AK receives another letter from a reader:
I’ve read your recent post on your 1H 2016 income. I find it very inspiring and I hope to be able to reach your level one day. I have a few questions that I hope you can help me with in planing my portfolio
1) How much of your portfolio do you allocate to growth stocks and how much for income stocks?
2) If looking at income stocks aka dividend yield, what % and above do you deem it worth your while to invest in?
3) Whats your average yield for your whole portfolio currently?
Such blog posts are meant to inspire readers to embark on their own journeys towards financial independence. They are not meant to instruct. I am glad you are inspired. 😉
The allocation would depend on a person’s motivation. Since I am more interested in income, I allocate more resources towards investing for income, for example.
When investing for income, a higher yield is always attractive but we have to bear in mind that other factors must be considered too. Always ask how is that income generated and also if it is sustainable (for how long)? We might not always get it right but if we have clear answers to these two questions, we should get it right most of the time.
One objective of investing for income is to beat inflation. If a stock is able to generate a yield that beats inflation rate or at least equals it, I might consider.
I never tell people what my portfolio’s average yield is, but I have revealed my annual passive income in absolute dollar value. However, this does not stop some readers from doing some CSI in my blog to get an estimate. 😛