Building Passive Income In The UK:
An Interview with Lewys Thomas
Welcome to this interview series focusing on UK-based passive income builders. The term ‘passive income’ has been gaining popularity in the last 10 years (according to UK google trends data). Whilst this is encouraging to me, I think that UK-based voices are few and far between.
I don’t doubt there are plenty of pioneering individuals out there with a passive income story to tell. Whether those people are just starting out on their journey. Whether they already have established income sources or they are financially free, this series will highlight them. I hope you find this series enlightening and encouraging, opening your eyes to the multitude of ways you can reach your financial goals.
Today, in our second interview, I’m talking to Lewys Thomas.
Please introduce yourselF
When I was 18 my grandfather gave me £1,000. Wow! What a gift. I happily stuck it into my bank account, locked it away for a year later it had grown by just a few pounds. What? This can't be true! I suffered a whole year, foregoing purchases and making sure I didn't touch a penny of the £1,000.
This is when I learnt about interest rates and how, at the moment, savers aren't being rewarded. This is when I started learning about investing in the stock market. My name's Lewys Thomas and I blog under the name of FrugalStudent. I'm currently a full time Accounting and Finance student at Swansea University.
What Does Passive Income Mean To You?
Passive income to me is safe and steady income while I sleep. I don't need to check anything, do anything and most importantly it's not going to disappear overnight. Getting paid to sleep, what a job!
What passive income sources do you have?
I hold shares in a mix of US, Chinese and British companies, most of which pay a safe, growing dividend that outstrips inflation. As time goes on, I earn more and the best thing is that I don't have to do anything. I simply buy and hold forever and, best of all, I'm handsomely rewarded.
How easy is it to manage foreign-based passive income?
Very easy! The broker sorts out all of the currency conversations for me although the nature of Chinese companies worry me a bit, this is why they make up just 10% of my portfolio.
How does your passive income compare to your active income and your expenses?
At the moment my passive income is only £500 a year. Quite lame really. But, by reinvesting this income into buying new shares and as these shares pay out larger dividends the compound effect will take hold and lead me to riches. (Well, that's the plan at-least!).
What are your short and long term goals with passive income?
My short term goal is to hit £25,000 invested in the stock market by January 31 2019. I recently hit my goal of having £20,000 invested.
Which source of income is the most passive?
All my passive income comes from dividend payments from companies.
What is your favourite passive income source and why?
Dividends! - It's as passive an income as one can get, they usually grow faster than inflation and I don't feel so guilt buying a McDonalds as I have shares in the company.
Do you think your passive income sources will provide consistent income over the long term?
Absolutely. Unless the world grinds to a halt that is. In fact, by investing in companies that managed to grow their dividend while the world was apparently falling apart in 2008 we can often be sure that they would be able to do the same should another crisis hit. (There is a lot more to look at of course).
What passive income sources would you like to have in the future? Do you see any areas of growth?
I would love to start a Teachable course or Youtube channel where I could earn income from people buying my course and watching videos. The best thing would be that these sources would help others build a passive income too!
Do you plan to pass on these income streams to your beneficiaries?
Nope. I look to give away over 50% of my money to good causes. If I ever get rich enough I may even pass on 99% (just like uncle Warren).
Has passive income-building changed how you save, spend and invest? If so, how?
Passive income is addictive. I forego spending of £1000s just for £20-30 a year in passive income. But that income will grow forever and once compounding takes hold, I'll be a very happy man!
What are the main advantages and disadvantages to being UK-based when building passive income?
The main advantage would be the existence of Stocks and Shares ISAs which shelter hard saving investors like myself from paying tax on our investments.
The main disadvantage would be the lack of competition in the broker space leading to high investment charges and prices and a lack of first hand knowledge of some of the worlds largest companies - mostly based in the US and China.
What advice would you give to someone looking to build passive income in the UK?
Be patient and invest in dividend stocks. Building a passive income takes time and also means sacrificing a lot in the short term. Discipline is also key. Writing down some rules that dictate the way you invest is always helpful and will stop you from getting carried away in market rallies and selling in a bear market.
And finally, where can people find you?
Lewys learned an important financial lesson at a young age. Instead of perceiving his bank balance as simply the money he could spend, he placed greater value in the long term income that this balance could produce. Underwhelmed by the income from his bank accounts, he found a way that he could maximise this income, long term, through investing.
If you liked this discussion, hit the like button down below. What do you think of Lewys’ source of passive income? You can join in the discussion in the comment section down below