Passive Income

My early retirement goal relies heavily on passive income streams.

Although it looks like I will have some sort of pension, annuities, and IRA’s to live off at the appropriate age levels, I also want to count on a diversified collection of continuing incomes.

Here is what that currently looks like;

Links from above Chart; Business Venture, Stock Portfolio #1 & #2

Once I start adding some rental properties to the mix I will feel like this part of the plan is really shaping up. I have also toyed with the notion of Peer to Peer lending, but I think Dividend Portfolios and some rental income will really be the two pillars of this strategy.

We do rent our cottage out on VRBO. Thus far it just covers expenses so it does not count as a passive income stream.

I have also somewhat soured on the bond interest at this point. $42 dollars a month is a steady stream on $25,000 worth of I bonds, but the current interest rate does not bode well for my continuing to dump money into this venture. I would revisit this when interest rates start to creep up again.

The business venture payouts will cease in about 12 years, right around when I plan to retire. By then I should have more than replaced them with dividend payouts.

To this, I add about $10,000 a year into dividend stocks. Plus any lump sums I come across that are not already ear marked for something else. I figure I need the portfolio to grow from its current $220,000 to a little over double that to hit a good target stream of $ 1,500/month. I use a rate of about 3.5% when figuring dividend income.

 

Other possible types of income I have looked into include venture capital lending and real estate buying pools. Due to their newness, I am just not sold on them as income vehicles at this time.

For now, I will keep dreaming of the day when passive replaces active earning and weighing out my personal level of risk tolerance.

Here is a link to our Retirement Master Plan to see how this all fits together.

 

2 thoughts on “Passive Income

  1. Looks like a good plan. I’ve been doing P2P for about four years now. If you’re going to do this, I recommend doing it in a Roth IRA because trying to figure out the taxes is challenging. I like things to be easier not harder. I’m slowly liquidating all my P2P investments as the loans mature.You might find that other investments are more worthy of your time and focus.

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