Like many other personal finance bloggers, I’m planning to rely solely on passive income in my early retirement. I expect this passive income to be derived mainly from dividends from stocks and bonds, as well as a little bit of interest from high interest-yielding bank accounts.
My goal is to generate passive income of between $30,000 to $33,000 a year (in Singapore dollars) when I eventually retire early at age 41. That’s about 14 years from now.
As such, I thought it would be interesting to chart my yearly progress towards this goal. This is my second passive income update.
Related Reading: What Was My Total Passive Income in 2018?
Sources of Passive Income – An Overview
As at end-2019, I enjoyed passive income from my holdings in:
- Singapore stock ETF.
- High dividend-yielding individual Singapore stocks.
- U.S. stock ETF.
- Singapore bond ETF.
- Cash; and
- Cash in high interest-yielding bank accounts.
- Retirement accounts.
In 2019, my passive income amounted to $4,280 from stocks, bonds and cash, excluding retirement accounts. Including retirement accounts, my passive income amounted to $5,646. All this is in Singapore dollars, and the breakdown has been provided below.
|Passive Income Source||Amount (S$)|
Dividend Income from Stocks
Singapore Stock ETF
The majority of my net worth is in Singapore’s stock ETF, as this was what I started investing in years ago. As of my net worth update in December 2019, I had $83,866 in Singapore’s stock ETF alone.
In 2019, I received a total of $2,592 from my holdings in the Singapore stock ETF.
Singapore High Dividend-Yielding Stocks
At end-December 2019, I had $8,583 in individual stocks in the Singapore market. I bought these stocks primarily because these are reputable blue-chip companies, which provide great dividends. These stocks provide dividends anywhere between one to four times a year.
In 2019, I received a total of $303 in dividend income from these stocks.
U.S. Stock ETF
When I first started investing, I was hesitant to invest in anything outside of the Singapore market, as I wasn’t sure of what I was doing. In 2019, I read up a little on international exposure, and decided that this had to change.
As such, I gathered some courage and now religiously invest about $1,200 a month in the U.S. stock market. At end-December 2019, I had US$8,726 invested in the Vanguard S&P 500 Index. This is about $12,391 in Singapore dollars.
In 2019, I received a total of US$52 in dividend income from this stock ETF. This amounts to about $74 in Singapore dollars.
Dividend Income from Bonds
At end-December 2019, I had $43,677 in bonds, consisting of only the Singapore Bond ETF.
In 2019, I received a total of $958 in dividend income from this bond ETF.
This has provided some much-needed diversification in my investment portfolio, as I realise that the general trend is as such – when stocks fall, bonds rise, and vice versa.
Interest Income from Cash
As at end-December 2019, I had about $33,146 in cash. Most of this cash has been stuffed away in high-yield bank accounts, and a small amount is held in foreign currency.
My cash balance fluctuates throughout the year. If the stock market goes down, I go on a buying frenzy, and buy a lot more than I usually would. If the stock market keeps trending upward, I simply continue with my regular monthly investment in the U.S. stock market.
In 2019, I received a total of $353 in interest income from my high-yield bank accounts.
Interest Income from Retirement Accounts
A portion of my monthly paychecks are mandatorily shuffled over to my various retirement accounts, much against my will.
In 2019, I received a total of $1,366 in interest income from my retirement accounts, courtesy of the Singapore government.
Note: I don’t consider interest income from retirement accounts as a significant part of my early retirement plan. This is because I have no control over the money, and would not be able to withdraw anything until traditional retirement age. As such, my early retirement plan will have to exclude any earnings from my retirement accounts. Nevertheless, it’s still fun to be able to track how much I get.
Progress on Passive Income Goals
Since I’m aiming for passive income of at least $30,000 a year, which excludes retirement accounts, my passive income of $4,280 from stocks, bonds and cash puts me at 14% completion of my goal. That means I have another 86% to go.
I’m pleasantly surprised to find that my passive income has increased so much in just 1 year. (In 2018, I enjoyed passive income of $1,360, which is only about 4.5% of my passive income goal.) This is a direct result of me overcoming my fears of the stock market, and investing huge chunks of my cash over the past year.
In 2019, I started investing in high dividend-yielding stocks, as well as getting international exposure in the U.S. market. This has significantly increased my passive dividend income. Although my interest income from cash decreased, I’m happy to see that I’ve made significant progress in the stock dividend department.
Where will I be going from here?
In 2020, I hope to divest most of my bonds and invest most of my cash into stock ETFs and dividend stocks, as this will form the bulk of my early retirement portfolio.
It would be nice to see my passive income (excluding retirement accounts) hit at least $7,000 to $8,000 in 2020. If I include passive income from retirement accounts, my passive income might reach five-figures soon. Hopefully.
In addition, I hope to be able to enjoy passive income from passion projects as well, such as this blog. I do know that it’s extremely difficult to do so, so I don’t have very high hopes for this. If I’m fortunate enough to enjoy passive income from these sources, I’ll be sure to keep you updated.
I hope you enjoyed this yearly passive income update, and thank you for reading.