5 Income portfolios
This chapter covers
- Strategies to create passive income
- How to find stocks that pay solid dividends
- When to choose bonds over stocks for income portfolios
- Using cryptocurrency staking to generate passive income
Chapter 4 explored how identifying outliers can give you an edge in beating the market. We use these techniques to identify undervalued stocks (value investing) or look for companies with new technologies or business models that will outperform others (growth investing). This approach, however, also means settling for delayed gratification. We might have to wait years until our shares have gained enough capital appreciation to sell them again for enough profit.
For many who have experienced challenging jobs or projects, just seeing the rewards of investment portfolios on a cash account and mapping them with existing recurring expenses triggers a strong feeling of freedom and assurance. The more you rely on your salary, the more permanent your job feels. The moment you stop needing it, every job feels temporary.
This chapter will focus on passive income—investments with recurring payouts. While the previous chapter focused exclusively on stocks, this chapter will also explore two other asset types: bonds and cryptocurrency. Let’s begin by examining how to maximize recurring payments through stock dividends.