Passive Income is insanely powerful, here's why

I make $3,000/month at my day job (this isn't real).

I'm good at budgeting, so I'm able to save $1,000/month.

At the end of the year I have $12k, and I choose to invest in dividend paying #stocks.

1/

I choose a company/etf with a decent dividend yield, here are a few examples:

$T $VZ $JNJ $UPS $MMM $O

Let's go with $T, which currently yields 6.95%

On my $12k investment, I'll yield $834.

Nothing huge, but it's money I didn't have before.

2/

That next year, I budget and save the same $12k, and pick up additional shares of $T.

I invest:

-$12,000 from budgeting
-$834 from $T dividends.

Year 2 $T portfolio value: $24,834.

At the end of year 2, I'm generating $1,726 per year, just from dividend income.

3/

Year 3:

-$12,000 from budgeting, invested into $T
-$1,726 from dividend income, reinvested into $T

End of year 3 portfolio value: $38,560

End of year 3 dividend yield: $2,680

You can see where this is going right?

4/

The passive income you generate from dividends is essentially adding income to your total budget. It's not huge at first, maybe ~$70/month ; but after 3 years you're generating over $200/month of income just from your dividend portfolio in $T

5/

At this point you're feeding the machine, and it won't be long before your $T dividends are in excess of $1,000/mo, which is more than you're contributing from your 9-5 job.

Passive income increases your income, and makes it easier and easier to save more each month.

6/

The only question remaining:

How are you generating passive income?

Hit the comments below and let me know!

7/7

I wrote a short thread on the power of passive income and investing in dividend paying stocks like $T, I think some of you might like it:

@MindingMy30s @thewealthdad @SteveOnSpeed @CJ_Johnson17th @MoneySavvyMind @Cody @PaulMDomenick @HIAliving