How to Build Passive Income in 2025! (even with just RM100 monthly)

Summary

This video outlines how to build passive income with as little as 100 ringgit a month, emphasizing the power of compounding returns. The presenter explores five investment strategies: dividend stocks, REITs, P2P lending, ASB/ASM, and EPF. Each option is explained with its potential returns, risks, and benefits, focusing on how consistent investment can lead to significant portfolio growth. Real-life examples, such as investing in Maybank shares, demonstrate how small investments can grow substantially over time. The key takeaway is the importance of consistency and risk tolerance in building long-term wealth.

Takeaways

• 😀 Even small investments, like 100 ringgit a month, can grow significantly over time due to compounding interest.
• 😀 Dividend stocks offer a passive income through consistent payouts from company profits, growing as the company earns more.
• 😀 Investing in dividend stocks can be risky due to market volatility, but long-term growth and dividends can outweigh short-term fluctuations.
• 😀 REITs (Real Estate Investment Trusts) allow you to invest in property with as little as 100 ringgit, offering a more stable passive income stream.
• 😀 REITs are attractive because they must pay out at least 90% of their earnings to shareholders, offering high dividend yields.
• 😀 Peer-to-peer (P2P) lending offers fixed returns by lending money to small businesses, but it comes with default risks, especially with higher return promises.
• 😀 ASB (Amanah Saham Bumiputera) and ASM (Amanah Saham Malaysia) are fixed-price unit trust funds that provide low-risk, steady returns of 4%-6%.
• 😀 EPF (Employees Provident Fund) is a mandatory, safe investment that offers capital protection and steady dividends, with an annual return around 6%.
• 😀 Consistency in investment, like putting 100 ringgit monthly into stocks or REITs, can lead to a substantial portfolio over time, as demonstrated with Maybank shares.
• 😀 Always be prepared for market volatility with dividend stocks and REITs, and don’t panic sell during price drops to avoid losses.
• 😀 If you prefer lower-risk investments, consider safer options like EPF or ASB, though they typically offer lower returns compared to stocks or P2P lending.

Q & A

What is the importance of compounding interest in building passive income?

Compounding interest allows your investment to grow exponentially over time. For example, investing just 100 ringgit a month can result in a significant return when compounded annually, making your investment grow faster than just simple interest alone.

How does dividend investing work?

Dividend investing involves purchasing stocks from companies that pay a portion of their profits to shareholders as dividends. Over time, as the company grows, both the value of the shares and the dividend payments can increase, creating a stream of passive income for the investor.

What are the risks associated with dividend stocks?

The main risks include stock price volatility and the business's performance. A company's dividend payments are not guaranteed and can fluctuate based on their earnings. Additionally, the stock price can rise or fall depending on market conditions.

What characteristics make a good dividend stock?

Good dividend stocks are typically companies with strong cash flow, stable and predictable earnings, and a history of paying consistent dividends. Businesses in sectors like banks or companies with subscription models tend to make good dividend investments.

How can someone start investing in dividend stocks?

To invest in dividend stocks, you can open a brokerage account with platforms like Mumu or M Plus. Once the account is set up, you can buy shares of dividend-paying companies and start receiving passive income.

What is the difference between dividend stocks and REITs?

While both dividend stocks and REITs provide passive income, dividend stocks are investments in companies, whereas REITs focus solely on real estate. REITs own, manage, and rent properties, and are required to distribute at least 90% of their earnings as dividends.

What are the advantages of investing in REITs?

REITs allow you to invest in real estate with as little as 100 ringgit, and without dealing with property management. They provide a steady income stream from rental earnings and are required by law to distribute most of their earnings to shareholders.

What types of REITs are available for investment?

There are several types of REITs, including retail REITs (owning shopping centers), office REITs (owning office buildings), healthcare REITs (owning hospitals), data center REITs, and mixed REITs that invest in various types of properties.

What is P2P lending, and how does it work?

P2P lending involves lending money directly to businesses or individuals through online platforms, bypassing traditional banks. In exchange for lending money, investors receive monthly interest payments. However, there is a risk of default if the borrower is unable to repay.

What is the difference between ASB and ASM?

ASB is a unit trust fund specifically for Bumiputra citizens, while ASM is open to everyone. Both are fixed-price funds, meaning their unit price remains constant at 1 ringgit. They are low-risk investments that offer modest returns of around 4%-6% annually.