Have you experienced the joy of having money almost literally dropping on your lap without any effort on your part? Neither have we, before discovering the joys of income producing assets.
It’s the whole premise behind popular books like Robert Kiyosaki’s Rich Dad, Poor Dad and Tony Robbin’s Money, Master the Game. You could read their books for the story and the entire mindset shift that comes with this type of investment (which makes for really good reading!), or you can just take it from us that this is the crux of the matter.
Just 2 weeks ago, we learnt that we earned a nifty dividend of $15,000 from one of our investments. That’s exactly what our 3 months of travelling at this point has cost us (without flight tickets).
Related: How Do You Reach FIRE 101
Unlike traditional work, we didn’t lift a finger to earn that. What did we do to earn that? Research the company, purchase some stocks and twiddle our thumbs (hardest part).
Related: Value Investing 101 – My Durian Purchase
The challenge with income producing assets is that it takes time to build up. You need a sizeable amount invested to get a sizeable return. To illustrate:
| Invested Amount | $1,500,000 | $1,000,000 | $500,000 | $100,000 |
| Scenario 1 | ||||
| STI div yield 4.2%* | $63,000 | $42,000 | $21,000 | $4,200 |
| Monthly passive income | $5,250 | $3,500 | $1,750 | $350 |
| Scenario 2 | ||||
| 5 highest-yielding REITs and business trusts div yield 7.1%* | $106,500 | $71,000 | $35,500 | $7,100 |
| Monthly passive income | $8,875 | $5,917 | $2,958 | $592 |
* Source: SBR
I’ll say it again. You need a sizeable amount working for you as you sleep to get sizeable returns. That isn’t said to deter you, but more to encourage you to start. We all start somewhere! I remember the first time I invested in shares and received a half-yearly dividend of $50. Not a large amount by any standards considering my investment but it was fun all the same to receive money quite as easily as that.
If you do some research, you will find loads of information on income producing assets and their pros and cons. You can truly be a master of your own mix based on your risk appetite and other factors. On our end, we’re very partial to more liquid and passive options when it comes to investments. Our investment portfolio is somewhat boring even in terms of types of income producing assets.
Related: What Will Our FIRE Portfolio Be?
Your choice of poison is entirely yours and so your pie can be sliced up very differently but don’t miss the train on income producing assets. I almost certainly would have if it wasn’t for Mr.C taking control of our finances and goals or I would have been suckered into “products” that are being sold with all kinds of fees built into it, taking my returns away from me. I had 2 streams of income pre-Mr.C’s life changing ways and that was rental income and my salary. Yeah, if I kept that up I probably wouldn’t be writing this post from Cusco, Peru right now.
Related: Taking Action on Expenses
Related: How We Reduced Our Insurance Premiums by 33%
Earning a salary alone is not going to be enough if you dream of clawing back some of the remaining working years to retirement to do as you please, as least not for the majority of us! Take that salary and supercharge it with smart investments. Add a turbo boost by increasing your savings rate and you are well on your way to sizeable investments and sizeable returns!
Have you watched our quick videos on Financial Independence and How to Build Wealth? Click on the links and have a look. Please also like and subscribe to our YouTube channel.
To follow us on our Great Adventure mini retirement, follow our Instagram. We also share and discuss many topics on our Twitter that sometimes don’t make it to our blog.
