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How to make a million dollars by investing for income? (UPDATED)

Thursday, September 29, 2016

In place of 2 blog posts, one on my passive income from S-REITs and another one on my passive income from non-REITs for the first 9 months of 2016, I decided to write only one blog post but without all the usual numbers.

OK, I know, AK is lazy.

Bad AK! Bad AK!

Well, I get asked whether it is possible for regular folks like you and me to make a million dollars through investing in the stock market many times before. 

Could we make one million dollars from the stock market?

The future is closer than you think.

Of course, not surprisingly, many also asked me if it is possible to achieve this specifically through investing for income which is the mainstay of my investment strategy.

Honestly, I think that for the average person it is not easy to make a million dollars through investing in the stock market alone, be it by investing for income or some other methods.

OK, you can stop reading now.

Still reading?

Well, it is not impossible but it is not easy.

Although I have been trading and investing in the stock market for about 20 years, I only started to keep more accurate records from 2008 when I had more time and also the inclination to do so.

Of course, regular readers could put 2 and 2 together because I only started blogging in 2009 when I said I did that out of boredom and curiosity that Christmas Eve.

Aiyoh, AK is so long winded. 

Get to the point lah!

So, did AK make $1 million by investing for income?

I grew this from a seed.

From 2008 till now, without taking into consideration the bumper distribution from Saizen REIT in 1Q 2016, total dividends and distributions received from my investments in the stock market crossed $1 million this month.

Yes, I have made $1 million by investing for income.

Some people might say that I must have had a lot of money to begin with. 

After all, if we had $10 million, we could make $1 million in dividends in a couple of years with a 5% dividend yield.

Unfortunately, I wasn't born with a silver spoon in my mouth. 

It might have been stainless steel which was not bad but it wasn't some precious metal. 

Regular readers might remember I shared how my family moved from a 1 room HDB flat to a 3 room HDB flat and then to a 5 room HDB flat before moving to a condo (which happened about 17 years ago). 

I am from quite a regular sandwiched class Singaporean family.

Some stuff I have in my kitchen.

Sandwiched class or not, we need capital to invest with and, at one time, for many years, I gave myself only $300 of spending money each month and saved the rest. 

Over the years, I invested regularly for income and, of course, a familiar story by now is how I started investing in ST Engineering when it was trading at $1.55 a share donkey years ago when I was a young working adult. 

$1,550 for one lot (1,000 shares then). 

It was a big deal for me in those days. 

I didn't stop at one lot, of course, as I added to my investment when I could.

Over the years, my life improved but I was mostly frugal even when I made more money. 

I remember how a friend scolded me when I saw a SWATCH that I liked but decided not to buy it.  

"What is wrong with you? You make so much money! Just buy lah!"

I bought the watch to avoid further scolding. Silly AK did that. 

I gave the watch away a few years ago.

Alamak. I am digressing again. 

Growing old and nostalgic lah. 

Lucky not suffering from Alzheimer's yet. 

Knock on wood.

Anyway, you get the idea. 

I made more money over the years but I remained pretty frugal.

I worked hard, holding 3 jobs at one time, working 7 days a week for a few years, saved quite a bit of money and mostly invested for income. 

I didn't keep a precise record but over the years, doing what I did, I suppose it must have amounted to something. 

Dividends grew and my savings grew. 

Amount of money invested also grew. 

Dividends grew again and so on. 

It was a virtuous cycle.

Through many market crashes, AK learned that we must always have a war chest ready. 

During the Global Financial Crisis, Mr. Market offered a truckload of opportunities to make a lot of money and I emptied my war chest. 

Of course, the story did not stop there.

Enjoying the view because I can.

Receiving more dividends since the Global Financial Crisis, I had more funds to invest with for income which I did and the cycle continues till today. 

As I do this, I am mindful to sock away some money in my war chest because I don't know when we might see another stock market crash like the last one. 

After all, it was having a war chest ready that gave my efforts a leg up in the past.

Alamak. AK is so wordy.


And I used to laugh at my parents.

So, do you want my formula in a sentence?

Make more money, save more money, invest for income, have a war-chest ready and be patient.

Aiyoh. How to remember?

See if this helps you to remember:




What I have today took many years to achieve. 

So, yes, be patient.

There will be days when you feel down and, even, defeated. 

There will be days when you feel like throwing in the towel and giving up.

On those days, tell yourself:

"If AK can make a million dollars by investing for income, so can I."

It is not easy but it is not impossible.

When we invest, focus more on the income that is going to be generated in future by an investment and less on where the price is going to be in future as the latter is speculation.

If we have the right focus as investors for income, we will be less concerned with prices but more concerned with value.

If we have the right focus as investors for income, we will buy income generating assets at prices which make sense to us.

If we have the right focus as investors for income, all else being equal, we will not chase rising prices nor will we fear falling prices.

Stay grounded as investors for income and we will be amply rewarded over time.

Related posts:
1. Is AK a rags to riches story?

2. Secret to AK's success as an investor.
3. The millionaire next door.


Matt said...

I started investing seriously for passive income since 2008 and kept a ddetail record of all the dividends and trades done since then. I too received more thatn a million dollars in dividends by Jun of this year. This is excluding capital gains as they are not realised yet.

It is definitely not easy. During the financial crisis in 2008, my portfolio dropped by half in value, from $1million to about $500k. Fortunately, I switch stocks to those with better potential of appreciating when the economy picks up. All of them are in the black. An example would be MLT, which I bought for 30.5c.

For everyone aspiring to invest for passive income, it is not completely passive. You still need to monitor your portfolio. But take heart, it is possible to do well and do read and keep up with the news everyday.

Like AK, I stopped working 4 years ago and depend on dividend income alone. Fortunately, it is more than sufficient and I continue to reinvest any excess money backinto the stock market.

Kunio said...

Hi AK,
I fully agreed with you.
During the Global Financial Crisis, I have heard many voices: "If I have money, I will buy this property, so cheap now" "If I have money, I will buy these stocks, so cheap now"....

I bought a car -> Toyota Wish for $59K including COE.
I bought a small house too.

Therefore "No Money Only Talk" will not help us.

Action from today, start saving money!
When the next crisis will come, nobody know.
But we know "We have money and ready for it".


Unknown said...

Matt, then people will ask you how you got that $1million in the first place at 2008...... like AK mentioned in this blog post, people have been saying since his base is so huge, naturally the dividends would be a lot more. 5% of $1million and 5% of 100k is a big difference.

AK71 said...

Hi temperament,

As a believer, you would also believe that luck is an important element. Doing all the right things but without luck, things could still go wrong. I have been mostly lucky. ;)

STE said...

Hi AK,
Hahaha,, finally you combined both REIT and Non-REIT dividend and calculated the total dividend ,,, my one also hitting $ 1 mil this year ,,, we are so lucky !! and since day one of my investing in stock market ,,, I am a "hard core " income and dividend investing strategy .
As mentioned in my blog , the first stock i bought was " Magnum BHD " ,, a 4D betting counter in Malaysia which give me good and consistent dividend..
Remember what John D Rockefeller said : "Do you know the only thing that gives me pleasure? It's to see my dividends coming in. " $$ ding ding ding ...coming in !!
Yah ! everyone may have their own strategies in investing and I do believe " many roads lead to Rome "..
Cheers !! Let the compounding interest take effect ...

AK71 said...

Hi Matt,

Always good to have you share your experience here. :)

So, both of us started keeping more accurate records in 2008. That is another thing we have in common. ;p

AK71 said...

Hi Jasper,

It is dreadfully frustrating when opportunities abound and we have no money to take advantage of them.

Some people are frustrated with having cash "rotting" in their bank accounts now. It is very dangerous to seek the instant gratification of yield and at any cost.

Personally, I am quite happy to keep have a meaningful amount of money "rotting" in my bank accounts. ;p

AK71 said...


Happy to hear another success story from another like minded investor. :)

Receiving income from my investments is very satisfying but more important than that is the cushion effect during bad times. It is also very comforting. It is not something that is only good to have. If we believe that bad things happen from time to time, it is also something essential.

anon said...

AK, this post should snag the "Most inspirational blog article" of the year!

Readers tune into your blog because it's an old school blog with relevant and meaningful exhortations, practical real-life anecdotes, and most important, timeless wisdom, which will still be relevant come SG100 and beyond! No wonder, your readership increases multi-fold!

This post reminds me of some of Buffett's gems which I will share with you and your readers:

"If you buy things you do not need, soon you will have to sell things you need."

"Do not save what is left after spending, but spend what is left after saving."

"If you don't find a way to make money while you sleep, you will work until you die."

"You only have to do a very few things right in your life, so long as you don't do too many things wrong."

"I don't look to jump over 7-foot bars; I look around for 1-foot bars that I can step over."

"The most important investment you can make is in yourself."

"Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble."

"Predicting rain doesn't count. Building arks does."

"Time is the friend of the wonderful business, the enemy of the mediocre."

AK71 said...

Hi jojo,

If talking to myself has made a positive difference to people's lives, I am happy. :)

I think I can take the rest of the year off from blogging without guilt. ;p

STE said...

Hi AK,
Yup !! Always maintain enough emergency fund + war chest .. nobody know what will happen next ! Also, like what you said ,,, " treating CPF money as AAA rated Bond " ,,, and another source of income ( cushion ) ,, every year STE and Mrs STE would receive around $22K (combined total ) in interest pay by CPF ,,, good amount of $$ after accumulating for another 9 years when we reach 55 years old ,, if not withdraw , keep till 65 ... another good backup or cushion ...if anything really happen to share market during that time.
Cheers !

AK71 said...


I love the yearly ang pao I get from the CPF too. Singaporeans and PRs are a fortunate bunch but, unfortunately, not everyone believes this.

10 years down the road, life will most likely be better for us, the believers. :)

Happydoggy said...

Wah AK, I was having lunch in office while reading your blog and this really inspired me further. I just received my first dividend in this year JULY, looking forward to the next one in Oct. Yeah!! My dividends are definitely peanuts compared to yours but I am glad that we finally got some base to start investing after setting aside the emergency funds. :)I hope its still not too late for me to catch the train though.

Matt said...

That million dollars was accumulated after working for more than 20 years, in case some of you think we had it easy. I am older than AK by a decade and started off with nothing other than a university degree. I did not have the benefit of having my family here so had to rent a room after coming out from university. So it was hard work all the way and savings. The first holiday I took was after working for 5 years. I am a firm believer of tasting the bitter first before the sweet so that you can appreciate it a lot more. But I believe all of us can achieve that goal you set out if you keep at it and work hard. There will always be skepticism that those of us who achieve what we have, did it without having to put in the hard work or save like crazy.

Wealth Journey said...

Joining the Me 2 Club! :)

Started tracking since 2007 (when i started full-time investing), I would have collected more than a million dollars in Dividends too.

I would say It is not passive at all.
I believe people who do well are those who really put in effort to understand the stock market and its valuations.

Kevin said...

Hi AK,

Congrats for crossing the $1 million mark this month for distributions and dividends received.

Any good places or attractive fixed deposits to recommend for parking emergency fund + war chest excluding UOB ONE and OCBC 360 which you had mentioned before in previous blog posts?

It seems like the Deutsche Bank saga is causing abit of stir in the global markets lately huh? I hope it will present some opportunities for all bros and sis here to do some shopping again. :)

Dividend Town said...

4 words to summarize your investment journey :“先苦后甜”;)

Dividend Town said...

4 words to summarize your investment journey :“先苦后甜”;)

AhJohn said...

Buffett letter, someone either believe in value investing in 5 minutes, or never believe.
Hard to convince people to have a better life, but AK's blog may still help more people if more new people come to your blog, some of them will believe in it and enjoy life at the end.

I have 40% in cash now, very itching ...

RK said...

Is there a part where u made some money/capital from property investment? Think read about it before.

RayNg said...

How nice to accumulate another $1M in 5~6 years with min work, and with reinvested dividend, the $1M mark period will be shorter and shorter.

The snow ball effect work!

KMay said...

Dear AK,

Despite being mostly an investment blog, you never fail to inject doses of humour and that is partly the reason why I follow your blog for years.

I would like to sincerely thank you for your unconditionally sharing in your investment journey.

Lastly, I would like to add, besides patience, we must not be greedy.


AK71 said...

Hi happydoggy,

We always start by taking baby steps. Never too late. Gambatte! ;)

AK71 said...

Hi Kevin,

BOC Smartsaver is another one. I didn't blog about it though. Lazy. Bad AK. ;p

AK71 said...

Hi DT,

I wouldn't say it was particularly bitter though. I was able to get by with $300 a month without much bitterness. I guess not having many friends and having no social life helped a bit. ;p

AK71 said...

Hi AhJohn,

We can only lead a horse to water but not force it to drink. :)

40% cash? That is a good problem. ;)

AK71 said...

Hi RK,

I mentioned it in a few places. This was one:

How did AK create a 6 digits annual passive income?"

AK71 said...

Hi KM,

Only talking to myself, as always. I cannot imagine doing so without humor. I would bore myself to death! ;p

Gambatte! :)

AK71 said...

From my FB page:

Adeline Low:
"Really inspiring and motivating to hear you juggle 3 jobs for 7 days a week, for a few years! You do that coz you want to invest more early so you will reap the benefits soon?"

"I wanted to get rich, not drive around in Ferraris…but for the freedom it would give me" Charlie Munger.

Sanye ◎ 三页 said...

Congrats AK, for crossing the million dollar mark with your passive income. I am trailing behind you, two years, maybe... :)

AK71 said...

Hi Sanye,

It is about growing rich slow, isn't it? Less stressful. I like. :)

AK71 said...

An email exchange:

The answer is in my blog. ;)

Quoting Kelvin:
[Hide Quoted Text]
You have $1M in portfolio or $1M in passive income generated through your portfolio?

On 26 Oct 2016, at 12:59, wrote:
What is "sufficient"? That is pretty subjective. ;)

Quoting Kelvin:
You have $1M in portfolio or $1M in passive income generated through your portfolio?
What other advice do you have to an average fresh graduate? Is buying ETFs and REITS ETF sufficient?



AK71 said...

U recently never share ur buyings
Too busy gaming until don't wanna invest le?

i will blog about my dividends soon 😉
investing is on auto pilot more or less. no need to do much work. 😉
Haha. For your reading pleasure:

AK71 said...

Aik Keong Koh:
"My late Grandfather once said, "If you got fertile chicken eggs and they hatch into chickens, the chickens will take care of themselves while you decide once awhile what to do with the chickens and eggs they lay." Didn't get it when I was a young boy, but I do now..."

financialfreedomnooblet said...

Hi AK,

You really inspire me! You are one of the reasons I decided to start my own personal finance blog (just started today actually)!

Hope to continue on this journey and looking forward to reaping the harvest in years to come.

Thank you for the inspiration!

AK71 said...


I am glad. Gambatte! :)

AK71 said...

Even as stock prices plunge, it is important to remain focused.

Blog updated.

WTK said...

Hi AK,

Continue to invest the fund on a monthly basis is the way to go. There is nothing to worry as long as one do it on a consistent basis. The reward will come in the form of dividends soon.


AK71 said...

Hi Ben,

Although time in the market is important, having a war chest ready to invest big during market crashes will make a big difference and that has been my experience. :)

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