I have been toying with this concept for the longest time but have always put it off and procrastinated. What happens if I manage to invest a large percentage of my monthly salary into REITs or dividend paying stocks and then reinvest the dividends that I receive? Will I become financially free within 10 years?
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Long-term investing to reach FF is to hold a portfolio of high dividend yield multi-baggers.
ReplyDeleteCan reits become multi-baggers?
Ouch!
ReplyDeleteRealistic sustainable average dividend is about 4-5% pa. Those higher may be possible to sustain but risks higher.
ReplyDeleteSo just do some project based on 4-5% and see if that is enough to retire in 10 years.
If inflation is low and you have large amount of money invested, then maybe.
If you assume $3,000 per month for a couple without children and a yield of 5%, then one would need $36,000 a year. Back-calculating, we get a portfolio size of $720,000. I think realistically, one would require at least a portfolio size of $750,000 to $1 million generating 5% per annum in passive income to be able to "retire" without active employment.
ReplyDeleteReits are good in term of income investing but when they need extra money, they will issue rights again and again.
ReplyDeletePersonally, though I owned reits, I slowly feel that dividend giving stock with consistent earning are much better and higher chance to gain more in term of capital gain and dividend.
However, if one has large sum of money, it might not be a bad idea to put in both kind of instruments.
CW,
ReplyDeleteCan. But it depends on when you get in. In 2009, I invested in Mapletree Logistics at 30.5c and am still holding on to it for a dividend of about 6c per annum.
If you check with AK, he will tell you that Suntec was at 50c in 2009 as well. MIIF was about 24c then.
Super high yield can't be found in REITs. If we can find them, there will be riots in the streets.
ReplyDeleteBelieve it or not? Look such lobang in the next Great Bear. Read?
High Dividend Yield Stocks? (10)