Passive Portfolio Income Investing

True passive income

Passive portfolio income investing is truly the “true-true” passive income, where we focus on accumulating assets* that pays us passive income in dividends or profits on a consistent basis without requiring me to work actively to earn more, other than balancing portfolio (optional) and adding more such as reinvesting returns.

*Assets refer to any businesses that pays us income passively.

Even if you love your work and business, it makes plain sense to have multiple streams of passive portfolio income that keeps your money working harder for you over time.

Safety net

Having these streams of passive portfolio income also works as a safety net for unforeseen circumstances such as

  • retrenchment or strong change in market forces (such as in the incidence of COVID-19 which displaced a lot of workers and businesses)
  • health issues that forces you to be unable to work
  • option to retire early or move country
  • etc

The minimum target?

Everyone’s number is different, as it depends on a number of factors, but generally I aim for my passive portfolio income to be able to

  1. pay for our living expenses and lifestyle, so you got to know how much you need to retire
  2. and have surplus to reinvest to counter inflation plus help the portfolio to grow even more

Compounding growth

By reinvesting the returns over time, you will compound your interest.

In simple terms, to compound interest simply means that the interest that you earn each year is added to your principal, so that the balance doesn’t grow at a linear rate – it grows at an increasing/exponential rate.

And to me, it’s a beautiful concept that helps tip the favor of interest to both your and my interest.

An illustration: if you place $1000 in an investment that provides you 5% returns per year, AND you don’t add a single cent to it AND leave the interest to roll on itself, this is what happens:

  • Year 01: $1000.00 x 1.05 = $1050.00
  • Year 02: $1050.00 x 1.05 = $1102.50
  • Year 03: $1102.50 x 1.05 = $1157.625
  • Year 04: $1157.63 x 1.05 = $1215.51
  • Year 05: $1215.51 x 1.05 = $1276.28
  • Year 10 after compound interest: $1628.89
  • Year 20 after compound interest: $2653.30
  • Year 50 after compound interest: $11467.40

You can see how it grows – without you needing to adding additional money – it compounds on itself.

To accelerate this process, I reinvest at least 20% of the returns AND add additional money on a yearly basis.

High risk required?

Heck no.

I can take risk in business ventures and maybe for some you, taking risk at work to get promotions and increment, but I’m much more cautious with my passive portfolio income investing.

It’s to counterbalance risk-taking and passive, so it’d need to be

  • low/no-risk and just needs to work over a period of time and that I can sleep
  • low/no-effort with no need for me to have active inputs or management

What do I invest in for my passive portfolio income investing?

Wealth management (roughly 7-9% returns per year)

Wealth management I started in 2021, as an experiment to “see how they can help me”, and if they are consistent with their returns I may sell all my dividend stocks portfolio for them to manage to take the load off me and make it even more passive for me. They have a fee of 1.25% per annum and the 7-9% is after fees.

Dividend stocks including index funds and REITs (roughly 4-6% returns per year)

Cryptocurrency staking (6.5-12%++ per year)

Cryptocurrency is of course, one of my favorite because of the high stable returns percentage-wise. I have a portion of staked USDC which is stable as it’s pegged to 1 USD per USDC, so it’s flat for that; but for cryptos such as Bitcoin (BTC), Ethereum (ETH) and others, the prices fluctuate on an hourly basis and can be quite volatile. For crypto, I have a dual-approach:

  • “doubling and take profit”: for speculations/investments that have acquired at least 2x, I will take profits into USDC (and eventually liquidate to fiat to purchase stable hard assets and/or place into wealth management)
  • let some selected cryptos to run its course after taking profits and continue to take profits

Rental properties to be considered later

I may consider purchasing rental properties in Singapore later, both residential and commercial, as it seems that there is constant demand even over 30-years+. The downside of this is that it needs more capital, but the upside is that you can leverage (ie borrow) from banks and financial institutions.

I am open to also purchasing properties outside of Singapore, as well as investing in Tiny Homes for rental.

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