Sunday, April 5, 2009

3 Sources of Passive Income

Been seeing a lot of advertisements on the newspapers recently advertising how some people are willing to teach you how to make passive income by either joining their seminars and stuff. Well, I will just share mine openly since I believe that knowledge ought to be free for all.

In this post, I will be revealing the 3 sources of passive income that I hope to achieve by the end of this year. For this year, my goal is to achieve a passive income of $400 per month or $4800 per annum. I am looking to 3 areas/ sources to grow my passive income.

Source #1 - Dividends and Distributions from Stocks/REITs

This is currently my main source of passive income. I hope to achieve a minimum of $300 per month or $3600 per annum of passive income from dividends and distributions that I receive from both Singapore and US listed stocks.

Source #2 - Paid Advertisements on Blogs

I am currently relying on Google's Adsense to make some coffee money. It is peanuts really. Hope to achieve a stable $20 per month by the end of this year.

Source #3 - Writing Options

I have opened an OptionsXpress account. Basically, I hope to sell naked puts on fundamentally good stocks. Should the puts be exercised, I won't mind buying the stocks. If not, I will just be happy to make money from these puts. I hope to make this source of passive income operational by May 09.

There you go! My 3 sources of passive income. Feel free to comment or share your sources of passive income with me!

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  1. Hi FF

    I chanced upon ur blog by chance, and really enjoying reading it, and identify with what u r planning to achieve.

    Just to share, i've also got 3 passive source of income:

    1. Dividends / Interest Income. Similar to yours i guess, using REITs, high dividend yield stocks & high yield bond funds

    2. Trading income. I'm trading the US futures, started abt 3 months back, still finding my way. I was trading options before. I think ur strategy of writing naked puts is quite dangerous, maybe u could share how u r doing so far.

    3. Doing part time accounts for companies. I am not actively doing this now, cos it is quite time consuming, but this is my forte as I am an accounting grad.

  2. Hi,

    I am also an Options Writer.
    Writing Put Options is not risky if you know what you are doing. In fact, it is one of my main source of Passive Income for about 2 years already.

    Put it in simple terms, when you write a Put Option, you are selling "insurance" to the person owning the stock.

    As insurance company insure healthy people, we should also insure healthy stocks!

    As what FF mentioned, we are willing to buy the stocks at the strike price after analyzing its intrinsic value.

    And guess what happens if we are forced to exercise the stock? It is very simple for me, i will now sell the CALL, with strike price above what i bought.

    So no matter what, i will give premiums from the options every single month.

    Another comment - (no offence, i hope). I do not think that trading is a passive income. The time spent and the uncertainty does no warrant it to be classified as a passive income. Please advise me otherwise, but to me, trading is another job.

    Hope to hear from you,

  3. Thanks for visiting and giving all the really good comments!

    I really need to learn more from people like you all. Do drop by more often and act as my sounding board as sometimes, my thoughts that I write here might be unclear even to myself and it would be good to hear from another party.

  4. Hi FF,

    I agree with Weiming, trading is definitely not a source of passive income. You have to be actively trading to generate any income.

    Blog advertising seems to be difficult to generate a decent amount of income.

    I am considering property rental as a source for myself.

    Would you like to exchange blog links?

  5. Hi FF,

    How's your writing put options going? I want to learn how to do it too. Can you teach me?

  6. I am not writing at the moment. Don't have the platform to do so.

  7. Passive income is a lot of work. I know a few people out there that make it sound so easy. Passive income does take a lot of time and effort.


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