It is indeed nice (actually very nice) to have money coming in without having to work for it. Everyone dreams of it, but to achieve an adequate amount on a persistent basis is something else.
John D Rockefeller was quoted as saying "Do you know the only thing that gives me pleasure? It's to see my dividends coming in."
Although there are other things that can give me pleasure, I must say seeing my passive income growing ranks high on the list. Let me recount my passive income journey.
I got married 2 years after I started work. With both of us working, we managed to scrimp and save $100k within 4 years. All our bonuses went into it. At that time, interest rates from FDs were still decent at 4%. We were so pleased with the $4K interest earned that we volunteered to host the annual gathering for our extended families for that year. That was our first taste of "passive income". It felt good.
As our income and savings grew, we started buying blue chip stocks. It opened up a new world of passive income for us. As young and rather inexperienced investors, we were very cautious and bought only blue chips. We also dare not trade, what we bought we kept. After a further 5 years, we were getting close to $10k of dividends and interests (from FDs) combined. We were ecstatic. The $10k helped to pay our car road tax, insurance, parking, maintenance and petrol with enough left for short holidays to Malaysia.
Fast foward another 5 years, we switched most of our FDs into stocks encouraged by the steady dividends payout as well as the rapidly declining interest from FDs. We bought more dividend stocks. The dividend payout grew to $20K! That was more than enough to fund our vacation to Europe for a family of four.
5 years ago, our dividend income plateaued at around $40K (about 5% of our investments in stocks). We decided that it was time to diversify our investment to spread the risks, instead of pumping more into stocks. We bought an investment property for rental income. That added another $45K (gross rental income) to our passive income stream.
Today, together with the interest from our
CPF of about $25K, we got $110k pa total in passive income. And we used it to buy a new jap car!
When we reach 65, we should get another $28K from the Annuity Life payout.