Investing in stocks for Passive Income = Misleading?
First of all, I must commend GiraffeValue for applying active critical thinking and his willingness to challenge and verify for himself some of the platitudes out there when it comes to investing.
The strength of youth is you don't know what cannot be done!
Normally, I would not poke youths since I would rather do cheerleading - who doesn't?
But how boring life would be without some exceptions!
This post is motivated by the "weak" challenges to what GV has written.
I mean, you don't go "you have not proved that dividends are not passive income" when GV has written a whole bloody long thesis on his views already! Duh!
It is you, the challenger, that have to provide the counter arguments to demolish GV's position!
Thinking like a land owner
When you are a business owner, it doesn't matter whether you pay yourself a salary, consulting fee, or dividend, in the books, its considered you have taken capital out from the business.
Now imagine you are a business owner, and your business is self-generating so you don't need to add new capital into it other than that first capital injection of yours.
You "reward" yourself with a 5% dividend yield every year.
After 20 years, we would have gotten our capital back.
Will the business collapse or disappear now that you've got your initial capital back?
What do you call those 5% dividend yields you'll continue to get from 21st year onward?
Passive my foot!
If you think I have your back all you yield hogs out there, you have another thing coming!
My only critique of GV's post is he is not twisting the bayonet hard enough... You're too gentle!
What Passive Income?
And what's with all that apologetic preamble anyway?
Good job GV!
Income passive or active not the most critical; having an active mind is!
Singapore Man of Leisure (welcome to my blog; just google it!
