Dinner with AK71: Ben & Jerry's CCC Dough.

Haven't had ice cream in a long while. This is one of my favourites:

I was watching TV at the same time and...

Argh!!! What happened to all the ice cream? Did I do that?

Bad AK! Bad AK!

OK, I must do something about it. Some Genmaicha?

Better. ;)

Related post:
Genmaicha.

$15,000 passive income. To pursue or be pursued?

Regular readers know that I would never tell people what to do. I am not qualified to and neither am I allowed to. Partly for the same reasons, I have declined invitations by a few readers to conduct talks for private groups or to have courses for the public.

Of course, we know that there are many investment courses out there and, recently, there has been discussion as to whether the authorities should step in to regulate these.

R Sivanithy says it well in a column in The Business Times recently that we "should always be leery of claims of fantastic performance that come with profit guarantees and no risk. After all, there are no free lunches in the cut throat world of finance - unless of course, one happens to be in the business of conducting "get rich quick" seminars."

So, when someone who is receiving about $15,000 in annual passive income from his investments in stocks and REITs asked me what he should buy next, I was ready to side step the question in my usual style but I decided to ask what percentage of his portfolio was in cash. He said about 3%.

Pause.


Pause.


Pause.


Pause.


The pause should be longer but I think you get the idea.

There is nothing wrong with keeping more cash even though cash is an asset that earns practically nothing in a savings account. Well, some banks offer 0.4% to 0.88% per annum now and although Garfield would say, "big, fat, hairy deal", having cash provides us with a peace of mind. The low returns for holding cash is the price we must pay for now. It is like having insurance and insurance cost money or don't we believe in insurance?

In an article I read some time ago, it was revealed that the UHNW rich in America (those with investable assets of $15m) would only feel rich if they had at least a million dollars or two in cash. That means a minimum cash position equivalent of 6.6% to 13.3% of their total wealth.

Remember, however, we could do quite a lot with a million dollars or two. If our 6.6% to 13.3% is ten or twenty thousand dollars, can it make a big difference?

In the pursuit of passive income, it makes sense to do a bit less pursuing and, instead, be pursued.

Related posts:
1. If we want peace, be prepared for war.
2. Be a real estate owner the easy way (4).
3. STE's story: The Millionaire Next Door.
... it is revealed that most high income earners are not wealthy. They make a lot of money but they don't keep much of it.