The ideal scenario for travelling around the world fulltime is to do so by earning a passive income. This means having the ability to earn an income without actually having to trade in your time to do so. There are several ways to accomplish this, but one of the methods that has been promoted alot in the past is to do so by owning shares/stocks.
I’ve personally invested in stocks and shares over the years and I want to share some of the insights about using shares as a tool to develop your passive income portfolio.
Have a passive income strategy.
The minimum that you will want to earn annually per person is $24,000USD. You will need to build a stock market portfolio that will allow you to achieve that.
Your goal will be to acquire shares that provide a high dividend yield.
Ideally, you will be able to find shares that have a dividend yield of 4% or higher. The higher the dividend yield, the more cash you will receive when the company pays out its dividends.
You want to invest in shares that have low volatility.
The strategy that you will be implementing will be a buy and hold strategy. The intention is to never sell the shares, but to use the shares for cashflow. The higher the volatility, the higher the risk of the shares losing their equity value. This means you can lose money. And you want to minimise the risk of you losing money.
How much money will you need to start earning additional income from shares?
If you work to a rule of 3% of what you have invested, it will give you a figure. For example.
- $1000=$30 a year
- $10,000=$300 a year
- $100,000=$3,000 a year
- $1,000,000=$30,000 a year
Is it worth investing in shares?
It is an easy way to earn an additional income. There are a few reasons why I don’t personally like investing in shares.
- The management is under someone else. If they don’t manage the company well, then the profits and revenue growth won’t happen and you won’t benefit from owning the shares.
- The risk that you take is high compared to the dividend amount that is received.
- The risk of losing the equity value in the shares are high.
On the positive side.
- You can earn an income without having to put any time into developing the business.
- If you invest well, the share amount will increase over time and increase your net worth.
- If you have a lump sum of cash and you are unsure of what to do, then investing in shares can be a good option for increasing your cashflow.
Have you invested in shares? What do you think?
Let us know in the comments below.
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2 thoughts on “Should you invest in shares for passive income as a digital nomad?”
Very nice article loved it
Thank you Faiq for your kind words :)
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