My passive income will come from three sources: dividend income, rental property, and online income.

Dividend income

Dividend income is what my this blog is focusing on.  I don’t claim myself as a pure dividend growth investor, because I also seek for capital gain besides dividend income. I know some peer dividend income investors won’t sell stocks unless the company cut dividends.  Dividend cuts are definitely a criterion for me to sell stocks.  However, I’ll also set a selling price at the time when I make the purchase decision.  The selling price is calculated based on stock intrinsic valuation and personal judgment.  Once a stock of interest is bought, I’ll monitor the stock closely and do some adjustment on selling price if needed.  Basically, if there is no exceptions, I’ll sell the stock once it reaches the selling price.  I know this is not a best strategy, and a lot of people may oppose to it.  However, I’ll adhere to it because the selling price provides me guideline of the stock intrinsic valuation and helps me to act more sensibly.

My current portfolio and year-end target amount are as following:

Dividend_investment_account_July

The initial amount is the available cash in my trading accounts by the end of June 2012.  I have sold out most of my holdings in March and currently in heavy cash position.  I am waiting for the market pullback and good entry points.  Will see.  The monthly deposit includes monthly dividend income and cash deposit from my bank accounts.  I plan to set monthly average deposit at $800.  My annual GP rate is 12%, which is higher than the yield rates of most dividend stocks, but reasonable enough considering capital gain also as the goal.  The year-end target is my target aiming to be achieved by the end June of 2013.

Combining monthly deposit and annual GP rate, the composite annual GP ratecompared to initial amount will be 22.6%.  Following is the annual targets till year 2020.

Dividend_account_compound_GP

Rental property

Currently I only have one condo, which was purchased at the end of last year.  It provides me around $300 monthly net income.  I have a natural preference for rental property investment based on the three simple reasons: 1) All the expenses including mortgage, HOA, tax, etc. can be covered by monthly rental income, which means the rental property is able to self-sustain itself.  Most of the time it is even better because you will probably be in surplus after all the expenses. 2) Property value appreciation.  Real estate is a good weapon to fight against inflation.  I mainly purchase condos or townhouses, so I can’t expect value appreciation as much as those of  single family houses.  However, value appreciation should still be sizable considering the fundamental real estate nature.  3) leverage effect. I purchase the houses with mortgage, not with full cash offer (the truth is I don’t have that much cash. Sigh.), which means I only need to pay 20% down payment for owning the whole 100% property after I payoff my mortgage.

In my plan, ideally I’ll purchase at least one property every year.  Of course, it will depend on my cash flow and income. I’ll set up another blog which record my thoughts and my actions on rental property purchasing, renting out, upgrading, etc.

Online income

I’m very new to this.  However, I expect some income will be naturally generated from my blogs as the result of sharing some worthy thoughts.  I am still learning about it.  The online income should be considered as a natural flow from good interactions with my readers.  I won’t impose on it.  However, I’ll take it as one of the barometers to judge whether my information sharing is worthy or not.