How to build $2500 monthly passive income?

Question

Assuming you have sufficient net worth, how will you build 2500 monthly passive income? What investments will you go into?

Joe Lee · Accepted Answer

I will structure the portfolio below.

1) SG Dividend stocks (Banks/Reits/Utilities) - 50%

- Just to ensure i have a stable cashflow going and SG market is one of the best market for dividend investing

- This will be in SGD which helps to hedge against my other overseas investment

2) China ETF - 20%

- Cannot missed out on the up & coming Chinese revolution, i feel that this are the key to the next decade of world economy growth

3) US ETF - 20%

- Tested & proven. A stable way to inject growth elements to the portfolio

4) Gold/BTC/Commodities - 10%

- Whichever instrucment that you feel more comfortable with to hedge against your equities

As a matter of fact, this is how I intend to structure my portfolio once I wanna retire/ FIRE. Currently more hands on at stock picking china/US stocks.

Hustler · Answer

Hi, to build a passive income, you basically need your money to work for you and putting them into stable investments is one good way to do. Currently, I have my money working through Robo-advisors by investing in equities (as it is shown historically that equities bring about the most gain over a period of time although the risk is higher). The rebalancing will help you to ensure that your investments are best invested with a peace of mind to generate the most income for the user. Based on my investments, if you’re able to earn a commendable 5-10% int on your investments per month, you’ll need around 25k-50k to earn 2.5k/mth.

I also do have my investments in crypto, stocks and commodities but they fluctuate more than my investments with Robo-advisors. If you’re willing to invest the time and effort, I suggest taking on the higher risk. If you want a more hands-off approach, I suggest doing your research on Endowus’s Fund Smart and picking your own funds to invest into. Some funds I’ve chosen has enabled me to earn 5-10%/mth. I gain more through commodity trading, shares and trading but that depends how shrewd my trades are too.

Randy Reinaldo · Answer

Assuming I have sufficient net worth is very strong assumption. i just bought treasury inflation protected securities and I can sleep very soundly (your assumption eliminate longevity risk i.e. I live longer than my net worth and I dont care about return % anymore. I just need to eliminate credit risk and inflation uncertainties in which TIPS provide those passive income that will go up with inflation and it is essentially risk free).

Tinexxxx · Answer

Robo-Advisors & Stocks picking!

Zac · Answer

This is just an opinion.

I would use managed spot FX trading accounts. The spot FX market is highly liquid and therein lies potential for income generation. The manager must however have strong safety principles and risk management strategies, since you need to protect capital at all cost.

Chris · Answer

It really depends on risk appetite, but for me, I'll be aiming for a part dividend, part options-selling portfolio in retirement probably, to collect consistent cashflow.

Assuming a 50/50 split between options selling and dividends, a realistic portfolio value to get to 2500/month would probably be about $500,000 - 600,000.​​​

Chujun Hong · Answer

Personally I would use a combination of equities and property rental income. The stocks must have a good track record of consistent dividend growth, not dividend yield.

Chris Chong · Answer

It really depends on what stage n life are you right now?What are your investable assets? What is your risk appetite?

Investment vehicles like CPF life (ERS), rental income,  dividends stock, eCommerce sales can be part of your consideration.

Presley Soh · Answer

Depending on your stage of life, appetite, and income, I would suggest FX trading as an option but you need to have a good strategy or find someone reliable to manage the funds for you. Alternatively, you can invest in stocks with constant growth.​​​

Gerald Ho · Answer

A mix of appreciating dividend stocks like starbucks, 3M, Johnsons & Johnsons and Apple, all these to ensure continued capital growth.

Then to make up the rest of the 2.5k, I'll look at a unit trust with a good track record of dividend yield.

Daz · Answer

That's 30k / year. Let's say your portfolio yields ~4%, which is realistic, you would need $750k invested.

For an income portfolio, I would try to go for a diversified combination of high yield and high growth dividend stocks. Singapore and HK stocks can earn a higher yield, while US stock dividends tend to grow faster (albeit with lower yield after you take the 30% dividend withholding tax).

You could supplement income by selling options, although that's high risk.

Lin Kian Wai · Answer

I will simply find a unit trust that is providing 7% dividends p.a to build up passive.

death benefit to cover the potential downside of things.

600000 fund should be looking at 42000 per year.

Kian Wai

91073980

Irfan · Answer

My Portfolio for dividend income:

Global Index-based UCITS ETF (30%):

A global etf, such as Vanguard FTS All-World UCITS ETF will be the core of your portfolio. As a global ETF, VWRD consists of Large and Mid-cap stocks from Developed and Emerging markets, weighted by market cap. This is a pretty well diversed ETF. Being a UCITS ETF, you would also save on the dividend withholding tax since this etf is domiciled in Ireland, 15% vs 30% if you had bought a US based ETF. You can get this ETF if your brokerage has access to the London Stock Market.

US S&P500 UCITS ETF (20%):

With this added to your portfolio, you are essentially overweighing your portfolio with US stocks. This is not a bad thing considering US has the largest market share in the overall stock markets. Again you should consider UCITS ETF like Vanguard S&P500 UCITS ETF (VUSD) because of the lesser dividend witholding tax vs if you had gotten something like SPY.

China ETF (20%):

A China ETF is a no brainer. China has one of the fastest growing stock market and alot of the major Large-cap companies like Alibaba and Tencent are there. You can get an ETF like the Vanguard Total China Index ETF (9169) from the HK stock exchange. This has a mix of A and H-shares.

Asian ETF(20%):

This one is a personal pick. For me I am going with the iShares MSCI Korea UCITS ETF (IDKO). This ETF has companies such as Samsung, LG and Hyundai in its portfolio. You can also go with another ETF like those from Japan or India if you so incline. Alternatively you can also consider an ASEAN ETF if you feel that there is potential growth in our home region. I would not recommend the STI ETF since its been stagnant for far too long with little to no growth. If you want to get some Singapore stock exposure, you can consider getting some individual stocks but I would not count that as part of the core portfolio.

NikkoAM SGD Investment Grade Corporate Bond ETF (10%):

This is the only SGD denominated ETF i can recommend. This should act as a sufficient hedge against a drop in the equities market. Even with STI went to crap, this fund has maintained its value.

Please note that these guidelines are not fixed and you can adjust the % to your personal preference. You can also have other forms of investment outside of your core portfolio like having some cryptocurrency and individual stocks. As usual, due diligence is required when investing and make sure to do your research to understand what you are putting money in.

Nathaniel · Answer

3 years ago, a colleague invested approx. $200K in a restaurant run by his friend - his share of annual dividends is now est. $80-$90K. Here's a guide on [starting a restaurant in SG](https://www.providecover.com/12-steps-on-how-to-start-a-restaurant-in-singapore-the-restaurateurs-guide/).

Steve Tan · Answer

What about option selling? Collecting premium on blue chips and index funds might be quite a low risk and profitable strategy

Lee Arjun Sasangan · Answer

Technically if have sufficient the ideal would be. Just purely have so much money in the bank that the 0.05% interest is $2500 a month then just slowly spend until inflation destroy me.

But personally, and on a realistic-ish outlook. Will have to be a mix of dividend paying stocks in different classes from apple to coke to dbs that kind. Then probably 1 rental collecting property. Then some in bonds. The allocation, will have to see how much the property costs, the interest rate of the bonds. Then the final part of the pie goes to the shares. I feel.

Teng Leong · Answer

You can build your passive income around these 2 forms: Guaranteed and Non-guaranteed Passive income.

Non-guaranteed passive income includes:

1. Capital gains from equities/ETFs/Unit trusts

2. Rental income (non-guaranteed because income dependent on tenants, and is rental is usually fixed on a contract basis only)

3. Dividend income from stocks or dividend funds (Dividend payout is based on company's discretion)

Guaranteed income includes:

1. CPF Life

2. Annuities

3. Bond coupons

4. Endowment products

5. Fixed Deposits

Indeed there are definitely various intruments to be invested in to achieve the rate of return you are expecting, according to the risks that you are willing to take. Of course, most of the time, guaranteed instruments gives lesser return than non-guaranteed ones.

But the more important question when trying to build your passive income portfolio is: What are you using the passive income for? By answering this question, you'd be able to better identify what proportion of guaranteed and non-guaranteed instruments you should be investing in.

Using $2,500/month of passive income for retirement as example:

Daily neccesties: $1,000

Insurance premium: $500

Lifestyle expenses: $1,000

As such, daily necessities and insurance are your "non-negotiable" expenses and should come from you GUARANTEED income. This way, you could make sure these expenses are paid for no matter what. As for your lifestyle expenses, these are considered variable expenses and could vary according to your non-guaranteed passive income: when the market's performing well, you deserve a nice steak dinner! If not performing too well, maybe you can make do with kopitiam caifan 😂

PS: i think this is a good way to answer the question because, anyone with sufficient net worth could just put ALL their money in a GUARANTEED instrument to give $2,500/month of passive income. They don't have to take any risks to receive this $2,500/month. For example, putting $3,000,000 in a fixed deposit that gives 1% per annum. Risk free, but we all know nobody's gonna do that 🧐​​​

Adam Wong · Answer

I would focus on markets which are tax friendly for dividends. For example, dividend income is tax free in Singapore and Hong Kong. The U.S. has a 30% withholding tax on dividends for foreigners, so I would avoid the U.S. for dividends, although it's great market for growth: https://youtu.be/ZV79AL8sI3k