How To Achieve Your Toughest Financial Goals - $100K dividends is it achievable?

In the financial blogging space, many new bloggers set their financial goals as achieving their first 100K by the age of XX. This age is getting younger from 30 to 28 to even below 25. Many years back, I also set this similar goal and achieved it at the age of 28. 

Something miraculous happens when we start to set goals. When you set a goal, your brain first evaluates the goal and start to plan how to reach there. Somehow or another, you'll realise if you're focused on your goals, your subconscious mind will think of new ideas and strategies to achieve it. When I was a secondary 4 student about to take my O levels, the school sent us on a motivational camp in a spur to help us achieve better results. I was from a neighborhood school (which surprisingly is no longer there now due to school merger in a short 10+ years), my results were average and often failed in many of my subjects. The worse thing is while I failed some of my subjects, I sometimes could still be the top 5 in my class. That's how bad all my classmates results were too. 

I had low self confidence and didn't think I would achieve much in life, same for the friends around me who are all just happy with average results. We didn't even think if we would have a future. 

During the motivational camp, the instructor asked everyone what all of us want to do for our future. He specifically went round each one of us to ask what's our ambition. One by one, each of us shared what we wanted to do. There are people who say they want to be admin staff, teachers, security officers, police officers etc.. Each one of the ambition, he challenged us to aim higher. For example, when someone says he wants to be a security officer, then he'll say why not you aim to be a security supervisor. When it was my turn, I said I just want to be a technician. He looked at me and said, "why not an engineer?" This sentenced changed the way I think. It triggered a response in my brain to think higher. Eventually, I passed all my subjects and went on to be an engineer for 6 years. I may have been just a technician if not for that challenge. 

The key to success is opening up our minds to greater things. If you've watched Bling Empire on Netflix, you'll realise the 2nd generation kids, who have rich and successful parents, are also very good in earning money themselves. They have seen their parents make a lot of money and believed they too could make a lot of money themselves. On the contrary, a child from a poor family may be limited by their thinking as they see their parents struggling to make ends meets. They would think they can only make a limited amount of money in life. But, the good news is this can be changed by changing the way we think and conditioning our mind to see greater things. 

Failure is not when we set too high goals and can't achieve it but it is when we set too low goals and achieve it. This phrase changed the way I think into believing greater things. Setting higher goals can really propel us to reach it even if it seems impossible. 

How To Set Goals To Achieve What You Want?

1. Think about what you want to achieve

This first step may seem like common sense but it is critical as this is the stage you should open up your mind and imagine the impossible. There are many advise out there which recommend setting realistic goals but this will again limit our minds. 

If you want to set a goal to achieve $1 Million in your 40s, put this in your mind first and don't think about how it is impossible or how tough it is to achieve it. Just put in on paper first and start imagining the possibilities.

2. Make your mind believe it can happen

When you set a goal and make your mind believe it can happen, your subconscious mind will start to think of ways to achieve it. The best way to make your mind believe it can happen is to look at other real life people who have done it before. Source from the internet those who have become millionaires at a young age and this will make your mind believe it is possible as others have done it before. 

3. Set milestones to know you are on track

The next crucial step is to set in between milestones so that you can review every 3-5 years to see if you are on track. Setting a goal of 1 Million by your 40s can have $100K, $300K, $500K in your 20s, 30s as milestones. For example, you can set $100K by age 28, $300K by age 33, $500K by age 38 before hitting $1 Million in your 40s. This is just an example of financial goals setting but the same principle can be applied for any other personal goals which you can to achieve. If you want to be healthier, you can set a goal to lose 10kg in 5 years and achieve 2kg in year 2, 5kg in year 3, 7kg in year 4. 

4. Make it specific to visualise how it can be achieved

Achieving goals now lies in the details of the specific ways to achieve it. Let's go back to the example of achieving $1 Million in your 40s. You'll need to know exactly how much income, how much you need to save and invest to actually reach this target. Without this visualisation, you will not know what to do. If you look at my financial goals, I break it down into specifics of how much income I should be earning, how much I can spend, how much I should save and how much investment returns I should be getting. 

Once you write down the specifics, for example, earning $5K income, your subconscious mind will think of ways to achieve it and go along that path. In the midst of your journey, your mind will let you know which is realistic and which is not. For example, if you put an investment return of 15%, then along the way you may realise that it is not sustainable and focus on earning more income or controlling some spending instead which is more attainable. Your specific steps on how to achieve your goals will change along the way and that's ok because your end goal is still the same, just the strategy changed. 

Setting a goal of $100K annual dividends. Is it achievable?

I now have a dividend income target set for myself below. The dividend income goal should reach $60,000 per year, equivalent to $5000 per month when I reach the age of 50. If I continue working till my 60s, I would be able to achieve a more than $100K dividend income. Is this achievable? Yes it is as I've seen many people who have achieved it and I've also put it in a spreadsheet on how much I need to earn, how much I can spend and how much investment returns I need to get to achieve it. The dividend yield is based on 5% to achieve what I have set out below. 

Anything is possible as long as we set the goal to achieve it. It may be a long journey and many people will give up halfway. The one who persevere till the end will reap the rewards of achieving that goal. 

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Building a 5 figure dividend portfolio

7 years ago when I started this blog, I wrote about the start of my financial journey towards financial freedom. Being consistent is not easy, painstakingly building up my net worth and investing in boring stocks throughout the years. The financial goals I set for myself in my financial goals page were met surprisingly even without me actively tracking it. As I approach age 33 this year, I am thankful for all the knowledge I've learnt through other blogs, friends and learning while writing too. 

Back in 2013, I was inspired by financial bloggers who manage to have 5 and 6 figure dividends from stocks annually. While most people just save enough money for retirement in their old age and start to draw down their savings during their retirement years which can probably last about 10-20 years only, this group of bloggers were able to retire earlier with 6 figure ($100K+) annual dividend income which can last for a lifetime. I thought this was a good method to journey towards financial freedom. It is easy to visualise and plan for the future with dividend income method. After 7 years, I managed to finally achieve a 5 figure dividend portfolio from stocks although this is still many years away from the financial freedom target. 

While this 5 figure dividend income may seem like its a lot for many people, it is actually just a basic requirement for financial planning. Moving forward, I expect most of my savings to come from dividend income as expenses will take up almost all of my monthly net take home pay. I can imagine people who do not invest will have problems reaching their retirement goals in the future as inflation continues to kick in and cost of daily living goes up even higher.

My dividend income from stocks is projected to surpass $10K for the year 2021. This is done base on conservative estimates as most stocks have cut dividends starting from 2020. The dividends may come in higher if economic recovery happens this year and beyond. Let me share how is it possible to build a 5 figure dividend portfolio.

Build up your investment capital

When we first started out investing in stocks, the dividends from stocks will definitely be low. On a conservative basis, most investors should aim for around 5-6% dividend yield for your portfolio. Higher yield doesn't mean its always good as there is risk investing in high yield stocks too. 

With 5-6% dividend yield, a $100K portfolio will give you $5000-$6000 in dividends annually. To build up a 5 figure dividend portfolio, you need $200K and more. It is therefore important to set goals to build up a sizeable investment capital when you first start your financial freedom journey. This can be done through finding ways to increase your income, saving up more and investing in growth stocks to compound your money. 

At the start, my dividends from stocks was only $1K+. It steadily increased to $2K, $3K, $4K before hitting more than $10K. Dividends from stocks can only go up with more investment capital. This is why it is important to focus on building up a sizeable investment capital for dividend investing. 

Invest in good dividend stocks

After you have a sizeable investment capital, you can look to invest in good dividend stocks. Take note that a dividend portfolio is built up over the years and not when you have a lot of money then you start to invest in stocks. The reason is that when you have the money, stocks may be at high valuations and thus dividend yields may be lower too. It is important to invest consistently to build up our dividend portfolio as stocks valuations become depressed. 

Most investors looking to build a dividend portfolio will invest in REITs or business trusts. The more common ones are shopping malls, commercial offices and industrial buildings. REITs need to payout at least 90% of the rental they collect from tenants to shareholders. A good dividend stock should be able to grow distribution per unit (DPU) consistently. For REITs, they can do so through asset enhancement initiatives (AEI) or DPU accreditive acquisitions. REITs also grow their DPU is their rental reversion is positive. This means they are able to increase the rent charged to their tenants when renewal comes. REITs which have properties at good locations are able to command higher rents over the years. 

Besides REITs, we can also invest in other stocks too. Some big companies do pay good dividends too with growth potential also. Stocks such as Comfort Delgro and Jardine Cycle & Carriage are currently trading at low prices due to the COVID-19 pandemic. Comfort Delgro has dividend yield of 6.5% whil Jardine C&C has dividend yield of 5.5% based on their 2019 dividend payout. If we believe that their stock price and dividend will recover back to 2019 levels after the COVID-19 pandemic, then these are good opportunities to accumulate such stocks to have both good dividend yields and capital gains as well. 

Manage risks by diversifying

Some investors may not believe in diversifying into multiple stocks to manage risks for a dividend portfolio. For me, I would think this is important as without diversification, the dividend portfolio may be destroyed in future. 

There are some dividend stocks like Eagle Hospitality Trust and Lippo Mall Trust which had their value depressed to point of no return. These stocks were trading at impressive yields of 8-10% at a point in time. But their stock value decreased by more than 50%-80% which negated all the dividends collected for many years. Eagle Hospitality Trust was even halted. If we had heavily invested into the wrong dividend stocks, the dividend portfolio would be destroyed. 

We would want our dividend portfolio to be as stable and as sustainable as possible for the longest time possible. Ultimately, the dividend portfolio is suppose to supplement our income for financial independence and the end goal is to achieve financial freedom living on a substantial 5-6 figure dividend income for the rest of our life. 

Final words - Don't just focus on dividend investing only

While dividend investing is a slow and steady way to build wealth with about 5-6% yields, we should not focus on dividend investing only when we are younger and do not have a sizeable investment capital. We should also include a mixture of growth stocks in our portfolio to compound our money faster. With a combination of dividend and growth stocks, we should be able to aim for 8% or more investment returns on a sustainable basis. This will enable us to build wealth faster through investing. 

I have done many projection before and have proven that without investing, it is very hard for many of us to build wealth enough for retirement unless we earn an extremely high income of more than $10K per month and save enough of it. Investing is an important part of wealth building and so is increasing our income. With an extremely low income, it is also hard to accumulate enough for retirement even if we are very good in investing. We need to have a balance of both.

If you're looking to build a sustainable investment portfolio, patience is key and staying invested in the market will enable us to build wealth and compound it over the years. In this way, we will definitely have enough for retirement and even more for financial freedom. The journey towards financial freedom continues.... 

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Using Dividends To Boost Savings Goals For Financial Freedom

I've not been blogging for quite some time again. Pardon me for going missing as life gets busy with more projects at work, preparing for wedding, renovation for new house next year and the hustle and bustle of life. Sometimes I've not been able to sleep well and even during holidays my mind can't feel rested.

In view of the busyness of life, I've set a goal earlier this year to create more passive income instead of active income. I realised time is limited and its impossible for me to create any more active income. Despite not much time spent on stocks investing this year, dividends still come in regularly. This is passive income in the making. The good thing is dividends help to boost my savings quite significantly.

Financial planning for financial freedom can be complicated and a daunting task for many who look to get out of the rat race. When can I stop working? How much should I save? What ROI should I get for my investment? These are common questions which all of us have. In this post, let me share an easy way to visualise and make it easy for us to achieve financial freedom. I will show you how to determine what amount to save, how to use dividends to boost your savings and achieve the desired amount for financial freedom.

Determine the amount to save

The first step to financial freedom is to set a goal on how much to save. Financial freedom is having the money to sustain your desired lifestyle indefinitely without having to work. The most popular formula is the 4% rule which is a retirement study published in 1998 by three professors from Trinity University in Texas. The study found that 4% is the safe withdrawal rule for a portfolio of stocks to generate dividends indefinitely. This means having 4% dividends from your stocks is more sustainable than having say 7% or 8% dividends especially when we do not want to take on so much risk in our later years.

Based on this 4% rule, if you save up 25 times of your desired annual spending, the likelihood of you depleting your capital is very low. This means, if you desire to spend $40,000 annually (avg $3,333 per month) during your retirement years, you'll need to save up $1 Million dollars.

Summary of amount to save based on desired monthly income during retirement:

Monthly spending desired	Amount to save up
$2,000	$600,000
$2,500	$750,000
$3,000	$900,000
$3,500	$1,050,000
$4,000	$1,200,000
$4,500	$1,350,000
$5,000	$1,500,000
$5,500	$1,650,000
$6,000	$1,800,000

Work towards your target amount

The next step is to work towards your target amount. If you target to save $1 Million, you can use various ways to reach that target. The first step is to determine how much to save annually to reach $1 Million by certain years. Assuming we want to save $1 Million in 20 years, how much do we need to save annually? Here's the answer:

$1 Million divided by 20 years = $50,000 annually

Now, saving $50,000 may be out of reach to many of us. If you earn $3,000 per month, your take home pay is $2,400. Even saving all of your salary without spending a single cent, you won't be able to save up $50,000 annually. Its time to re-strategise. 

In life, we must understand it is never a straight road. If we work backwards like this literally, we will be stressing ourselves too much at the start. When we are younger, naturally we will earn less money and thus its harder to have much savings. Nevertheless, it is still important to save up a significant sum of money when we are younger to let compounding takes it effect. 

Achieving $1 Million savings goal in 20 years with $4000/month income and $2800/month expenses

I have curated a possible scenario to achieve $1 Million savings goal in 20 years with still a decent amount of spending so as not to compromise our current lifestyle. You can adjust accordingly to your needs. 

The scenario is as below:

• Must have $200,000 savings to start off
• $4000 monthly salary
• 3.5 months bonus
• $2800 monthly expenses
• Invest 80% of savings with 4% dividends

The end result is a whole set of numbers below:

YR	Net worth	Monthly SAL	Annual SAL	Bonus	Total income	EXP	DIV	SAV	SAV+DIV	Div%
1	$200,000	$4,000	$38,400	$11,200	$49,600	$34,000	$6,400	$15,600	$22,000	4%
2	$215,600	$4,120	$39,552	$11,536	$51,088	$34,000	$6,899	$17,088	$23,987	4%
3	$239,587	$4,244	$40,739	$11,882	$52,621	$34,000	$7,667	$18,621	$26,287	4%
4	$265,875	$4,371	$41,961	$12,239	$54,199	$34,000	$8,508	$20,199	$28,707	4%
5	$294,582	$4,502	$43,220	$12,606	$55,825	$34,000	$9,427	$21,825	$31,252	4%
6	$325,834	$4,637	$44,516	$12,984	$57,500	$34,000	$10,427	$23,500	$33,927	4%
7	$359,760	$4,776	$45,852	$13,373	$59,225	$34,000	$11,512	$25,225	$36,737	4%
8	$396,498	$4,919	$47,227	$13,775	$61,002	$34,000	$12,688	$27,002	$39,690	4%
9	$436,187	$5,067	$48,644	$14,188	$62,832	$34,000	$13,958	$28,832	$42,790	4%
10	$478,977	$5,219	$50,103	$14,613	$64,717	$34,000	$15,327	$30,717	$46,044	4%
11	$525,021	$5,376	$51,606	$15,052	$66,658	$34,000	$16,801	$32,658	$49,459	4%
12	$574,480	$5,537	$53,155	$15,503	$68,658	$34,000	$18,383	$34,658	$53,041	4%
13	$627,522	$5,703	$54,749	$15,969	$70,718	$34,000	$20,081	$36,718	$56,798	4%
14	$684,320	$5,874	$56,392	$16,448	$72,839	$34,000	$21,898	$38,839	$60,738	4%
15	$745,057	$6,050	$58,083	$16,941	$75,024	$34,000	$23,842	$41,024	$64,866	4%
16	$809,924	$6,232	$59,826	$17,449	$77,275	$34,000	$25,918	$43,275	$69,193	4%
17	$879,116	$6,419	$61,621	$17,973	$79,593	$34,000	$28,132	$45,593	$73,725	4%
18	$952,842	$6,611	$63,469	$18,512	$81,981	$34,000	$30,491	$47,981	$78,472	4%
19	$1,031,314	$6,810	$65,373	$19,067	$84,441	$34,000	$33,002	$50,441	$83,443	4%
20	$1,114,757	$7,014	$67,335	$19,639	$86,974	$34,000	$35,672	$52,974	$88,646	4%
21	$1,203,403	$7,224	$69,355	$20,228	$89,583	$34,000	$38,509	$55,583	$94,092	4%
22	$1,297,495	$7,441	$71,435	$20,835	$92,271	$34,000	$41,520	$58,271	$99,790	4%
23	$1,397,285	$7,664	$73,578	$21,460	$95,039	$34,000	$44,713	$61,039	$105,752	4%
24	$1,503,037	$7,894	$75,786	$22,104	$97,890	$34,000	$48,097	$63,890	$111,987	4%
25	$1,615,024	$8,131	$78,059	$22,767	$100,827	$34,000	$51,681	$66,827	$118,507	4%
26	$1,733,531	$8,375	$80,401	$23,450	$103,851	$34,000	$55,473	$69,851	$125,324	4%
27	$1,858,856	$8,626	$82,813	$24,154	$106,967	$34,000	$59,483	$72,967	$132,450	4%
28	$1,991,306	$8,885	$85,297	$24,878	$110,176	$34,000	$63,722	$76,176	$139,898	4%
29	$2,131,204	$9,152	$87,856	$25,625	$113,481	$34,000	$68,199	$79,481	$147,680	4%

If you look at the above, $1 Million can be saved up in 19 years. $4,000 monthly salary with $2,800 monthly expenses and 4% dividends should be achievable for many people. Some of you may even earn more and can generate more dividends which you will be able to reach your target even earlier.

I would like to point out the significance of this scenario. If you look at the additional savings column, you will see that this person is able to save up quite a significant sum annually despite managing to save only 20% of salary at the beginning. Take note that for a $4000 monthly salary, the take home pay is only $3200 which is already factored in in the calculation. Spending $2800 out of the $3200 take home pay is quite a lot. However, adding on bonus and dividends generated from the initial savings of $200,000, this person still can save an impressive $22K annually.

Let's now dive deeper to the various components which makes this possible:

1. Having $200K savings
2. Earning at least $4000 monthly salary
3. How to invest to get at least 4% dividend yield

How to achieve $200K savings?

There are many articles out there which talks about $100K savings by age 28 or 30 etc. This is an important milestone as it will set the tone for your savings habit. The first $100K is always the toughest but after that it gets easier somehow. This is probably because we have already built a savings habit and also we earn more income and invest more after we achieve $100K so the money gets compounded faster. 

To save $200K, I would think give yourself 10 years which is to save $20,000 annually. Many of us will be able to achieve $200K in less than 10 years as we will also get returns from investment while we save up. 

Earning at least $4000 monthly salary

Besides saving hard, income is also an important component in this financial freedom journey. If your income is too low, it is going to be very tough and a huge sacrifice to save up any significant savings. This is the reality of life. Therefore, using the above scenario, it is recommended to aim for at least a $4000 salary as we progress in our career. This should also come with good bonus of about 3.5 months else you should aim for a higher monthly salary. 

If you can earn higher salary, its good for you as you can spend more than other people and still achieve the same goals. However, its always important to keep track of your spending as it can go overboard easily sometimes. 

How to invest to get at least 4% dividend yield?

Investing is the next part of the plan. I would say getting 4% dividend yield is not a difficult task. Its a matter of investing in the right stocks. For my own investing, I don't usually use very complicated methods. In essence, investing is about investing in a company at good price and seeing that it has potential to do well. Reading of annual reports is important to know what is going on and a basic understanding of the industry you are investing into is also critical.

To invest in companies at a good price, we can use several valuation methods such as Price to Earnings (PE) ratio, Price to Book (PB) ratio, discounted cash flow model, discounted dividend model etc. You can read more on valuation methods in a previous post I wrote here.

To know if a company is good and if it has potential to do well, we can ask the following questions:

• What is the business about?
• Is the business expanding?
• Is the industry the business is in doing well?
• Who are the management?
• Does the management have aligned interest with shareholders?
• Revenue & Net profit increasing?
• Cash Flow increasing?
• Gross profit & Net profit increasing?
• ROE increasing? (Management efficiency)
• Debt to equity ratio? (Financial strength)
• Dividends sustainable or growing?

Summary

To summarise, a financial freedom plan needs to be thought out carefully with the following steps:

1. Determine how much you need to save - 25 times of your desired monthly spending
2. Start saving - Work backwards to determine how much you should save annually
3. Earn a decent salary 
4. Target at least 4% dividend yield for your stocks investing

Visualisation is important to help us stay on track and also make any adjustment to our plan when necessary. Excel is a good tool to help visualise this plan. Save up $1 Million with the 4% rule and you can generate $3.3K+ per month out of this savings through dividends to achieve financial freedom. 

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Multiple Streams Of Income - Can It Be Done?

The fear of having not enough money or losing our job makes one think about how to create multiple streams of income. It has been a popular topic since many years ago in this uncertain world we live in. Just these few months, I've heard a few people got retrenched. This makes me wonder when will I be next?

However, when we are already so busy with our work, how do we even have more time to create more streams of income? Its quite impossible to take up another part time job or even do freelancing when time is so tight for everyone. So, how can we create more streams of income using the least amount of time and is this realistic? Let's take a look at how it can be done.


Dividends from Stocks as an Income Source

If you're thinking of whether dividends from stocks can possibly be a source of income, the answer is yes. There are real life examples of people who manage to create $10k or even $100k of dividends through stocks. A few of my financial blogger friends have already achieved that.

However, nothing comes easy. Through my conversations with some of these friends who have already done that, let me share what did I find out.


1) Save Save Save

The first step to creating dividends from stocks is to save up. Without any investment capital, there is no way we can get dividends. Maybe you think you can invest $1000 and get $10,000 easily. The reality is not the case.


2) Look out for opportunities when its gloomy

Many people make their first pot of gold when a crash happens. This greatly increases our investment capital which will be useful for dividend investing.

Many multi baggers are made during a market crash. This means we could make more than 100% return on our investment on a single stock. This kind of opportunity doesn't come all the time so take advantage of it when you see it. How to know which stock to buy? This brings me to the next point.


3) Learn how to value companies

Buying stocks at the right price is all about knowing how to value a company. How much is the company really worth?

There are many variations on how valuation can be done If you read it up on your own, most probably most beginners will get confused. The most basic form of valuation is the PE ratio. There is no one fixed number we should look at. A PE of 20 for one company compared to another company with PE of 10 doesn't mean much if we do not understand what is it about. The PE ratio is calculated by taking the Price (Stock Price) divided by the Earnings (Earnings per share) of the company. If the Earnings of the company drop sharply and price remains the same, PE ratio will be a very high number. Similarly, if stock price goes up a lot while earnings remain the same, the PE will be very high. As such, a low PE is generally better than a high PE.

One way to look at PE is to compare the PE of companies in the same industry. The company with lower PE is more attractively priced than another company with higher PE. Let's take for example 3 companies in the Telecommunication industry namely Singtel, M1 and Starhub. Here's their PE:

Singtel PE: 16.46
Starhub PE: 14.39
M1 PE: 13.12

If we just base on PE from the above, M1 seems to be most attractively priced. Does it mean we buy M1 straight away? The answer is no. Previously I wrote an article about how Starhub went wrong as an investment. It is a lesson that if we buy at the wrong price, the whole investment can suffer.

Valuation has a second part where we try to project the future PE. We have to ask ourselves if we buy M1 at current PE ratio, is it really attractive? The PE ratio is low now base on current price and earnings. If earnings of M1 drop further, the PE will shoot up again. Most of the time, the stock price will also drop to reflect a fairer PE ratio. Earning drop and price drop will re-balance back the PE.

Another scenario is where the PE is not that low now but we predict that earnings will go up. If earnings really go up, the PE will be lower thus making it more attractive. The most ideal scenario is where the PE is low now and we also predict that earnings will go up. Most of the time, the stock price will go up thereafter to reflect the valuation.

In summary, PE ratio is useful for valuing a company base on its price and earnings. A PE of 1 means the company is making a profit that is equal to its price. Let's say a company has $100,000 worth of stocks (investors money) and it made earnings of $100,000 that same year, its PE ratio is therefore 1. PE ratio can also be described as the number of years it takes for investors to get back their money.

There are many other valuation methods such as using the price to book ratio which is a valuation of a company's assets. Some investors use other models such as calculating the intrinsic value or looking at the cash or free cash flow. It will be confusing if we're not finance or accounting trained but all these can be learnt if we are really determined to do so.


4) Don't be fooled by high dividends

Getting dividends from stocks doesn't mean we just go for the stock which has the highest dividend yield. Since we are investing into these stocks to get a second source of income, we want the income to be stable as well.

When companies pay out dividends, they have to get the money from somewhere. If a company has a payout ratio of 100%, this is unsustainable in the long run. It is likely the company will reduce its dividends later on. A company who pays out 100% of its profits in dividends do not have money to continue growing and expanding.

Another thing to look at is whether the companies' profit will be stable? If profits are not stable, it is likely the dividends will be affected later too when earnings drop.


Other multiple streams of income

With limited time, it is honestly quite hard to create more sources of income. We can build websites, publish books, sell items, do freelance etc. But, all these take time and effort.

To me, I would think dividends from stocks is an achievable stream of income. The hard work is certainly needed at the start but as time goes by, we will get more and more familiar. We can buy a company and hold it for the long term while monitoring its financial results only once every quarter. If you realise, there are some very stable stocks which gives good dividends in Singapore. In that case, we don't even have to monitor much.

Take the first step to invest and create a second stream of income!

New to Dividend investing? These articles will get you started:

The Power Of Dividend Investing [Part 1]
The Power Of Dividend Investing [Part 2] - Choosing the right stocks for dividend investing

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