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

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.


人老话多.

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:

Money
Saved
Is
Waiting
Patiently

Mnemonics. 





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.