One Major Benefit To A Passive Income Portfolio

By: ispeculatornew
Date posted: 06.02.2011 (5:00 am) | Write a Comment  (6 Comments)

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As we’ve discussed in the past, even though it’s possible to start a passive income portfolio with as little as $5000, there are many challenges to building a big enough portfolio to be able to live off of it. Of course, a dividend portfolio is one of many different ways to generate passive income but it is obviously my preferred way of doing things. There are many challenges of course in selecting the right stocks, putting enough aside, etc. It’s easy to become discouraged, especially when you start later on. That being said, if you keep your eyes on the prize, I think it’s very possible for almost anyone to achieve that goal.

Imagine How Things Would Be If You Had A Big Enough Portfolio From The Start?

It might seem unreal or impossible but in fact, imagine that by the age of 25 or 30 years old, you had been able to put your hands on a portfolio that generated enough passive income to live off of. I doubt you would have complained too much. You probably would have still worked but it might have been a different job, a different focus and you probably could have lived a different life. Maybe not but chances are that some things would have been different. You might be spending more time with your family, travelling, staying in shape, doing activities with your friends, etc. I’m also certain that because of all the reasons that help the rich get richer, it would have been easier for you to accumulate assets, etc.

One Extra Motivation…

While it’s obviously not possible to go back in time and give yourself a passive income portfolio, one thing that you can do and that you do have control over is building a big enough passive income portfolio for you to live off of but also big enough to keep up with inflation. If that is the case, you should be able to more or less keep the same amount throughout your retirement and leave that same portfolio to your kids, grandkids, etc. It might seem far away (it does for me), but I think it’s easy to imagine how life changing that could be and how much of an impact it could have on future generations. I’m not saying it’s easy to do (it’s not!) and maybe too many it’s not extra motivation, but to me it clearly is.

So I’m curious, does the thought of possibly giving away a passive income portfolio motivate you in any way? How would your life have been different if you’d had one from the start?

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  1. Comment by optionsdude — June 2, 2011 @ 7:49 am

    I can see where things might have been different. I might have looked into pursuing golf as a career. Am I motivated by passive income? You bet. Right now, though, I have family obligations and am trying to balance many aspects of life. I still think I am in a decent place though.

  2. Comment by Stephen — June 2, 2011 @ 12:08 pm

    I have no children, so it’s basically apres moi le deluge. 🙂 Actually, I have to make sure to leave the house and hopefully some assets to my cats, otherwise no one would take care of them. For better or worse they ended up with me, so I better make sure they will be taken care of after I’m gone.

    If I had the passive income portfolio at that age, I think I would have pursued a more interesting career.

  3. Comment by IntelligentSpeculator — June 3, 2011 @ 4:09 am

    @optionsdude – Golf hey? Did you have a decent shot? I guess the challenge was to determine the odds that you could make a decent living out of it.

    @Stephen – What kind of career?

  4. Comment by Stephen — June 4, 2011 @ 8:57 am

    I enjoy making things with my hands. I always wanted to be a potter. Hopefully by the time I reach retirement age I’m financially secure enough to get by with just a part time job and be able to diddle away with a potter’s wheel for my own enjoyment.

  5. Comment by Wil — January 9, 2012 @ 11:32 am

    I’ve got $6 million in Inheritance and during 2007, i implemented the dividend investing strategy and got around $200k (nett).

    It is easy to say we should only care about the dividends and not the drop of 40% in portfolio value. Seriously, how would you feel if you experience a sudden paper loss of $2.5million? Does the $200k income that year make up for the loss? You need 12yrs to recover 2.5mil.

    I can tell you the drop in 2008 and 2009 was damn scary. Lucky for me, I actually liquidated most of it and left $1.5mil in the stocks by June 2008. which promptly went down unde 750k.

    I broke even on my the 750k paper loss by investing most of my money back into equities from April 2009 onwards (buy in batch weekly till October 2009).

    Can you imagine I might still be sitting on paper loss if I had not pull out in time.

    It’s easy to say stick to the ride when u r working and ur portfolio might be 10yrs of ur annual salary. But can you imagine a portfolio that might take a lifetime to earn? Would the psychology be different?

  6. Comment by IS — January 15, 2012 @ 1:52 pm

    @Wil – I understand of course, I think it’s much easier said than done, but I still think that in the end, it’s much more about the income being stable than the “paper value”. I mean, if the markets drop by 15-20%… you are bound to lose big on paper almost no matter what but in most cases, that seems to revert at some point.

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