Passive income is quite literally money that appears in your account automatically. You don't have to do anything for the money to appear. While there are many different strategies and ways to Financial Independence, I consider myself financially independent when passive income > current standard of living.
To me, this is an easy to understand idea which is one reason why I have adopted it. There are small details such as whether there needs to be a margin of safety (my view is that only lean FIRE might require such a margin, other forms of FIRE have discretionary expenditure such as holidays that can be cut in years when passive income is reduced).
In 2023, I was fortunate to receive $15k passive income. Furthermore, the increase in my passive income was higher than inflation so that is one issue sorted out. While a lot of people talk about lifestyle inflation, I did not feel the urge to 'inflate' my lifestyle further. Instead I hope to continue to reinvest any extra free cash flow in order to generate more passive income.
My 2024 target will be to grow my passive income by 15%. The reason for a more modest target is that I have been putting a fair bit of money into fixed income including T-bills, where the S$ yield is in the modest 3-4% range. I will be getting the 'interest' on these investments in 2024, and obviously the return (and risk) will not be as high as equities.
Happy New Year!!
ReplyDeleteI have been following you for a while and really enjoy your posts. I just want to take this opportunity to extend my appreciation.
Also, what is your take on investing in Gold ETFs now? Completely understand if you have not looked at it. I am just thinking maybe Gold will be a good way to manage risk given all the uncertainties. Thank you.
Happy New Year! I hold physical gold as I am too stingy to allow the ETF to deduct fees. Its also nice to collect different types of Bullion. My gold buying period took place when AAA fixed income had close to 0% interest. Now that T-bills and giving nice interest rates, my focus is on T-bills and fixed income. Interest rates will give fixed income even more upside.
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