Friday, December 5, 2014

Focus on Income-Generating Assets

We are into the last month of 2014. Since I started my income-investment journey about 2 years ago, I am glad to say that it has been a fruitful experience, but not without challenges. I am so far still on course towards my goal of financial independance, and am more convinced that this is a path of wealth accumulation more suitable for me.

I would like to pen down some of my thoughts of income-investment to serve as a reminder to me to stay the course. Last year, I have shared my master plan on reaching my goal to shift my dependance on earned income towards a dividend-driven passive one.

  1. My focus will be put on building up my Supply Drop Zones (cashflow-generating assets) rather than the cashflow itself, since it is the assets that will enable the cashflow-generating mechanism. Of course, selection of assets is of utmost importance, as it can determine the stability and speed (yield) of its income-generating ability.
  2. Brokerage charges should not be too much of a concern for income-investing strategy since we are going for the long haul (if possible). And for that reason, I have intentionally left it out on my portfolio update. I chose it write off the charges as a decision to add new "supply drop zones" to my portfolio and expend my invested account size.
  3. Similar to point 2, as this is a plan with a long-term objective and we cannot have all the required information to ensure all the decisions are correct even with careful analysis , it is inevitable that we will select some wrong stocks to add. (Probably due to changes in company fundamentals, some hypothesis which I have missed, or even some calculated risks which I decide to take). We should be willing to accept the mistakes and move on, even though it will impact the absolute yield or accumulated income. After all, it is the assets that matters more to me.

What do you think?

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