Alternate Income – Using Dividend Yield Funds – HOW Realistic???

POSTED BY sunil ON January 2, 2013 1:05 pm COMMENTS (8)

Dear All,

I have been thinking over this from past few months, as in to have a second source of income (not substantial though) through investing in Dividend Yield Funds…

How good would that idea be and will it be ever profitable.

Can you please throw some light on this.

Thanks in Anticipation.

Sunil Ramidi.

8 replies on this article “Alternate Income – Using Dividend Yield Funds – HOW Realistic???”

    1. Ramesh says:

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  1. sunil says:

    Thanks all… i became a bit over ambitious by reading something else…
    As suggested keeping things simlpe gives a lot of scope for my requirements.

  2. Ramesh says:

    What exactly are Dividend Yield Funds? First think about that.

    Basically, you just need to put your money into a decently performing fund (whether dividend yield or not), and get either the fund-declared dividends or withdraw whatever amount you want regularly / irregularly as per your need.

    Do not try to complicate things, where it is not required.

    Keep things simple.

  3. You could use this
    http://freefincal.wordpress.com/step-by-step-guide-to-choosing-a-mutual-fund/

    to select a mutual fund.

    You goals seem pretty vague to me. If you want secondary income just to pay utility bills I think it could prove costly in the long run. Cut down your expenses as much as you can, use to primary income to first pay yourself that is fund your retirement then other long term and short term goals that you may.
    After this if you have any money left you can think about passive income generation.
    you will lose the power of compounding if you dont do this.

    Of course if you are investing enough for all your goals doing the above or even now best to use any lumpsum you receive like bonuses for this passive income

    “a person might not then venture into Equities with that Lumpsum instead he tries to ge money through FDā€™s or some DEBT instruments.”
    Again this is vague. A small portion of equity investing with a lumpsum is mandatory for financial independence in retirement to fight inflation.
    All other goals once lumpsum is obtained it will get spent in one shot. so what you say is not relevant

  4. sunil says:

    Any specific Mutual Funds which migt help my cause (or atleast let me calculate how good this idea might be)

  5. sunil says:

    Thanks FFC for your reply.
    Idea of building a corpus first and then thrive to accumulate wealth using that might seem interesting and tempting as well…. but i somehow feel a person might not then venture into Equities with that Lumpsum instead he tries to ge money through FD’s or some DEBT instruments.
    In my case, i might as well get a second income as well my investment does grow with equities…
    I assumed a time horizon of 7-9 yrs.
    With secondary imcome supporting my small payments (utility bills) and the final corpus helping me to plan for a new vehicle.

    How good will this be ????

  6. as a non-reliable and variable second source of income yes. Will it be profitable depends on your definition of profit. Why you need it? How much you need, Is this second source so important that you are forgoing the power of compounding.

    Having passive income is a great idea. However it would be prudent to invest first gain a sizeable corpus and then use it to generate sources of income from various instruments.

    Since you are saying it will not be substantial why not invest let it compound build a corpus and the think about passive income?

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