Building Passive Income - Layer by Layer

Almost all of us who are in our working years are working in a full-time job or generating income from other sources be it from a business or investment. 

One of the key to financial freedom is to allocate as much as possible your monthly income from an 'active' source whereby work is required to generate the income to a 'passive' source whereby income streams in regardless of whether work has been put in or not. I remember reading a book many years ago at Starbucks in Central Mall. I can't remember the title of the book but what I do remember is that it stated that there effectively are just 3 main passive sources one can derive their income from.

The first is via a business or royalties, the second is through property via rental income and the third is from dividends/coupon payments from investments. I decided some time back that I probably would not be venturing into a business anytime soon. As for property, I have neither the knowhow or appetite for leverage to partake aggresively in that. Investments particular into stocks was a natural choice for me.

Therefore I made up my mind around 1.5 years ago to allocate around 50% of my monthly income to stocks and to consistently build the portfolio over time. Through a slow and steady process, the percentage of 'passive income' versus 'active income' would grow. Using my current progress as a check, I currently have only 2% of my annual income made up of passive sources. There is a long way to go but it is indeed an extremely exciting journey, one which makes me excited to head to work everyday to generate the salary to build further amounts of passive income in future. I'll be 35 next year and I hope to be able to have a better scorecard by the end of next year, let's see!

How has your progress to build passive income been coming along? Do share with me!

Signing off

Transitioning Stock Investor