Passive income (sleeping money)

Here we are talking about ways to make money work for you. 

On google, you can find many bloggers highlighting the top 10 ways for passive income, but most of the time, it’s the end game. “Big win”

I prefer to start accumulating “small win”. What steps can you take today to get passive income right away.

What can I proactively do today to get start?

Project #1: Dividend Stocks

• The idea with dividend stocks is that the company declares “dividends” at specific date and if you happen to hold the shares at that time, they PAY YOU MONEY. Cash flow in!

• See “How to get started?” to set up your “Direct/ Self-brokerage investing”

• Choose a solid company who increases and pay dividends year after year. (e.g.: Dividend aristocrat)

• Where is the money?

  • 1 unit of share cost around $100 CAD at that time

  • If you hold 1 unit of shares, the company would have paid you $5 CAD in total for holding it during that 1 year period, no matter if the initial purchase was $100 or $120.

    ·       In 1995, 1 unit of share cost $20. If you were lucky to be alive and financially smart at that time to purchase the share, the same 1 unit of share will give you $5 for holding it during the same period today. (Concept of effective yield)

• That’s the power of dividend stock! 

• The problem is you need more money to make more money. 

• e.g.: If you had $10k in 1995, and bought 500 shares of stock, it would give you today 500 * $5 = $2.5k dividends yearly

• The idea here is that you are getting started in your journey to become a wealthy man by getting paid outside of your job.

• $5 is $5 that your co-worker didn’t get from working harder. That $5 already put you ahead of anyone stuck in a 9-5 job and not doing anything about it in their lives. That’s the small win I was talking about. Make the money you worked for, work for you. 

Semi-active income:

• Rental properties: Buy multi-unit house -> rent rooms + rent basement -> collect rental income

  • If you hire a property manager, it’s almost “passive”. You still need to make sure everything run smoothly.