Passive Income Streams

Just to clarify for readers, don't go and buy VAS (ASX 300) if you want the above....looks more like VGS (MSCI World ex Aus)

 

Ace
Is this net income

 

I have a few income streams.
All are passive .

 

Income before tax, but I'm sure the good account can reduce it to a minimum for us.
Might have to get into more debt which would become a vicious cycle.

At lease with passive income from property, you could still holiday all the time and only have to answer an email or phone call once in a while from anywhere in the world.

 

Putting me to shame there Kieran
But that's awesome

 

I am working towards a goal of a diversified investment portfolio, around 50:50 property/equities. Thinking is to initially use what in my experience is a lending system that heavily favours residential property to continue building a portfolio to a total value of around $4M with solid capital gain prospects and neutral cash flow in the next 3 years.

Then hold/value add to the portfolio for at least one good growth cycle, and though a combination of either equity releases and/or opportunistic selling increase investment in a diversified basket of local and international shares, probably via a mix of ETFs, LICs and Managed funds. My goal is $120k household net income in 8yrs and I see these investments about as passive as you get while still achieving reasonable returns.

At that point I would like to step back from the workforce, still work but probably in a part time job which I find really rewarding. I would say I am about 1/3 of the way there currently, I know it is a big goal but I figure shoot for the moon and if you miss at least you are among stars!

 

How does franking increase the total yield?

 

Aiming for about 55K AUD pa (=3K/mes EUR) after tax, about 2/3 from direct shares, 1/3 property.
Not quite there yet (maybe 70%) but can be after selling a few things and moving funds around. Very exposed to exchange rates though, income from 4 different currencies/countries.

 

I have shares, both direct and in an index fund, that provide a passive income stream through dividends. While the underlying share prices can be volatile at times, their dividend income streams have been pretty steady.

 

shares (direct + LIC's) and a few houses + granny flats

 

Companies earnings in Australia are taxed at the company tax rate (30%) before been distributed as dividends. Franking (or imputation) credits are given for the tax already paid so you are not taxed twice. Dividends may be partially, fully or unfranked.

Only Australian residents for tax purposes can claim them.

Hope that makes sense

 

if 70% fully franked divide the dividend by .7 so $2.00 dividend is $2.86 gross
or as suggested 4.5% is 6.43% grossed

 

I get that. But that 4.5% yield is after tax. With franking credits how does that make it >5%

 

Aahh... so that 6% is before tax. And you might pay further tax on that franked dividend based on your tax rate

 

Spot on

 

It's called the grossed up yield or dividend so that you are comparing apples with apples and not the after tax return of only one type of investment with the pre tax yield of another.

 

I have shares - direct and a couple of LICs, all Australian - and plan to get into international shares via a managed fund. Currently looking into using warrants to buy shares as an alternative to margin loans.

 

Burnt my fingers with stock markets both in the UK ( Bank shares came crashing down during the GFC and have never recovered and i doubt they ever will) and the US with option trading. So now decided to stick to property with its lesser risk element. The aim to to have a rental income of $5000 per week.

 

A week?

 

Yup. Hopefully can get to that figure in the next 5 years . Because i look a the lower end of the market assume an average rent of say 300 dollars per property per week that would mean a property portfolio of around 16 properties