Validation: Income Investing Idea from Smart Passive Income Podcast #174



I was listening to Pat Flynn's podcast, and I was very happy to listen to episode #174 on how to invest on the episode with Ryan Morgan (listen to the podcast here: http://www.smartpassiveincome.com/how-to-invest-passive-income-from-business) that what he does is essentially the same as my ideas and where I'm going - looking at investing and reinvesting my income yields back into these income investing such that by 20 - 30 years time, the dividends will be massive and provide me good passive income.

Since january 2015, I've been researching and looking deep into the area of income investing, where I look for very safe and stable investments that provides ongoing dividends or rental over time - and interestingly, despite me finding evidence that it works - Warren Buffett has this to say about safe investing (he recommends index investing, which is an even more ultra-conservative-and-safe approach to income investing in equity.

My advice to the trustee couldn't be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S & P 500 index fund. (I suggest Vanguard's.) I believe the trust's long-term results from this policy will be superior to those attained by most investors - whether pension funds, institutions or individuals - who employ high-fee managers. From: http://www.marketwatch.com/story/warren-buffett-to-heirs-put-my-estate-in-index-funds-2014-03-13

So what I do is to take whatever budget alloted to me to invest, and to look for good and stable investments that has proven to provide stable and growing returns. These include:

  • dividend stocks especially in real estate investment trusts (REITs). Wikipedia defines REITs as:

    A real estate investment trust (REIT) is a company that owns, and in most cases, operates income-producing real estate. REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and even timberlands. See https://en.wikipedia.org/wiki/Real_estate_investment_trust

    My REITs and dividend stocks are estimated to nett me about 5 - 8% per annum, which is a much better return than having a physical property, and less work too.

  • I also started investing in overseas rental property - started with a single room unit in the city of Melbourne, and after tax, it nets me about 4% per annum rate of return.

Over time, dividends and rental will be reinvested into 2 general groups:

  • 50% to other Passive Income Investing
  • 50% to build/acquire other Passive Income Internet Businesses

This approach is slightly more aggressive, because my perspective is to create/acquire more and more active/passive recurring income internet businesses that will accelerate my passive income portfolio....BUT I am not THAT aggressive to put 100% returns into passive income internet businesses.

It is more sustainable and scalable for me to put 50% and 50%.



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Nigel

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