Sunday, 4 December 2016

Average monthly passive income goal of S$1,500

Back in Aug 2016, I wrote about our average monthly passive income hitting S$1,000 for the first time. However, I didn't think I could keep it up until the end of the year. But I realised the average monthly passive income figure for the past 3 months has been staying above S$1,000.

In fact, based on the projected & received dividend & interest income for Dec 2016, the figure should be above S$1,000 by the end of the month too. I don't show the progress of the growth in average monthly passive income on the blog but it's been a grind to increase it (even so slowly) over the year.

Dividend cuts and reductions continue to cause problems with this strategy. Given my shift in focus away from dividend stocks and to ETFs, the dividend yield of the investment portfolio will actually decline. For the dollar amount of dividend income received to increase, I have to inject large amounts of cash into the ETF portfolio every year.

In turn, my interest income suffers since I no longer have as much cash balances in the bank accounts. Which is making me realise that growing the average monthly passive income is perhaps my toughest investment goal. Comparatively, all I need to do to ensure our portfolio balances are increasing (even by a bit) is to ensure we keep our jobs every month. not get retrenched and don't spend everything.

There's no point in setting an aggressive average monthly passive income goal. It will result in me over-investing in the short-term instead of spreading the cash funds out over market cycles. Screws up the asset allocations as well. The key is consistency in ensuring that it is actually increasing every year and the sustainability of the dividends.
Hence, my next target is for the average monthly passive income to hit S$1,500. I would be interested to see how long it takes for me to achieve this S$500 jump. Doesn't look like much but it took me a number of years to reach S$1,000 in the first place. I'm hoping the rate of increase rises as I get more experienced with managing our portfolio and we maintain or increase our salary income.

There is something else I would like to say though. I have been getting criticisms on a number of points below:
  • Too conservative in my deployment of cash
  • Ineffective selection of dividend stocks and ETFs
  • Over reliance on the salary income
  • Expenses are too high relative to our salary income
  • Lack of experience with bull and bear market cycles
I agree with all of the above, hence my efforts to constantly tweak and improve my strategies. I have no idea what will and will not work in the long-term because does anyone know what's going to happen in the next 50 years? Things sure have changed much in the most unexpected ways in the past 50 years.

This is why it's called a journey to financial freedom/independence. We all have different starting points, skills, strengths and weaknesses. More importantly, we all have different financial and emotional support from our families and friends. Self-doubt is always present as we make our own mistakes and meet our own problems along the way.

But financial freedom/independence is not my only life goal. It's an important one though because it makes my other life goals more achievable. However, they are much more intangible and require a lot more work. Things like happiness, satisfaction, fulfillment etc that have no easy way to track, difficult to meet and always evolving. Aren't they worth striving for?

1 comment:

  1. Hi FS,

    Impressive passive cashflow! Look forward to your update.