I want to quit the rat race and reach financial freedom as soon as possible. In order to reach my goals, I need to make sure that my spending will be fully covered by my passive income.
My goal is to get 65$ per day in passive income, 365 days per year before quitting my day job. Then, I’ll have all the free time in the world to do more intelligent stuff than repeating the same tasks over and over again and I’ll also have more time to spend with my loved ones. I like my colleagues but… I’d prefer spending time with my wife, family and friends! I don’t see them often enough…
My journey to financial freedom started long ago. But I really started investing in stocks in october 2013 when I finally decided to jump in and opened my first brokerage account. It may sound weird to Americans but here in “french Canada” it is not common for people to trade stocks by themselves. In fact, except for my brother who decided to do like me, none of my friends or family members have a trading account and they all think I’m gonna go bankrupt because so many people here lost all their hard-earned money on Nortel stock back in the days.
Lets see what are my results so far :
Dividend growth investing
In order to receive recurring passive income, one can choose only between a couple of strategies.
Owning real estate and renting it to tenants is not for me and too risky in my own point of view (too much cash tied in a single investment, weird tenants destroying my property, laws restricting a lot of things here in Quebec…). Plus, I don’t feel it’s truly passive since you have to take care of both the buildings and the tenants. I see it more like owning a small business.
I tried to sell books with Amazon and had a certain success (5-10 books per month at 5$ each) but taxes were too complicated (dealing with IRS and obtaining a ITIN in order to avoid getting a 30% withholding from them). My sales were not high enough to justify going through the whole process of getting a ITIN and paying an accountant. In the end, IRS would have taken 30%, Amazon 30% and CRA 50% or the remaining income… I would have been left with bread crumbs… So, unless I write a best sellers, I’ll let others make money with Amazon Kindle self-publishing program!
What better fitted my profile in order to reach my objectives is the dividend growth investing strategy.
Every month (if possible), I will invest my savings in stocks of great companies paying growing dividends years after years after years at a pace higher than inflation!
My buys so far
In november 2013, I bought 200 Jean-Coutu (18,49$) shares and 25 McDonalds (97,83$) shares. Since then, their market values have increased of 23,47% and 3,72% (at the time I wrote this post).
Jean-Coutu also recently announced that they would increase their dividend by 17,6%!!! I never had such a great salary increase in such a short time!
Then, in february 2014, I bought 20 Exxon shares at 90,15$ (approximately the same price paid by Warren Buffett) and 30 Mattel shares at 35,65$ (almost at its 52 weeks low).
Since then, Exxon had announced a dividend increase of 9,5% and its market value has increased by 14,08%. Mattel’s market value has increased by 9,93% when I wrote these lines! Not bad of an investment so far.
Then, it took me some time to accumulate funds to invest so I didn’t buy anything before may. I decided to jump in with 25 Tim Horton’s shares (59,17$) and then, recently in june, I bought 110 shares of American Realty Capital Properties (12,30$) when it was trading almost at its 52 weeks low. ARCP pays a juicy monthly dividend of 8%!!
Finally I bought 18 shares of Wal Mart last week at 76,01$ per share.
My daily passive income
65$ per day, 365 days per year, it doesn’t seem a lot. But, do the maths and you’ll see that it adds up to 24,000$ per year.
It is more than clear that these purchases are not enough to generate that kind of income. But I’m satisfied with what I have achieved so far in a little less than 8 months of dedicating myself to dividend growth investing.
My daily passive income has reached 0,89$ US per day and 0,32$ CAN per day. With an exchange rate of 8%, my daily income is 1,28$ CAN per day!
Cool, I can almost buy myself a coffee per day! 😉
In 8 months, I have reached 2% of my objective. I gave myself 13 years to reach it. I think I’m on the right path so far, because my objectives also includes to see that income grow at an 8% rate per year.
So, if I would stop investing right away and if I would simply let that income compound (without reinvesting for the matter of simplicity of the maths), this 1,28$ per day would become 3,48$ per day 13 years from now which would give me an income of 105,88$ per month.
These small purchases already represent 105,88$ per month in future recurring income for my 45 years on this planet. In these terms, it is not 2% of my final objective that has been reached but 5,3% since my goal is not to receive 24,000$ per year now but for my 45th birthday.
But, this doesn’t take into account dividend reinvestment and for sure I’ll reinvest 100% of these dividends until I fully retire.
I won’t try to calculate what would the be my future income because I’m not a mathematician and because in the end, there are too many unknown variables that would enter in that equation.
What I know, though, is that I’ve been able to achieve more than 5% of my goal in less than a year. With time, the snowball will grow and it will accelerate a lot!
My snowball has started rolling!
What about yours? Do you have a plan? Do you receive passive income?
Image courtesy of Stuart Miles/ FreeDigitalPhotos.net