Wednesday, January 6, 2010

Making your investment into a passive income

In the past, I don’t like the idea of investment. Maybe I watch too many dramas that show how investment can make people bankrupt. My first investment is in unit trust whereby my insurance agent has spent a lot of time changing my mindset that proper investment will not make people bankrupt. Since then, I started to learn more about investment by myself.

Many investment instruments are targeting for capital gains only. Capital Gains basically mean the profit that you earn when the price of your investment instruments increase. This type of investment can never be a source of passive income. It is because if the price never goes up, you are not gaining any money.

There are other investment instruments that give out dividends which I am more interested in. Dividends are part of company profits which are paid out to its share holders. For good companies, dividends are paid out consistently every year. The dividends can be as high as 10% depending on your purchase price. Of course there will be risk in losing money when the investment instrument price drops. I like this type of investment instrument as it can be a source of passive income.

I have another blog call "My Investment Portfolio in Singapore" which shows all my investment strategies including how I choose my shares, thing to avoid in the stock market and when I decide to buy or sell shares. If you are interested, feel free to visit it.

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