50,000 per year or lesser. They would be okay / willing to

  • move to a lower cost of living area
  • spend less on travel or experiences
  • cut back or simplify food and transport expenses


Financial independence, retiring early can be very tough for young people to save a large chunk of money upfront, especially when cost of living is higher now no matter where you go. LeanFIRE can take many, many years to achieve (even the example above is a good 28.5 years). CoastFIRE on the other hand, is another alternative.

The difference between coastFIRE and normal FIRE is that with normal, traditional fire, you have more than enough passive income from your passive income investments to cover your daily expenses. You’re “there”. CoastFIRE is more about the beginning or earlier journey of FIRE, and you focus on

Frontloading your coastFIRE number which will let you achieve FIRE in X years.

I gave an earlier coastFIRE example with Jake here.

The two top principles of coastFIRE are:

  1. you will still need to work to cover the basic living expenses BUT
  2. you no longer have to worry about saving money and investing for retirement

Because you frontload the coastFIRE investment amount as early as possible AND let compounded investment return work hard for you over a period of time (usually the time you choose to retire).

Example, say 25-year old Jane has saved $100,000 and wants to retire at 55. Assuming Jane doesn’t spend much, around $2,800 a month (total $33,600 per year) and Jane’s money grows at 6% per year, she will have $574,349.12 by 55. 6% of $574,349 is $34,460.94. Jane would have achieved her coastFIRE number at age 25.

If I’m 35 want coastFIRE and retire with $1 million at 65, and say I’ve $200,000 to invest. Assuming annual returns of 6%, with the 6% reinvested over 40 years, I would have achieved it

within 28 years, by then I’ll be 63 years old. 2 years early.

Thing about this coastFIRE approach is that I will still have to work to cover living expenses as my investment work its compounding over time, but I will be on point for retirement without needing to add any extra savings – this is what it means to

coast into retirement

Of course, knowing myself, I will want more buffer, so I will top up / add in additional monies over the years to grow the principle more, and this will lead to

  • shaving off the years to hit $1M but more importantly
  • I’d have a larger (and more defensive) amount above $1M for buffers

What I like about coastFIRE is that it takes a lot of mental stress away from the get-go, and I can choose to work simpler or less hours at my work, knowing and having confidence that I can retire at X amount and years which is working for me. This is the biggest benefit in my opinion. To add on to that, secondary benefits are less sacrifices upfront:

  • no longer have to be stressed by counting dollars for vacations or big spends or small spends
  • dont have to choosing higher yielding projects with a lot more stress or tolerate rubbish people at work
  • even if I lose my job, I can choose a simple low paying job to pay the daily expenses and I’ll “still be okay”

This allows me to enjoy the journey of life more.

Why financial independence or retire early at all?

Someone asked in a group chat just the other day when I was sharing about passive income, retiring early and financial independence, and my immediate response in my head was: why not?

Why not have passive income? Why not be able to retire early?

I dont get tired of speaking about this at all, and I’ve been sharing and saying this for years now, since 2009. Passive income is still relevant today, perhaps even moreso than ever before.


  • during 2020 – 2022 during the COVID lockdowns and fears and lots of job losses and changes
  • 2022’s Russian’s parasitic, invasive war of Ukraine
  • ?future

Passive income isn’t complex. It’s a necessity of life.

With so many different case uses and benefits, because everyone’s preferences and needs are different right? Me, I will work less and spend more time with family and pursuing / doing projects that matter to me including more time in and video making. Maybe hire personal trainers and nutritionists to improve my and family health.

For others it may be

  • retiring their partners or parents
  • spending time with sick or elderly parents
  • having (more) kids
  • being able to NOT put down their sick pets
  • travel the world
  • maybe move to another part of the world (vanlife, anyone?)
  • volunteer
  • finally have the mental bandwidth to meet people, date and maybe even marry
  • focus on your first love, be it acting, drawing, writing, baking – whatever

There’s so many more examples of what one can do with passive income and retiring earlier.

Surely there’s downsides to passive income?

Of course there’s some downsides, such as

  • maybe you’d start to have people sticking to you cos you have money (and they want money from you)
  • maybe you’d get bored
  • maybe…traveling and the beach was boring after all

Who knows? You then have the luxury of time to explore and find out what you dislike, what you like and want more of, which is still a net positive in my books.

And that what keeps me going and sharing this message again and again to those who will hear.

Rich rule #4: work your money hard

I dont believe in eating all my yearly profits and income. That’s like the apple farmer selling every single apple tree – it’d make more sense to sell the apples for money, and take the seeds of the best 20% of apples to plant better and better apple trees.


In the same vein, I take every dollar that I save from my businesses and investments as an employee, and as my employee, I have just one job for them: to work harder and harder for me to produce more money.

That $1 needs to either earn

  • $0.05
  • $0.15
  • or double to $1

every, single year, year in, year out.

Let’s relook at that again.

  • $1 making $0.05 = 5% returns
  • $1 making $0.15 = 15% returns
  • $1 doubling to $2 = 100% returns

At scale, say for example $100,000

  • 5% returns is $5,000 + original $100,000
  • 15% returns is $15,000 + original $100,000
  • 100% return is $100,000 + original $100,000

And I hadnt even touched on reinvesting the returns, which will make my mind go blurry mad with excitement.

Get your stuff to pay for your lifestyle???

Let me show you a typical example.

  1. John Doe, who earns $4000/month. He spends it all with some 5% savings, and he’s pretty happy of his progress. It’s not shabby, and he’s content. In a good month, he can save more, around 10%. In about 10 years, he’s socked away some $24,000.
  2. Jane Doe, who also earns $4000 a month. She decides to save a little more so she can invest 30% of her income every month into dividend stocks. She follows some of the tricks of the trade I share here in In 10 years, assuming the dividend stocks pay out average 7% per year and she reinvests every single dividend, she’d have $241,210.81. That’s already 10X of John. 7% per year on this means if she stops working, she’d continue to receive $16,884.7567 per year in dividend.

Which sounds sexier?

I dont know bout you, but I really really like #2’s approach better.

I can budget to spend at least 50% of my dividends on frivolous purchases, and reinvest the difference.

Maybe even take some of the dividends to start an online business.

The most important rule to get rich (simple but profound)

Holy grail of getting rich

This is one of the “holy grail” of wealth and financial growth, that is to pay yourself first.

Of course, paying yourself first isn’t about taking out money to splurge and spend on frivolities, but it means to FIRST carve out a percentage of your income every month to be invested FIRST.

In an earlier example, I shared how I do this:

  • 20% of income set aside for investing
  • of this 20%, 80% goes into stable cash paying dividend stock including REITs and 20% balance into higher-risk-higher-return stuff

This is to be done REGARDLESS of how much I spend or spent that much, be it overspending or underspending (frankly speaking, readers on my blog will more likely be underspending rather than overspending).

So month-in-month-out, my investment portfolio will keep growing, and I will follow the rule to not overspend so I can invest consistently every month.

Why this is important

…is simply because most people are broke because they dont do this.

What they do is to pay everything else first THEN they try to save and invest the balance.

They pay the electricity bills, water bills, the mortgage or loan, etc etc…and at the end of the month, they’re already out of money and funds, and what do they do with that last $247? They’re too tired to think clearly, so they spend it on treating themselves to a nice meal or a purchase.

Poof, there goes that month’s investment opportunity.

Why paying yourself first is vital

Firstly, I know myself. I work better as systems and habits, so I’d rather set a budget and invest first from the get-go, and work around the balance; rather than the opposite of paying all the bills first then hope that I’ve enough money and willpower to invest at month end. I wont lie to myself, I…tend to fail that way.

That’s why I rather:

  • exercise at the beginning of the day
  • wake up as early as I can
  • make all the hard decisions as early as possible
  • do all the hard stuff as early as possible

Because I know that at the end of the day/week/month, my willpower is weak and I’ll do shit to help myself.

Therefore, the most logical conclusion for myself is to pay myself first and invest at the first of the month rather than at the last of the month, and it’s a

Virtuous cycle

Converse to the vicious cycle of most people who pay everyone else first and try to save and invest the balance but fail at the end of the month and feel demotivated and stress, there’s a virtuous cycle of paying myself first and investing at the first of the month.

I feel like I’ve achieved more (which I have, by investing that 20%) that’s already working for me. That keeps me a little lean in my finances, and keeps me accountable to keep my money and funds in check…but I know that if I want to, I can spend the rest of the 80% because I’ve already invested.

So it’s guilt-free at this point.

This keeps me motivated and the momentum keeps me going =)

How much to invest in dividend stocks?

This can be fairly subjective, so I’ll tell you how I personally do it.

I carve out a percentage of all my income for investment, around 20%, and of this 20%:

  • 80% goes into stable, cash paying dividend stock (including real estate, business trusts and REITs)
  • 20% goes into higher-risk-higher-return stuff such as cryptocurrency and growth/tech stocks

So I dont wonder about a specific amount, but work on a percentage.

Say I earn $4000 a month; so 20% of this is $800; and 80% of $800 = $640 to invest into cash-paying investments per month. Then I can invest monthly or quarterly.

That’s it – no need for overthinking and overcomplicating things.