Securities as a source of passive income

Published by Uday Jethva on

Good afternoon dear friends! I am continuing my series of articles on passive income sources. And today, I would like to talk about securities, or rather how exactly they can be turned into a source of passive income and receive money without doing anything. Well, if you have not read about business and bank deposits , which are also sources of passive income, I recommend that you do this and find out how you can make good money on this!

Today I will not go into details, talk about what securities exist and why they are needed, but I will simply offer a working scheme that consistently brings money.

So, as you already understood, securities can generate income, it remains to figure out only how this is done and how you can make money on it. Surely, you have already heard many times about how someone receives dividends. Yes, dividends can be different, including from securities. Simply put, dividends are a portion of the profits that are shared with you by the company whose securities you own. The scheme is simple: you invest in an enterprise, and it gives you securities confirming the right to own part of the enterprise. In fact, it turns out that you bought a part of the enterprise and now, like the rest of the thousands and millions of other owners of securities, you are entitled to receive a part of its profit, according to the share by the number of shares.

The owners of securities for which there is a periodic payment of dividends are usually called shareholders. Thus, the amount of dividends and the frequency of their payment is established by the meeting of shareholders. Dividends can be paid several times a year, and sometimes one or not paid at all, because the company incurred losses or such a decision was made at a meeting of shareholders.

It is a common practice that dividends are not paid to the shareholders because such a decision was made by the shareholders’ meeting. But this is not a very good policy on the part of the enterprise in which people have invested money. Judge for yourself, if an enterprise has not paid dividends to its shareholders for a long time, then does it make sense to keep shares of such an enterprise? Of course not. Therefore, experienced investors buy shares of well-known companies and companies whose financial policies are conducted openly. When there is access to financial documents and there are no failures with dividend payments.

To live on dividends from securities, you need to have a very large portfolio, which will collect hundreds and millions of shares of well-known companies. 

A few shares of a little-known company will not be able to provide you with a normal return. unless of course all the money in the world is stored there. Therefore, the choice and purchase of securities is such a responsible business, which takes a lot of time and effort.

Again, I would like to say that you should not consider securities as the only source of passive income and be limited exclusively to this type of money investment. From experience I can say that the total share of securities in the share of your total assets can be approximately 15-20%. 

This is not very much, and not very little, especially considering the fact that it can always be safely increased or decreased.

Of course, in order to become the owner of a certain package of securities, you need to invest money, having previously earned it or accumulated it. 

Therefore, if you have not yet started creating initial capital, read this note and feel free to start creating capital in order to buy securities and live on interest later!

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