Passive Income Reflection

Each morning I write about whatever my mind seems enjoy thinking about. Recently, my mind has been thinking more about passive income generation from various asset classes. Here’s those thoughts…

With a $99,000 nest egg, contributing $2,500 per month for the next 28.5 years (when I can withdrawal from tax advantaged accounts) my portfolio should sit at $3,079,165.
$123,166 annually.
$10,263 monthly.

A smart money strategy to follow would be having 2 years worth of expenses saved in cash. This money is used if the market is going through a recession / depression. In such times, you wouldn’t touch your paper asset portfolio since in doing so you would negatively impact your monthly spending amount of $10,263. Rather you will use your savings to spend on daily activities thereby buying your portfolio time to recover.

In such times I would rely on the income from my rental portfolio as well. By this timeframe I will own properties that are free and clear – or a few years away from free and clear. An extra $2,500 – $5,000 a month in profit would be wonderful.

As a single man, $5,000 per month passive income would change my life. I could do almost everything I want to do – travel to foreign countries for a few months, play golf, snowboard, soccer, lift, socialize, eat out, concerts.

My real estate business vision is to earn $60,000 annual passive income. That level of success allows me, if I’m inclined, to work on big things that could drastically make me a very wealthy man. The key I believe is building that 60K per year passive income business. All the pundits and media will scream “that’s not enough!.”

$60,000 in annual passive income is $5,000 per month. Based on my current real estate model’s passive income threshold, that’s 5 more properties self managed. For a more true passive income model, hiring a property manager would mean I’d need 6 properties to earn $5,000 per month and pay for the property manager service.

My philosophy for financial independence is using real estate to achieve my passive income goals in the short term while I’ll fund paper assets for long term compounded growth. The paper assets will service as additional pillars of passive income in my old age. In the short term, rental income will earn my early financial independence.

But what is enough? 60K passively is enough in my opinion. I can always spend more, yet, that’s against my frugal values. When you finally have the nice sports car or full sized pickup, a jet ski, fine dinning experiences, designer clothes – your going to be the same person you were except you own lots of things. These things weigh you down. Prevent you from being more flexible and adaptable. Prevent nomad travel. It fosters an environment when you have to keep working in order to pay for the upkeep of all these things.

Is that truly a good way to live this one short life?

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