How We Increased our forward Passive Income by over $12,000 In One Year
How We Increased our forward Passive Income by over $12,000 In One Year
Money is a interesting subject. Some people get excited when they hear the word, while others can get very anxious. It is not everything, but can open a lot of doors and create a tonne of opportunities/ experiences. It can completely change someone’s life for good, but sadly for the bad as well.
One simple accident could severely change your career, or even worse end it all together. That is why I’m a huge fan of multiple sources of income. Passive income’s are a great way to branch out since they don’t require much of your time once they are created. Supplying you with a steady income weekly, monthly quarterly etc.
In this post I want to talk about how we went from 3 sources of income to 6 in 2017. Our forward passive income at the beginning of February 2017 (When I started this site) was right around $1,160 dollars. This was all just dividend income. Currently, (less than a year later) we have a forward passive income of $13,619. A $12,459 difference. Yup, you read that right. It can be done. Let me tell you how I did it.
Ok you might be wondering, he said he had 3 sources of income last year. Why does he say all his passive income is from dividend’s. When I started this site the beginning of last year we had our 2 jobs bringing in incomes and dividend’s. Representing 3 different sources of income, with only the dividend income being passive. Last year saw a bunch of new moves and we added 3 more sources – A private family investment that pays us monthly, Ads and Affliates from this website and we installed a 10 kilowatt solar panel system on the roof. Check out more about them here. Our Sources of Income.
To give you a quick idea of numbers, here’s how we come up with our current forward passive income of $13,619.
We put a lot of money to work in the stock market last year purchasing dividend paying stocks. When I started blogging we had $22,000 in our portfolio generating roughly $1,160 a year in dividend’s. Throughout 2017 our portfolio kept growing and now has about 125 thousand in it. We increased our forward dividends for the year to $4,619 dollars. Clearly the average dividend yield went down as I started buying more secure stocks. Our Portfolio currently yields 3.72%
We decided to invest with our family who does pretty well with real estate and other en-devours . With this investment we put down $50,000 and generate a 12% rate of return. We get paid $500 a month to do nothing but trust them. 500 x 12 = 6000.
The government of Ontario offered a micro-fit program for awhile now. (2017 was the last year) This was to entice people to go green and start installing solar panels on their property. We signed up last yr and just recently got hooked up and installed on our roof. The total cost was around 32 thousand but will generate roughly 3 thousand a year on a 20 year contract. After that we will negotiate a new contract.
I wont talk much about ads and affiliates or cash back credit cards but those would add to the total as well. So those 3 incomes total $13,619. The dividend’s are tax free as they are all in rrsp, resp and tfsa accounts. The private investment and solar income will be taxed.
So How Did We Do It?
Honestly I have stated it so many times, this online financial community of bloggers is fantastic. I can’t take all the credit for the growth or the moves I made. The comments everyone makes keeps you going. Its nice reading other bloggers about what stocks they are buying and why. How they are handling their finances and of course how are they doing it! Some of them are bringing in massive stacks of cash. I want to emulate them, show me the way. Here’s hoping this post will help some of you as well.
Join the community, start by getting on twitter and following some people, commenting on their posts and ultimately start your own website. Goals and targets are a lot more compelling when you know there’s a bunch of people watching you. I feel the website is one of the best things I have ever done by the way! Click here to find out more – Why Everyone Should Have A Website.
Cancel Mutual Funds
One of the very first things I did was cancel all our mutual funds. Yes all of them. They had high management fees (2.5 – 3 %) and really weren’t doing too much. My sons resp for example returned 6% in 2016 while the stocks I held returned over 35% with the dividend’s they paid included. That was a massive difference and when I asked them why that was, they told me when Trump got elected the fund went all bonds, thinking the market wouldn’t like it… Well they missed a tonne of gains but they still got their management fees. (The 2.5-3%). In total we transferred approximately 18 thousand over to our own direct investing stock accounts. RESP and RRSP. Noone Cares About Your Money As Much As You. (If you like fund’s, Etf’s offer the same benefits with a drastically lower management fee.)
Refinanced Our House
I know this one isn’t for everyone. Personally I was even hesitant. Dave Ramsey raised me!(well financially) Pay that off. But Rich dad, Poor Dad – Robert Kiyosaki says otherwise. He loves to state buy assets and use other people’s money, generating a higher return than what your paying in interest. Previously at our old house, I threw all our extra income at our house and created a lot of equity but I wasn’t investing. The family (we invested with) would approach me to invest but I would always shoot them down. After seeing fellow blogger’s (Especially Leo) and realizing that interest rates are low and I could get a better return in other investments we refinanced. We pulled out 150,000 in equity. We didn’t pull the max we could. Both of us (me and wife) felt that would be enough for what we wanted to do with it.
Most people after they refinance would go out and blow it, buying new cars and toys. We didn’t. That money was already earmarked. $52,000 to open and max out a tfsa. (buying stocks) 50,000 went to the private investment. Leaving us with 48,000 which went to the Solar Panel system and a brand new roof. All the remaining money got funneled towards rrsp, resp or the other tfsa account. There might of been a camping trip or a dinner out with that money too!
Added Cost of Living
Now of course that refinance added to our cost of living. It basically brought our monthly payments up another $400 a month, which easily gets covered with the new investments. It also completely eliminated all our banking fees, since we switched our mortgage over to our bank. Saving us 120$ a year. Since we weren’t desperate to move it there too, they gave us a great rate of 2.59%.
At the time I really debated if this was a move I wanted to make. A year later I see it created a lot of great opportunity’s and would recommend it if you are financially secure. I think that is key. As Robert states, buy assets don’t waste it. All income from this refinance will cover the 400 dollar difference and the remaining will be reinvested into some passive income.
There is nothing special to all the other money we have put towards passive income sources. Just hard work, live below your means, Enjoy life and invest the rest.
I understand a lot of people don’t have $150,000 in equity they can just pull out of their house. While the income was created over the last year the equity took a couple years to generate. Anyone can do this, I’m a average Joe. This new passive income will be put to work and will continue the snowball, hopefully generating more and more in years to come. I hope you learned something from this post.
I Wish you all the best in 2018
Hey I’m Rob, creator of Passive Canadian Income.
In 2011 me and my wife had almost $60,000 in debt and a negative $7,000 Net Worth. Through hard work and financial education we paid all that off. Now we are focusing on increasing our Passive Income Streams to make the money work for us. Feel Free to Follow along the Journey by clicking the Social Media links below or subscribing to get notified of new posts on the sidebar.