I am a substantial fan of the traffic for financial independence, earlier retirement (Fire). The idea of ​​building a indefinite, passive income that would supplement and, hopefully, replaced my performances from nine to the fifth, sounds perfect.

Of course, to achieve another stream of earnings, you need a lot of challenging work, discipline and happiness. I think that investing in high -quality British actions is one of the most achievable ways for me.

Here are three things that investors should take into account when building passive income for the future.

Investing in appropriate shares

Choosing the right investments is crucial. Personally, I prefer high -rate dividend shares, because the level of payment levels are usually relatively “sticky”. Company management boards, if possible, avoid significant reduction of dividends to avoid sending investors an improper signal.

There are many actions with a high rate of return on Foots. One example is Legal and general information (LSE: LGGE), which currently brings impressive 8.7%.

This is a result much above the average Footy of about 3.5% and one of the highest in the British index of immense companies. The company is the main player in the British asset management industry and could benefit from the consolidation of retirement programs because it tries to augment managed assets and related fees.

Although Legal & General offers high performance, it is not for me at the moment. The company’s dividend coverage indicator of 0.9 indicates that the company’s profits do not cover dividends, which calls into question the future payments. Another worry for me is the price rate for profit (p/e) located north of 40.

To do this, you should be aware of the dividend value trap. This happens when investors buy shares because of their high rate of return, but in fact the price of shares decreases due to impoverished results, which means that profitability seems artificially overstated.

Although I am a supporter of people paying dividends who can augment the value of my future portfolio, the Legal & General department is not for me. There are several other high -income Fotsie shares, including GSKWhat am I thinking about.

Building lasting saving habits

Investing in shares of companies such as Legal & General and other dividends are possible only if you have cash. Investors who are able to build vigorous saving habits in the long run really have no chance to build a substantial passive income.

These habits are also helpful when hunting for occasions. Investors with cash they can buy when others sell, they could potentially invest in economical shares and ensure profits in the long run.

Having a fund for a rainy day

All this is fine, but investors can easily be caught by market movements. The stock exchange tends to cyclicality, so the recession can affect the value of the portfolio at the same time when people need cash the most.

Of course, it’s best to avoid sales at the lowest level. One of the best ways to protect investors is to create a fund for a rainy day or an emergency fund to cover a reasonable amount of expenses.

This amount will be different for everyone, but I usually keep spending in three to six months in secret. Doing it by choosing the right investments and maintaining constant saving habits, I hope that I will avoid forced sales and build a long -term passive income.