How I’m making my life easier for 2023 with these passive income ideas

December is one of my favorite months of the year. However, it is followed by January, which is my password at least favorite month. At the beginning of the year, I like to distract myself with intensive research and some stock picking. I’m always looking for ways to make life easier. Part of this has to do with passive income. If I can create another income through investments, then it can help me enjoy 2023 (and the years beyond) even more!

Hit the ground running

I didn’t have to wait long to start earning. The easiest and fastest way is to buy another dividend stock, before the ex-dividend date passes. This is the last date by which I must be a registered shareholder in order to receive the upcoming payment.

In the next month, there is an ex-dividend date for some well-known names included SSE, Imperial brand and BT Group.

Even though I don’t have the free money to buy these stocks right now, I will still have plenty of opportunities in Q1 to add different income stocks to my portfolio.

A risk is that I can miss the ex-dividend date of the shares I want to buy, in case the potential income stalls until the next announced payment.

Think for the next decade

What if I want a strategy to help me in 2023 but also for many years? I like to tweak the top by making one simple difference. Instead of taking the dividend payment and spending it, I will use the money to buy more shares.

This helps me next year as I save money and increase my investment pot. But it also helps me in the long run because reinvesting dividends gives me a bigger future portfolio.

For example, if I invest £300 a month for the next decade but take dividends and spend them, I will have a pot worth £36k at the end. I am assuming for the moment that there is no capital gain or loss in the share price. Now, if I leave the dividend (with an average yield of 4%) to compound, my pot would be worth £44.6k.

Passive income from growth stocks

My last idea is to use profit trimming from growth stocks. Such companies have not finished this year. But this actually makes them more attractive to me now, as the stock price is lower.

If we get an economic recovery next year, or if the recession doesn’t go as well as people plan, I should be more inclined to buy cleaner stocks.

Accurate growth rate forecasts are difficult. This is the risk when I try and predict whether this strategy makes sense or not.

But if I take the average stock price growth of five years as an example Amazon (9.8%), Apple (42%), Tesla (111%) and Alphabet (11%), I can see that it could be substantial.

If I invest in UK growth shares that I like and like the same yield, I can sell part of the shares every year corresponding to the amount of profit. That way, I will always keep the original size of the investment, but can earn cash profits along the way.