Greetings my upwardly mobile friends,
For the past few months, I’ve been bingeing on personal finance blogs and reading materials. The two most ubiquitous pieces of advice appear everywhere; 1) lower your expenses and/or 2) increase your income. When it comes to increasing income, the advice is similarly consistent. Develop a side hustle or develop a source of passive income.
Between an extremely full time job and being a new parent, a side hustle is not realistic or desirable. Instead of sleeping less, ignoring my child, or cutting time from an already lucrative career, I’m developing a passive income stream. I investigated tons of options, but most were far from passive and most required substantial time investments. Side note, why does everyone include writing an e-book as passive income? Wtf is passive about writing a book? Maybe book sales are passive, but writing a book worth reading is a monumental undertaking.
My passive income stream of choice is a small dividend investment portfolio. I looked at a lot of options and purchasing individual stocks did not appeal to me. I realize they can be very high yield, but I’m not a stock picker researching dozens of stocks. Instead, my small dividend portfolio is based upon a few big dividend ETFs. Nothing fancy, just modest investments in SCHD, SPYD, PFF, and PGX.
I added a small initial seed investment and I’ve decided to add $900/month plus some occasional windfall money to the portfolio. At this rate, it should grow pretty quickly and should get me a return on investment that beats out a CD or high yield savings account. I started this project in April so I didn’t get any dividends that month. However, my tiny pet project yielded $9.82 in income in May and $60.20 in June. Most of the dividends are delivered quarterly because the two bigger ETFs issue quarterly dividends. The ETF shares have also appreciated in value a fair bit because the market has been so strong.
What I like is that this is actually passive. It’s more diverse than individual stock picking, doesn’t cost me trading fees like buying individual stock, and doesn’t require huge amounts of research. It involves pretty much nothing other than a few minutes a month to arrange for the auto deposited funds to purchase one of the ETFs. It’s in line with my set it and forget it desires and it looks like it should yield a respectable return.
I’ll do follow ups and more comprehensive explanations on an ongoing basis. This little project is in its infancy so there isn’t much for me to talk about just yet. I would just point out that this isn’t a replacement for ordinary index investing, which comprises the lion share of my portfolio.