What minimal size would a lump sum need to be in order to generate a stable passive income, and which investment venues/choices would be the best for it? - Seedly
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Passive Income

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Fox Mulder

Asked on 25 Sep 2020

What minimal size would a lump sum need to be in order to generate a stable passive income, and which investment venues/choices would be the best for it?

Passive income, investment strategy, stable monthly/yearly income

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Mr anonymous

Level 4. Prodigy

Answered on 28 Sep 2020

Will have to know your age! If you're younger, most would look for capital gains from the US market, be it stocks/ etfs (I'd recommend Ireland-domiciled etfs).

My personal strategy would be to look for capital gains first, and then when I'm older, divest and diversify more into income/dividend yielding stable companies. As 5% dividend yearly for maybe 200k is only 10k a year. Therefore I feel its better to look for capital gains earlier in life as we can stomach the volatility and we have time to compound!

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Fox Mulder

4w ago

Thank You!
Thank You!
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Jovan Lai

Jovan Lai

Level 6. Master

Answered on 27 Sep 2020

Hi! I personally would prefer dividend investing.

It depends on how much your are expecting in return! Note that dividends can fluctuate and can be quite cyclical. To have sustainable passive income, aiming a 3-4% dividend yield is fairly reasonable. If we are aiming for 3K per month, we need 36K a year. That requires us to have a 3.6% yield on a 1 Million dollars portfolio.

Not many have spare 1 Million lying around to get there. I don't, but I personally have similar financial goals to get to a point to have a sustainable passive income.

For dividends, Singapore is much better, we do not have to pay 30% tax like on US stocks. The companies, in general, in Singapore are more directed towards more stability, defensiveness and dividend payouts.

However, to reach that amount of money it will be very slow investing in the Singapore market. China and US provide much higher capital gains

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Fox Mulder

4w ago

Thank You!
Thank You!
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Assuming we are targeting to achieve passive income for retirement, a couple (age 65 and above) will need $2,351 monthly^. This means that you will need $28,212 yearly. Assuming a conservative yield on investment of 3%, you will require $940,400 in investment. The higher the yield of the instrument, the more you will be able to receive monthly/require less capital. However, this comes at an increased risk of losing some of your capital too.

^https://www.straitstimes.com/singapore/study-finds-1379-a-month-needed-to-meet-basic-living-standard-for-single-elderly#:~:text=SINGAPORE%20%2D%20For%20the%20first%20time,and%20above%20would%20need%20%242%2C351..

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Fox Mulder

26 Sep 2020

Thank You!
Mr anonymous

28 Sep 2020

Haha 3% for investment is a little too Conservative
Thank You!
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Daniel Kok

Daniel Kok

Level 6. Master

Answered on 25 Sep 2020

If you work backwards on a 4-5% dividend income, you'll be looking at $30,000 - $37,500 income for every $750k invested. there are quite a lot of options for dividend income, such as banks or reits.

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Fox Mulder

26 Sep 2020

Thank You!
Daniel Kok
Daniel Kok

26 Sep 2020

You’re most welcome!
Thank You!
Can you clarify
I wonder if
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