Increasing My Passive Income

Man, I have been coasting.

I’ve been so focused on increasing my side income and working toward getting a promotion at my day job that I haven’t looked at increasing passive income from what I have already invested.

Passive income is the ultimate goal, of course, so focusing on maximizing that amount means potentially fewer hours spent on other money making ventures.

My Current Position

For the purpose of getting out there and baring it all, here is my current financial position:

Defined Benefit Pension Plan

I work for a government organization, so I have a defined benefit pension plan. The formula for retirement income after the age of 65 with the benefit plan is 2% * Highest Average Salary * Pensionable Service. Assuming I have no salary growth (which isn’t going to happen – we get increments every year), a rough calculation of how much I would get in retirement after each year of pensionable service is:

2% * 50,000/year * 1.0 = $1,000/year.

What this means is that if I work for my current employer, or at least one that has a defined benefit plan, for 5 years at the same salary, I will make $5,000/year in retirement income.

This is a rough estimate.

TFSA

I currently have $4,000 invested in my TFSA. My TFSA is with ING Direct, and is an Investment Savings TFSA. The interest rate is a pathetic 1.4%.

RRSP

My RSP is with ING Direct, and it is a Self Directed RSP. The book value of that account is $2,479.96, and the market value is $2,725.61.

Other Savings

I have an additional $4,000 in various ING Investment Savings accounts. They make 1.35%. This acts as my emergency fund with my TFSA as a backup.

My Investment Income Plan

It’s nuts to continue on making such pathetic returns on my money. I am only 25, and I have a pension which is pretty safe. My risk tolerance is moderate, especially since I have my pension. I developed a plan to put into place to increase my passive income position and make more money from doing nothing.

ETFs

I have about $1,000 that I wanted to invest initially. After much thought, research, and analysis, I decided that ETFs were my best options; and dividend paying ETFs at that.

I opened up a Questrade account to do so.

I chose Questrade because they are a low cost Canadian brokerage option, it’s cheap to buy ETFs and, frankly, the $50 worth of free trades didn’t hurt, either. A few bloggers that I trust had recommended Questrade so I decided to try it out.

(Use my affiliate ID to get $50 in free trades – click below and start the process).

I did quite a bit of research into low MER, dividend ETFs with a proven track record and came up with a few that I initially invested in:

• ZCN.TO
• ZDV.TO
• VDY.TO

It’s a slow process and I’ve only been at it for about a month, so as I do more research I’ll look at more options.

TFSA

I have $4,000 in a low interest TFSA right now, which makes me sad.

I am comfortable with ING for my TFSA because it’s easily accessible, I know ING well, and they do have some better options than what I am currently using.

I have started the process to switch from the TFSA Investment Savings Account to the Mutual Fund TFSA. Hopefully, it will provide much better returns.

I will transfer my various savings into that account as well, except for about $1,000 just in case of small emergencies.

I’m confident that I’ll be able to increase my passive income by following through with these strategies. How have you increased your passive income?