Learn how to build passive income for financial independence and your happiness will increase. I have been creating passive income since 1999, when I realized I didn't want to work in investing banking forever. Getting in at 5:30 a.m. and leaving after 7 p.m. every evening was too brutal!
Creating genuine passive income is the holy grail of personal finance. Once you generate enough passive income or semi-passive income, you are more free to do what you want.
The key is to start building your passive income as early as possible. Start by identifying what you are building passive income for.
Not all passive income is created equal. Some streams take much more initial effort to start, such as saving enough to buy your first rental property. Please don't confuse active income with passive income. But once you start building true passive income it's very difficult not to gain momentum.
Passive Income First Takes Work
Everything passive first takes active energy. The time to put in the effort is when we are young and not ravaged by disease or burdened by family obligations. When you're young, you can work much longer hours and still be good to go the next day.
I remember being able to snowboard from 9am until 4pm every day for a year. Now, I'm lucky to last from 11am until 2pm without wanting to go to the hot tub and drink a bucket full of beer!
If we can appreciate how lucky we are when we are young, we'll be able to maximize our vitality and live financially freer when we are older. Passive income is much more valuable than you may realize.
What You Can Do With Sustainable Passive Income
- Retire early and travel the world.
- Start a business in a field you are passionate about.
- Find a job that pays less, but is more interesting.
- Stay at home to take care of your family without having to worry about money.
- Volunteer for causes you truly care about.
- Be a big brother or big sister.
- Spend more time with your parents.
- Sit in a coffee shop on a 80 degree day in Paris for hours on a Wednesday afternoon.
- Write the next great novel on the balcony of a cruise in the Mediterranean.
- Eat tapas and drink sangria until 1am on a Monday evening.
- Potentially live longer due to much less stress.
- Experience perfect endless summers over and over again.
- Write the next greatest personal finance book
There is so much you can do once you generate enough passive income to pay for all your living expenses. I highly encourage everyone to at least try. This post will provide you a framework for passive income success.
How To Build Passive Income: The Framework
Let me share with you eight key ways to generate passive income to eventually live a life of freedom. I followed this passive income framework to retire in 2012 with roughly $80,000 in passive income.
Today, my investments generate roughly $380,000 in passive income. It's the amount necessary to enable my wife and me to stay home and take care of our kids in expensive San Francisco.
Here's the framework necessary to build more passive income.
1) Save Like Nobody Owes You Anything
If the amount of money you're saving each month doesn't hurt, you're not saving enough!
Generating passive income starts with savings. Without a healthy amount of savings, nothing works. Your overall “Money Strength” will be an F- if you do not build a financial nut. In our current low interest rate environment, you must save even more than before. It's important to also realize that the savings I am referring to is after-tax savings.
You need to save money after contributing to your 401k and IRAs since you can't touch pre-tax retirement accounts without a penalty until 59.5. Ideally everyone should max out their pre-tax retirement funds first, but if you don't have enough funds and want to retire earlier then a decision to have more accessible post tax money will still work.
What I did: Saved 50-75% of my after-tax, after 401K contribution every year for 13 years because I knew I could not last in finance for more than 20 years.
Today, I still save about 50% of my after-tax income mainly because I've been able to generate sustainable supplemental income from this site. If you stick with things for a long enough time, you may surprise yourself on the upside.
2) Find Out What You Are Good At
Everybody is good at something, be it investing, playing an instrument, playing a sport, communications, writing, art, dance and so forth. You should also list several things that interest you most. Find your X-Factor and be great at it!
If you can combine your interest plus expertise, you should be able to monetize your skills. A tennis player can teach tennis for $65 an hour. A writer can pen her first novel. A finance buff can invest in stocks. A singer can record his first song.
The more interests and skills you have, the higher chance you can create something that can provide passive income down the road.
What I'm doing: I love to write and invest. Combine these two interests with my ability to get things done equates to multiple investment types and this personal finance site that generates revenue.
Once you retire, it's a good idea to try and make supplemental retirement income from something you are good at. You want to have purpose and relevancy in retirement.
Also see this post How To Be More Creative: Advice From A Writer, Artist, And Pianist
3) Create A Financial Plan
Mark Spitz once said, “If you fail to prepare, you're prepared to fail.” You must create a system where you are saving X amount of money every month, investing Y amount every month, and working on Z project until completion.
Things will be slow going at first, but once you save a little bit of money you will start to build momentum. Eventually you will find synergies between your work, your hobbies, and your skills which will translate into viable income streams.
What I'm doing: I use this site to write out goals like 1) Generating $400,000 a year working 4 hours a day or less, 2) Trying to make winning investments, and 3) Keeping track of my passive income streams with free financial tools. My site and the community helps keep me accountable for progress.
It's important I do what I say, otherwise, what the hell is the point? You should consider starting a site or at least a private journal. Write out your specific goals, tell several close friends and stick to the plan.
4) Treat Passive Income Like A Game
The only real way to begin your multiple passive income journey is when you are making active income. The initial funding has to come from somewhere. Hence, treat passive income as a game that has various levels. If you fail to achieve one level, it's not the end of the world since you still have active income and can restart.
Further, a game is meant to be played with integrity. Using shortcuts (non passive income streams), someone else's income as a supplement (spouse), or one-offs (capital gains) does not count. The primary purpose of any game is to bring enjoyment to the player and beat the boss.
What I'm doing: I view online income as funny money to keep myself sane during this long journey. The dollars created are just points one can accumulate. I think convert funny money into real assets like real estate to increase my chances of keeping my wealth.
I've made passive income goals for each passive income type and check in at least once a year like I am now to make sure I'm on track. Passive income is also carefully managed to minimize tax liability. When you can build a buffer for a buffer, you are then free to take more risks.
5) Determine What Income Level Will Make You Happy
Building passive income is great, but you need to have a reasonable target. Otherwise, you'll just be building passive income for its own sake. You need a purpose.
Think back to when you made little to no income as a student. Now think back to the days when you just got started in your career. Were you happy then? Now go over every single year you got a raise or made more money doing something else. How did your happiness change at all, if any?
Everybody has a different level of income that will bring maximum happiness due to different desires, needs, and living arrangements. It's up to you to find out your optimum income level.
What I did: I first identified my favorite places in the world to live: San Francisco, Honolulu, Paris, Amsterdam, New York City, and Lake Tahoe. I then looked up the median rent and housing prices for each city. Then I factored in private education costs for two kids to be conservative given I may not have two kids and public schools are often good enough.
After calculating all vital costs, I then did a self-assessment of how happy I was making $50,000, $100,000, $150,000, $200,000, $250,000, $350,000, $500,000, and $750,000.
I decided working 25 hours a week making $300,000 a year was the best income balance for maximum happiness to provide for a family of up to four. Below is a sample family budget making $300,000 a year.
6) Always Remember That Everything Is Relative In Finance
The best way to determine worthwhile passive income streams is by comparing the likely return (IRR) with the current risk-free rate of return. The risk-free rate is currently around 1% (10-year bond yield). Any new venture should thoroughly beat 1% otherwise you are wasting your efforts since you can earn 1% doing nothing.
What I'm doing: My realistic net worth growth goal is to have a blended annual return of 3x the risk free rate. With a current 3.5% hurdle, I am not paying down mortgages that cost less than 3%. It really is nuts to have mortgage rates under 2.5% nowadays.
My realistic blue sky scenario is a 5X rate of return over the risk free rate which can be achieved with property, stocks so far for the past five years, and certain private equity investments. In other words, a 5% annual net worth return in the new decade is just fine by me.
7) Try Not To Withdraw From Your Financial Nut
The biggest downfall I see from people looking to build passive income is that they withdraw from their financial nut too soon. There's somehow always an emergency which eats away at the positive effects of compounding returns. Make sure your money is invested and not just sitting in your savings account. The harder to access your money, the better.
Make it your mission to always contribute X amount every month and consistently increase the savings amount by a percentage or several until it hurts. Pause for a month or two and then keep going. You'll be amazed how much you can save. You just won't know because you've likely never tested savings limits to the max.
In my opinion, the ideal retirement withdrawal rate doesn't touch principal. But for a more practical exercise, here is the proper safe withdrawal rate depending on economic conditions.
What I Do: I've set up multiple investment accounts outside my main operations bank that deals with working capital e.g checking, paying bills. By transferring my money to a couple brokerage accounts and two other banks as soon as it hits my main bank I no longer have temptation to spend on frivolous things. As a result, I can wake up 10 years later and reap the rewards of compounding.
My 401(k) is the best example where consistent contributions over 20 years has grown to over $600,000 without any savings pain given it just became a part of life. Real estate is also a fantastic asset class for the long term. It's fantastic to enjoy your home, pay down your mortgage each month, and end up with a paid off asset that has likely appreciated during your time of ownership.
8) You Must Force Yourself To Start
“A Journey Of A Thousand Miles Begins With A Single Step.” Laozi was a great philosopher who penned this popular English translation. Everything great started somewhere. You must set aside one day to tackle your financial independence goal. Circle the date on your calendar and cancel all other distractions.
What I did:The first two years of work in NYC was brutal. I told myself there was no way I could work on Wall St for my entire career because I'd probably die from heart failure by age 40. Having an early death in my mind willed me to save 50%+ from the first year onward and devise a CD, real estate, and stock investment distribution system for my savings every year.
I thought about starting this site for at least a year before I hired someone from Craigslist to give set me up and push me forward. Hiring someone to get started is totally worth it if you are a master procrastinator. You can now learn how to start your own site with my step-by-step guide to save yourself time and money.
And if you want to build a low-risk passive income stream of interest, consider a high-yield savings account or CDs with CIT Bank. They're a safe and reliable direct bank with consistently some of the best paying rates.
Latest Passive Income Streams
Now that you know how to build passive income for financial independence, let me share my latest passive income streams. The goal on Financial Samurai is to always put ideas into practice.
We have used our passive income streams since 2012 to slowly build the life that we want. Our passive income was around $80,000 in 2012, which allowed me to retire early. By 2015, our passive income had grown to about $150,000, which enabled my wife to also retire early.
Today, our estimated passive income is around $380,000 so that both my wife and I can by stay-at-home parents. Our kids are only three and five, which means they need lots of love and attention.
I do not include my online income from my business other than my severance negotiation book because writing takes a lot of work.
Below are my latest passive investment income streams, with a focus on real estate.
* I use Personal Capital to track all my finances in one place. It's much easier to use their free software to follow 28 accounts on one platform than to log into various accounts to check my balances. They've also got great tools for x-raying your portfolio for excessive fees, recommending a more optimized asset allocation, and planning for retirement with their Retirement Planner.
Stock Dividend As Passive Income
Dividend income is wonderful because it is completely passive and is taxed at only 15% if you are in the 25%, 28%, 33%, and 35% income tax bracket. If you are in the higher income tax bracket you will pay a 20% tax on your dividends.
My dividend income portfolio mainly consist of dividend equity and bond ETFs such as DVY, VYM, MUB, TLT, and IEF. Total stock and bond income is almost $100,000 a year due to a heavy accumulation of stocks and municipal bonds after selling my house.
Please read The Proper Asset Allocation Of Stocks And Bonds By Age to learn how to best structure your investment portfolio by age. The article goes through the very important “why” so you can invest more confidently for your retirement.
Real Estate Rental Income As Passive Income
I currently own three rental properties in San Francisco, one vacation rental in Squaw Valley, Lake Tahoe (2/2 condo), and my primary residence.
Real estate is my favorite asset class to build wealth because it is easy to understand, tangible, provides utility, and rides the way of inflation. I recommend individuals try and get neutral inflation by buying their primary residence as young as possible. The power of inflation is just too hard to counteract.
If you own physical real estate, consider refinancing your mortgage if you haven't done so in a while. Mortgage rates in 2020 have fallen to six-year lows, even after a 10+-year bull market.
Other Passive Income Sources
How To Engineer Your Layoff – In 2012, it took me four months of absolute focus and two years of data to publish my first e-book about helping people negotiate a severance.
The book went through over 30 revisions by four people. Then I updated the book for 2021 with 80+ more pages (200 pages total) using more successful case studies and highlighting more strategies for those who want to break free with money in their pocket.
If you want to make some extra money at home, self-publishing your own ebook could really help.
The book now generates about $42,000 a year in passive income and has helped numerous people walk away with nice severance packages and healthcare benefits so they can pursue their dreams. Below is a snapshot of my Paypal account highlighting books sales.
I also published an instant Wall Street Journal bestseller with Portfolio / Penguin Random House called Buy This, Not That. If the book sells more than 22,000 copies or so, it will begin to generate royalties. BTNT already became an instant Wall Street Journal bestseller. And is the best personal finance book on the market. I hope you all buy a copy!
Venture Debt As Passive Income
I invested $120,000 in my business school friend's venture debt fund. He started his own after spending 8 years at one of the largest venture debt funds as a Managing Partner. I'm very focused on income generating assets in this low interest rate environment. The true returns are yet to be seen, as the fund has a 5-7 year life before it returns all its capital.
Real Estate Crowdsourcing Is My Favorite Source Of Passive Income
After selling my SF rental house in mid-2017 for 30X annual gross rent, I reinvested $550,000 of the proceeds ($810,000 total) in real estate crowdfunding, $600,000 in dividend stocks, and $600,000 in municipal bonds.
My goal is to take advantage of cheaper heartland real estate with much higher net rental yields (8% – 12% vs. 2% – 3.5% in SF) and diversify away from expensive coastal city real estate.
As of 2023, I've invested $810,000 in a portfolio of 18 different commercial real estate projects across the country through real estate crowdfunding. My investments have returned over $624,000 in passive income so far.
My favorite platforms are Fundrise and CrowdStreet. They are the two best real estate investing platforms today.
Fundrise enables investors to invest in private eREITs for diversification and exposure. They have over $3.5 billion under management where their experts invest in real estate opportunities for you.
Fundrise is my favorite platform because it has funds that invest in single-family and multi-family properties in the Sunbelt. The Sunbelt has lower valuations, higher cap rates, and solid demographic trends.
CrowdStreet offers individual real estate opportunities mainly in 18-hour cities where valuations are lower and growth rates are usually higher. CrowdStreet occasionally offer specialty funds, like a Build-To-Rent or Industrial fund, which are always very intriguing.
There is a multi-decade demographic shift away from expensive coastal cities and into the heartland of America due to lower costs, the rise of remote work, and technology that enables telecommuting. I believe secondary cities like Memphis, Austin, and Phoenix will outperform cities like New York City and San Francisco.
What About Other Income Streams?
As part of the Passive Income Framework section, we are playing the game with integrity. It's no fun beating the Big Boss with a cheat code or super weapon that annihilates all enemies with one click of a button. The goal is to develop income streams that keep rolling in if we do nothing at all!
Income streams that don't count:
Capital gains: Unless you can repeatedly sell stock for profit, capital gains is a one off item. It's just as easy to lose money in the markets as it is to make money. Therefore, stop pretending like you are Warren Buffet. Although, there's a chance you might have recurring capital distributions if you invest in private funds. These distributions could be considered passive income.
Freelance writing: Quality freelance writing takes tremendous effort. Ironically, the better the quality of your writing, the more you don't want to freelance. Instead, you just want to keep the articles for your own site. Freelancing is a great way to earn side income, however, it's not really for me. I know that if I'm ever in the dumps, I can make some extra money freelance writing.
Financial Consulting: I used to do four financial consulting sessions a month on average for $1,500 each session. In 2018, I stopped in order to focus on taking more care of my son and now daughter.
Selling anything: If I decide to one day sell my Roberto Clemente rookie card for $800, I'm not going to include this in my passive income streams because I've only got a couple of them. Same thing goes for selling a watch or electronic device.
Blogging: This 3,500 word post has taken around 22 hours to write with a dozen revisions. Content does not magically appear out of thin air as some might believe. It takes a tremendous amount of effort, consistency, and creativity to come up with helpful and interesting content. That said, I enjoy blogging so much and I commend everyone to start their own site.
Build Passive Income Already
“He who fails to plan is planning to fail.” Winston Churchill
Now that you know how to build passive income, you've got to get going. Building passive income takes a long time. The key is to create a plan, save as much as possible, and just get going.
Start investing in assets where you are most comfortable. Always start small and work your way up. Also consider creating your own income producing products.
Do something long enough and good things will happen. All the best in your passive income journey!
Favorite Passive Income Investment
Once you've purchased your primary residence you are considered neutral real estate. Since you have to live somewhere, you will simply ride the real estate cycle. To be long real estate you must own investment property in addition to your primary resident.
Currently, my favorite passive income investment is real estate crowdfunding. Once I had my son in 2017, I decided to sell my PITA rental house and reinvest $550,000 of the proceeds into real estate crowdfunding. The goal was to diversify my real estate holdings across lower-cost areas of the country and earn income 100% passively.
Track Your Finances Carefully
One of the best ways to build wealth is by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts in one place. This way, you can optimize you finances.
Before Personal Capital, I had to log into eight different systems to track 28 different accounts to track my finances. Now, I can just log into Personal Capital to see how my stock accounts are doing. I can also see how my net worth is progressing and where my spending is going.
One of their best tools is the 401K Fee Analyze. It has helped me save over $1,700 in annual portfolio fees I had no idea I was paying.
They also launched an incredible Retirement Planning Calculator. It pulls in real data from your linked accounts to run a Monte Carlo simulation to output the most likely results of your financial future. I strongly suggest you run your own numbers. Play around with the income and expense variables and see how you stack up. It's all free and easy to use.
How To Build Passive Income For Financial Independence is a Financial Samurai original post. I've been writing about achieve FIRE since 2009. To learn more about building passive income, here are the best passive income streams ranked using multiple variables.
Can you share the total initial capital invested in each passive income category line of your total 2022 passive income stream ?
Thank you
The returns on capital are between 2% – 6%. I’ve found that as soon as I discuss investment capital numbers there’s a lot more judgement. So I don’t. I’m a relatively conservative investor since both my wife and I don’t have day jobs since 2012/2015 and we both fear going back to work with small children at home.
See: How I’d Invest $250,000 Cash In Today’s Bear Market
Your home insurance on a 1.5M property is only $1,560/year?? What am I missing?
Are you getting ripped off and paying more? If so, best to shop around if you haven’t in over two years. Check out PolicyGenius for free quotes.
Oh my goodness passive income is the dream! I started small with stock photography from my phone earning a few dollars every month but hoping to get to the point I can do real estate.
You mentioned both your own rental property you sold and Fundrise. Did the returns from Fundrise come anywhere close to the returns from your rental property?
-Andrew
Love your blog. However, I can’t seem to get started with ACTIVE income. Just turned 38. Very little savings under 5K and no job because of the pandemic. Even in pre-pandemic times I was working way too much and making so little. I live in LA. Wages are low out here. I know this but I went to school at USC. The process of finding a decent job has been impossible. I’ve worked plenty of temp jobs. I find TEMP work to be a revolving door of job to job without actually getting hired. I did two years at a University as a temp before I quit. Actually I’m finding higher education was the WORST decision I have ever made. Clown college probably has more of an ROI than what I studied. Lesson learned. I also just went through bankruptcy. Can it get any worse? I may leave LA but I have no idea where. Seems like the “grass is greener” is a relative term. I did try an East Coast city and that turned out to be a disaster. Let’s just say California is a dirty word out there.
Hi Travis- why aren’t you moving if your location isn’t good?
after college, at the age of 32, single mom, and 105 rejection letters, I couldn’t find a decent job. I moved 2800 miles- it was the best thing ever.
Curious, why don’t you move.
I have virtually no relationship with money , and never have. I’m retired, 69 and living now with my daughter. She and her husband are slowly introducing me to the concept of having a healthy relationship with money. They earn a lot of income and are working on building a passive income.
All this is a foreign language to me, but I’m slowly grasping that money isn’t evil, nor are people that want and have it. I’m late to the game yet I’m determined to understand money and allow it into my life. Perhaps more later. Your article was somewhat understood and very much appreciated. Thanks
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Thank you for the insightful article. Presently working on the active income and starting capital. Do you have any advice on increasing active income?
Take all your profit from active income and start investing in yourself. Also, create a blog or a youtube channel talking about your field `cause others novices have tons of questions about your market/service.
Hi Sam,
Thanks for the good articles, website, and work that you do. I’ve been coming to your website more and more often to learn and get good ideas. Quick question, aside from Personal Capital, how did you build your passive income report? I don’t see in personal capital where it kicks out that kind of financial summary. Are you using that software or another to generate the quarterly and annual reports? Thanks!
Dear Sam, I hope your readers really understand the totality of your story. After, reading some of the comments I am not sure many do. Here it is in in a nutshell.
Diversify safely but DIVERSITY. You do not need to get the best and highest return all the time. If so, you are not earning passive income you are earning active income which is taxed differently (see IRS.GOV passive -vs- active income definitions). As an investor you do not need to be chasing ‘the almighty dollar’. This is a losing proposition. Make the dollar come to you.
The CD is one of the most effective ways to create passive wealth over time and has been used by investors for generations. Ask your grandparents; it is highly likely they own CDs (TDs) with their local bank or Credit Union. This is done by creating CD ladders to maximize effectiveness. Most Bank and Credit Union CDs have zero fees attached unless you cash out before maturity.
My tip: If you have not yet, look into doing business with Credit Unions. You maybe pleasantly surprised by the great financial products they have and low to zero fees. Have fun!
Great read! How is your blended CD rate 3.75% if the highest CD right now is 2.5%?
Great question! It’s not now. The best CD I have, which is actually great for its term, is the CIT Bank 12-month CD at 2.5%. I used to get 3.75%, but my old CDs rolled off.
You describe a life w/o $100,000.00 in student debt. No one in their 20s have 20% as a down payment. The life you describe no longer exists. Assume you are 25, have $100,000.00 I student debt, live in S.F. and need 20% to buy your first piece of property, how would you do this? You are lucky because you were born before everything went to shit.
Charles I agree and I’m alder than Sam ! Sam the one thing is that you are lucky to have had the fortitude to see the future and using your reitrement to raise your child .. I have 3 sons I love so much .. cherish ever moment and one grandson now – but had to work along w then husband when they were younger … as do most people — you have set up a great model / however people have children in their 20s and 30s …so there has to be a model similar to yours that address’s raising children when working
And yes what you do sounds like more fun !
I definitely agree with you. I’m a 21 year old and I can tell you without doubt, MOST people my age and up to late 20s can’t even dream about buying a house anytime soon. Especially in larger more expensive areas and how fast the market keeps spiking every month. However, I know it can be possible.
My husband is 23 years old. About one year ago, he relocated to a different state that is more family friendly and DEFINITELY more cost friendly than our hometown Portland, OR. We did have to get some help from his parents for a down payment, but we were able to purchase our first home. So, at the young age of 21 and 23, my husband and I are homeowners.
We really don’t make a ton of money and have to budget a lot and rethink our priorities often, but we think it was a great investment and is giving us a good leg up for our future. We’re working our way towards more passive income and financial freedom.
Our budget sure is a little tight at the moment, as we’re still in entry level jobs and working our way up with sources of income, but owning a house is possible and very rewarding!
Actually I’m living proof of having $110k in student debt after college. Paid it off in 2 years by working my tail off, and then I saved up a down payment on a home by 28. I just passed the $510k mark in net worth. The only thing I can advise is the attack that debt and get interest working on your side. You can’t start passive income until the student debt is gone. The interest rates on the debt is often higher than the rate you will get from passive income.
Pardon for being a bit of a newbie to true investing outside of a 401k. What about those of us who have 1) Just been laid off, and unable to find work due to lack of a degree (apparently 17 years in the industry with 5 certifications is just simply not enough – which is okay. It gave me the kick in the arse to get back to school finally) 2)Have three children to support (age 11 and under), and 3) Oh yeah – cannot find work. What do you recommend when the only source of positive revenue has ceased to come in and you now have less time than ever – due to responsibilities (i.e. doing well in university = academic scholarships means investment in time, plus spending 20 min breaks with kiddos) – to create positive sources of income ? I truly am wondering from an investor’s point of view how you would handle the pivot point of life if ever you had been faced with it. I realize this may be only imaginary, but at this point, I welcome your “what ifs” scenario on this one. You’ve truly done amazing work and I thank you for being so transparent.
Passive income building has become a major goal of mine recently. As a 30 year-old, I already allocate roughly 50% of our household income into investments. While I have several sources of passive income already, they don’t provide anything close to my eventual goal. I admire the work you’ve done to reach this level of independence.
One thing I’ve realized is this: It’s FAR easier to work for an employer than it is to develop durable passive income streams for the average person. Why? Because working for an employer in a place that “needs” you means that it’s possible to show up and give a 50% effort. You can show up, put in your time, go home, have a beer, watch TV, and rinse and repeat all without REALLY having to put in the effort.
Developing passive income is different. With the exception of one of my passive income streams (cryptocurrency mining), all of the others require real, hard work. Truly, I understand the barriers for people getting into building alternative income streams. I would say that most people WANT passive income, but truly aren’t willing to put in the blood, sweat, and tears to make it happen.
However, I think for those who are willing to do what it takes, the sky is the absolute limit. As an example, I’m trying to take a page out of FinancialSamauri’s book and create an online personal finance and investing blog. It is an enormous undertaking, and as a new blogger, there is a seemingly endless amount of work to be done. That said, I hope that one day I can not only generate some passive income from the hours of work I have put and will put into the project, but I hope to be able to help OTHERS reach their financial goals.
Great content — Thank you for sharing!
Question: You mention receiving $200k of passive income a year, but your chart shows half of that coming from real estate holdings, and reading between the lines it appears that you hold mortgages against those holdings. Then you conclude that $200k/yr of passive income should be enough to live comfortably anywhere in the world. So are you subtracting your real estate expenses (taxes, insurance, mortgage payments, maintenance, remote property management company fees, etc.) when you report your passive income from those properties? Really I think it’s the net (after taxes and everything) that tells us what is left over to “spend” on living, right? When I set up my spreadsheet to retire early at age 47, I calculated the after-tax income I would need to live. Then I compared that to my income streams (estimating tax on the taxable income streams) to measure the surplus/shortfall. Also some good advice from GoCurryCracker: If you can minimize your taxes so you’re in the 15% tax bracket, you can possibly receive tax-free long term capital gains. I agree with your philosophy that time is more important than money as we age. I am not sure I agree with a philosophy that is fixated on needing such a large income, and would rather minimize taxes if it’s all the same on the happiness meter. Furthermore, having 20 plus income sources in the name of diversification adds stress and requires more management (TIME!). I think this is fine for those of us while young, as we have the energy to work hard. But as time becomes more important, the extra headache of managing, planning, and buying/selling our assets becomes a resented hindrance on par with the resentment we felt when working for an employer and fighting traffic each day to go to a job we hated. Every thing we own in actuality owns us, by virtue of its demands on our time and affections, and that includes investments. It also includes our home, and is a good reason for downsizing. As long as we have food on our table, a roof over our heads, and clothes on our bodies, what more do we need? I think we need to consider freeing ourselves from the weight of the chains of managing too many ventures. Personally, I plan on investing in no more than 5 simultaneous ventures ever, with the exception of some IRAs that I just plan to let sit for the next 20 years (and therefore no thought or anxiety required).
Yes, the real estate income is after all expenses. For example, one of my rental properties was grossing $9000 a month. Then I sold it this summer to simplify life.
I’ve been thinking about selling rental property for years now and I’m glad I waited until this year. You can read the post here: https://www.financialsamurai.com/why-i-sold-my-rental-home/
When I was 34 years old and left corporate America, I had a lot of time to manage my semi passive investments. But now that I have a son, I don’t want to spend any minute doing something that’s not with him.
Hi, it’s probably been brought up before, but the statement “you can’t touch pre-tax retirement accounts without a penalty until 59.5” is incorrect. You can touch the traditional 401k accounts with a SEPP (substantially equal payment plan), and not pay the 10 percent penalty. You can also touch a Roth without the 10 penalty using the same strategy, although I understand you will pay taxes so you lose the Roth’s advantage. When I found this out, I stopped contributing to Roths because I wanted to retire early. Who knows if they will even live to age 59.5? So many people don’t!
You mentioned in your blog “Where I am dragging is my blended average CD interest rate of roughly 3.75%. It’s guaranteed money, but one of my biggest goals is figuring out how to reinvest this large nut starting in the next two years.” I wonder what you have come up with in that regard and what was the outcome?
EJ
I ended up investing $510,000 in RealtyShares, a real estate crowdfunding platform to take advantage of cheaper valuations and higher rents in non-coastal cities like in the Midwest. Target annual returns are 15%.
Here’s my 3Q2017 Investment Tracker Recap. I sold my SF Rental house that I owned since 2005 this year b/c someone paid my about 30X annual gross rent, which is a very rich price.
Sam!
Your articles are so in-depth and helpful, I’ve never seen anything quite like it. I am a 22-yr old finishing my last semester of college, studying Computer Science and Psychology. I’m in a really good place with my finances (2k savings, no student debt, only expenses essentially rent, groceries, and utilities) and I want to get ahead financially so I can pay my parents back and save up a lot.
I plan on getting a position as an entry-level software engineer, but I want to get really ahead in my finances. Are there any passive income streams you recommend the most for young people who don’t have much experience yet in the game?
Thanks,
Matt
Hi Sam,
I’ve been reading a lot of personal finance blogs lately and somehow stumbled across your site. Love the level of detail and transparency that you provide. You don’t mention student loans or other debts. Did you have any? I’m assuming that your employer paid for your MBA. You must have been receiving a high salary to be able to save so much money.
Thanks – keep up the good work!
Hi Sam,
Recently found my way to your site via yahoo and a lot of your points spoke to me. A little background on myself, I’m 28, a father (my 18 month old is my world), and a soon to be husband (she’s my universe lol).
I’ve been researching a path to financial independence, and the wealth of knowledge here is amazing, but at times overwhelming. I’m honestly not quite sure where to start. Whether it be paying off debt (which I’ve always heard is priority 1), or sinking money into realtyshares or CDs for growth. I’d love to generate a passive income (in a few years time) to supplement some of my day job to have time to spend with my little one during her golden childhood years, but not sure if there’s even a right order to go about it.
Feeling lost in this crazy financial world.
Anthony
A great list !
I tried all kinds of ways to make money online
What works best for me is koocam
I teach my hobbies and sell my knowledge in every field
It’s great
Gotta love anyone who collects Roberto Clemente rookie cards
I went a slightly different route in that I have no portfolio or much savings to brag about, but my net “technically passive income” exceeds 8k per month.
I did this by starting a swimming pool servicing company, grew the business actively for about a year, and hired 2 people to run it for me. I do nothing now except pay them (I pay well… it pays to pay well) and it’s been in business many years now.
I know it’s not millionaire status, but with repairs and billables I net over 100k per year and do nothing but travel and live light.
When considering income, sometimes out of the box thinking creates more opportunities. Next goal? Buy an apartment building.
Love the idea of making your passive income into a game. Right now my partner and I are having a “side gig income” competition. Makes it a lot more fun to sit down and rock out a few hours of freelance when the competition is on the line. :)
As an struggling young Engineer (back in the Carter era) I bought anything I could renovate then rent to justify paying the 18% interest. I never took vacations but worked on my properties all in the pursuit of passive income. I drove junk for many years & many months I just got by on credit cards. My friends & colleagues were amused by my ‘stupidity’ but most are still working to make enough for retirement.
At 49 I retired when my passive income eclipsed my W2 JOB$, but it also came with a suite of creative deductions.
Since then my wife & I continued to accumulate a LOT of property & today enjoy an enviable passive income stream.
Start early, ignore the pain of going without & it will never disappoint you.
Sam,
I have been following your journey to build passive income and financial freedom. I started my journey three years ago at the age of 25. Hoping to share my experience via blog posts so that I can touch as many people as possible to further build an inner-community that will share ideas and trends in terms of financial freedom.
Based on my initial experience of passive income, I feel real that real estate is best vehicle to build long-term investment. I live in Los Angeles and was able to cash flow my first rental property. What are you thoughts about starting out to build a passive income portfolio? I have utilized Lendingclub, online savings, and a small dividend/bond portfolio.
-GenWeFinance
Wow! Simply wow. I didn’t realise this was even possible. How were you able to save as much as 50%-75% of net income day 1?????
Did you have no rent to pay? Living costs? Transport costs?
So so impressive – but how realistic is that much saving for everyone else?
Nonetheless, an important example and guide to everyone reading
I was saving 50% of my after-tax income after about six months of working because I stayed late and ate all the free cafeteria food, and I shared a studio with my friend from high school.
I realized after the first month, but there was no way I could last more than five years in this type of environment. I was wrong because I got a raise and a promotion to go to San Francisco two years later. As a result, the lifestyle was better, I can save more money, and I lasted for another 11 years for 13 years total.
Those are some well diversified passive income streams. I’ve only been concentrating on building up dividend and rental income, but these assets are quite expensive right now. So I’m sitting back and building up cash for the next great investment opportunity.
I’ve been interested in finding ways to make money with less time involved. I enjoyed reading your post. Thank you for sharing. I just started blogging and would like to get more readers.
Sam,
So you would take a $1000 monthly payment instead of a $100k cash out if you were given the choice from your employer?
You could use the 100K to buy a business and make more than $1000 monthly, no?
See, I have few options. I have a townhouse with $100k equity. It worth $280k and I owe $165k.
1- I could get the $100K from employer and try to pay off the house
2- I could sell the house, use the money to buy a business, a franchise maybe.
3- I live alone, I could rent the house ( mortgage is $1400, will rent for $1900) get a business that has room for me to live in, keep the $1000 payments from the employer.
I am 48.
What would you do?
Ben
Ben, what did you do? I am compelled for an opinion as I am in somewhat similar situation. Paul
Hi Sam,
nice article again, I am just starting to create my own passive income stream but I am right at the beginning, hope I will get close to where you already are. What you have created is really awesome and very inspiring.
Cheers
Andy
Actually I like mixture of passive income , still have to learn about rental properties, but so far investing for last 9 months has giving a good return on investment and able to save 24k in 401k between me and spouse.
I first discovered the power of passive income when I was a senior in high school. I started a mobile billboard business where I would rent a small piece of land from someone who had land along a busy highway. Then I would place one of my billboard trailers on the land and rent out the ad space on the billboard. I would usually charge about $300 per month for the ad space, meanwhile I was only paying $50 per month to the landowner for the ground rent. I got to the point to where I had 9 billboard faces and was making quite a substantial income for someone in high school. I really learned how passive income could free up my life… this business is what lead me into investing in real estate.
yourfirstmillion.org
Love your articles. I think everyone is very different as far as how much passive income they need to meet their goals. I’ve read a lot of your articles and really enjoy your thoughts. I have a masters in finance and understand the math of keeping the debt but my emotions are such that I need to try to finish off paying off my last debt (mortgage) in the next two years. At 34 and only worth 525k I’m doing better than a lot of folks my age but it will be difficult for me to catch up in the passive income game without leverage. That is the main reason I recently created a website to try to bring passive income opportunities in my area to me.
Lots of good insights here. I’ve just recently gotten my own website for making online income. Also gotten a website for my fledgling voice over business. There’s a lot to learn when it comes to making passive income online, especially if you’re not financially savy, this is a very helpful blog in that regard, with all the useful tools and reference materials, it certainly removes a lot of guesswork.
You can also use that sum for interest income
Certain lenders will use a calculation that creates a “qualifiable” income on the asset/$1million dollars.
So yes the $1,000,000 asset even when not receiving/creating monthly distributions will assist in qualifying for a home loan.
Ok thanks! If I added like 3% on my return on investment a year ($2500) a month, could the help me afford a bigger loan?
Yes, it could work, but the question is why would you want to do such a thing. Until you’ve “made it” buying a house typically isn’t a good use of excess funds. Buy assets that provide a return. For instance, why don’t you use your income to buy a house and the additional investment returns to pay the mortgage on a rental property.
So let’s say you have $1,000,000 in mutual funds averaging 8 to 12 percent a year. Could you theoretically use the return on investment to afford a bigger house than your income would allow? Basically taking 25% of your income and then use part of your return on investment to pay for the house? Would the bank still give you the loan?
I’m always interested in earning more passive income. One thing I did was buy a website and hire someone to run it. I keep a hands-off approach on it and only put in maybe an hour/month. It’s worked out pretty well. I’m also exploring more things like a book and I’ve already created a course.
Buy a website?? I have never heard of this. Could you share a bit on how this is done?
Very inspiring post!
I really enjoyed how you listed all of the reasons to build passive income streams as well as the framework. You also made an interesting point about freelance writing on how the more skilled writers want to keep posts for their own website. Good insight because freelance writing is something I’ve been looking into for income recently. Also, it’s amazing what you’ve been able to accomplish with your blog over the past 6 years. It’s so motivational to see the success of Financial Samurai. I’m not in a place to afford any consulting, but, I wish I could pick your brain or get mentored by a successful blogger such as yourself…Not trying to blow smoke lol. It would just be so great to have someone who’s done it provide guidance around the direction of the blog, ways to earn, and on the general concept. Always enjoy your posts. Thanks for sharing :)
Agree with you 100%, passive income must be the key to achieving financial independence. Like Warren Buffett says “If you don’t find a way to make money while you sleep, you will work until you die.”
Inspired by you, I started a tax/personal finance a month ago. I figured if it works out, it will create a good side income for me. If not, at least I can use the blog to build my brand as a tax lawyer. Other than that, my current investment portfolio is heavily focused on index funds because of its historical performance and tax & cost efficiency. Right now my dividends income every year is about $14,000. I also have a good amount of unrealized capital gains every year from my investment, though I don’t count the capital gains as my passive income as they are paper gains, at least for now.
Nice job! Why not right? It costs so little to start and maintain a site nowadays. Think about how many tax laywers are out there who do NOT have their own website. You easily stand far above them in the online crowd, and I’m sure it will help you build more business.
I hope more folks can read: Blogging For A Living: How Much Can You Really Make Online
I came across your site and I love it! My husband and I work in corporate America and I own a consulting/coaching business. I have a goal to gross 1 MIL within the next 10 years I’ll be 40 then. How can I begin now? How do I find a millionaire mentor? We live in Philadelphia, PA all of our friends and family are mostly employed some with small businesses however i have huge goals I am working so hard to become a full time entrepreneur. Seems like everyone we know are all on the same level and I fear we’ll stay here of we don’t meet someone willing to show us how to level up. Any suggestions?
Thanks for your ideas I love them, also agriculture investment can be nice like tomato hothouse with half the produce for the grower and the sales profit for the grower The genocide against the international Japanese community some 2 million in the European Union at least can break the world economy and leave the One Sunrise War for True Japanese Survival the only alternative
Hi Sam,
I absolutely enjoyed reading this! You have definitely opened up my eyes and motivated me even more to work harder towards financial freedom. There will always be a way!! Thank you so much!
Dear Sam,
I have been looking into getting onto the US scene, especially on the idea of wealth management portfolios but I’m a Bruneian and not living in the U.S. The tips you offered are great but do you have any suggestions or ideas for us international investors who would like to get a slice of that delicious cake called ‘financial freedom’ as well?
Warm regards
Do you have advice in terms of generating passive income for those of us planning to live off of a stock/bond nest egg only?
I am projecting I can retire in 6 years with 4% SWR, 8 years with 3% SWR & 11 years with 2% SWR. All assume heavy stock allocations.
Is there a post where I can get some advice?
Hi Sam
Great article, your style of writing makes this topic material very exciting to read. I am from Canada and most of what you are talking about is transferable but do you have a favourite Canadian blogger or site that talks more specifically about our passive income opportunities?
Cheers
Hi Sam! I loved your sentence, “There’s so much information in my head that I need to write it down or else I might explode.” That’s exactly how I feel! I never thought of myself as a writer, and especially not a blogger, but recently I’ve started dabbling in it and it feels so nice to get everything out! I’m dedicated to helping others succeed with personal finances, and there are plenty of “how-to” sites, but it’s important to get people thinking and motivated to prepare, plan, and save!
Is there an update coming to this post Sam? It’s june! :)
*sorry if I missed it if posted elsewhere
I’l be posting an update end of June or by July 15, 2015, no worries!
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Hello Sam, is the rental income you calculated net income? Do you put your rental properties in a LLC? How do you handle your tax situation for passive income? Thank you so much for sharing such an inspirational article! Have a wonderful day!
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I like the article but you are missing a safe way to add residual based income with technology and utilities, that has outperformed real estate and other higher risk investment. I got involved in this utility business about a year ago and on track to earn about $18,000/mos in passive income in about 18-24mos.
I been active in real estate investing for almost 15years, but this business has done wonders for me in a lot shorter time frame.
It might be something that you may want to look into.
Jeff – Can you elaborate on this class of residual income? What kind of utility business are you describing, for example?
-Cody
Jeff,
I would love to hear and know about this utility business you speak of if you’re willing to share.
Gregg Knight
gknightjr@gmail.com
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Hello Sam,
Can you expound on the use of publicly-traded REITs as a passive income source? I’m 31 years old. No children. No wife. No dependents. (I am the closest thing to Ebenezer Scrooge you’ll ever see). My monthly expenses amount to less than $2,000 per month (most of which go to pay student loans) . I have a decent job making over $55K per year. I also have a $60K inheritance coming my way in a few weeks. I am absolutely crazy about achieving absolute financial independence, which for me would require a passive income of over $2000/month to cover my living expenses. I could achieve that in a mere couple of years if I were to save excessively and dump my savings (and inheritance) into a Mortgage REIT via the stock market, most of which are shelling out above 10% returns in dividend payments. Is this a good strategy for me? Or am I being too hasty and assuming too much risk?
Thanks,
Jim
Wow what a post and some great ideas Sam. FREEDOM is pricesless I totally agree with that and I can not imagine to go backto the 9-5 hell. I do not make 10k a month like you but I am happy to make 3k a month with my websites. Almost passive Income as well.
This was a very inspirational article! I too spent 20+ years in a high-stress career selling a high-end product under a 100 percent commission plan; that is, no salary! I realized, after racking up millions of frequent flyer miles, that there had to be a better and less-stressful way of making a living. My goal was to design my own lifestyle free of corporate shackles, which required a pre-determined amount of passive income.
At age 55, I own high-end rental properties (near the beach) and commercial buildings servicing the medical industry. I was widely criticized during my career for not living up to my income; that is, buying big homes with many fancy cars. I married a great woman who understood that saving and investing today meant a better lifestyle and more freedom tomorrow. Our passive income is half of my active income from sales, but my net worth has increased substantially. We are both happier and healthier than we were in the high-stress pressure cooker of franchise sales. The naysayers have become converts to the concept of passive income, but they have locked themselves into a “big hat, no cattle” lifestyle. It has been a great ride!
Thanks for the great article!
Randy
Always great to have a good woman teaming with you slog the way.
Thanks for sharing your story!
$1,000 invested in Franklin Resources (BEN) during the bull market of the ’80’s – ’90’s
became $1,000,000 during an 18 year period (about 3x better than Berkshire Hathaway). Five – ten shares, or more, invested in a ROTH Ira and held *consistently* come h..l or highwater, with dividends and splits reinvested, may provide you a very pleasant surprise in 20 years or so. Asset Managers often do better than the assets they manage. Eaton Vance (EV) and T. Rowe Price (TROW) also did exceedingly well over a 25 year period.
SMALL PLANS CAN YIELD LARGE REWARDS.
Hey Sam,
You are honestly a VERY inspirational person. Just your mentality towards personal finance is motivational!
I just graduated college in May and was fortunate enough to secure an entry level consulting position that pays 55k/yr (a little less than ~35k after 401K, other benefits, and the lovely taxes that government bestows upon us). I started from “scratch” with my finances and have ~$2.3k in an online savings account. Since starting work a couple of weeks ago, I’ve had an aggressive savings plan (saving around ~40-50% of my monthly income). However, I’m going to become even more aggressive and live off 1 paycheck a month (and save the other paycheck) like you have suggested in many of your blog posts.
I have two major dilemmas: (1) Should I wait to start investing (at least until the end of the year where I’ll hopefully have $5k+ in savings) in things like CDs? I ask because a little over $2k doesn’t seem significant enough yet to start putting my money to work (or maybe it is? that’s why I’m coming to you for your advice haha) and (2) I want to invest in things like P2P and stocks but I’m honestly a bit ignorant of how it trully works. I know the basics (high risk, returns can be volatile, returns are taxable). Do you have any advice on how I can best educate myself to start putting my savings to work?
Thank you, Sam!
Best,
Shawn
Passive income generation is quite tough task too do. Lot of effort and commitment is required to reach certain level where we can say that I have developed a passive income stream.
I am working on this and I hope one day I will reach there. Thanks for motivation and amazing information.
Awesome article Sam!
I have gone through very similar models for creating diverse income streams.
This was very helpful! It finally clicked for me that I’ve got funds I should be putting P2P lending instead of my 5 year CD. Thanks for the reality check!
Great article and I only got to step 3 or 4 and had some questions, had to write them while they are fresh.
1. Just so I’m clear, you saved the 17.5K pre tax and this does not include any of the 50-75% savings included in after tax. ie make 100k, now 83.5k after 401k, 50% of 41.75k in savings?
2. Treat Passive Income like a game, cheating is using your spouses income in this game. I understand some of the premise behind this, but I’m married, my wife has an income and we have a rental house that we consider ours. I’m not sure how I would count this since we also use another part of our own home(also rental income) to pay down the Rental house.
I enjoy how you lay out real numbers. A lot of people wouldn’t do that. While you admit that you are somewhat conservative, I think the $1M in CD’s is just too conservative. Assuming you don’t need the cash flow now (which you say you just save anyways) then all that could be invested for potentially higher returns. For example, what if you bought San Francisco real estate along the way instead of CD’s. Or, an SP500 Index fund. I bet your average return would have been higher than 3.75%. Sure you could lose it, but the point is if you don’t need the cash flow now, you should try to increase that nut as high as possible until the day you actually need it. Your nut could be $5M right now if you had invested in asset classes other than CD’s for the last 14 years. Don’t get me wrong, you have done far better than me, but I guess I would take a little more risk if you don’t rely on that cash flow.
It’s cool.
It’s easy to say do XYZ in hindsight, especially now that we are back to bull markets. But I’m just going to continue being methodical in my diversification, including building my online business.
Everybody thinks they are a genius in a bull market. But I will never forget 1997, 2000-2003, and 2008-2010.
At some point, I realized I had enough. It’s different for each. And it’s all about capital preservation with a little low risk growth for me. I feel like I’m playing with the houses money as I build my business and earn consulting income on the side too. Check it:
https://www.financialsamurai.com/consulting-for-a-tech-startup-part-time/
Also, my financial nut is higher
than what you said. I just don’t reveal all my assets.
What’s your story? Eg age, passive income, net worth, industry? I’m also curious to learn more about my readers.
Cheers
Very surprised to see your money in CD. My are invested on RE, index funds, ETF. No need to touch any principal, that is why I am looking into IRA inheritance law and irrevocable trust. Trying to skip the death penalty.
Sam…just read this article and I want to say that this is the best posting on passive income I have ever read…in a blog, article, or book. Thanks for making a difference and being an inspiration as to how it can all be accomplished. One of the great benefits of the internet is that people are willing to share their stories and experiences with each other online. If we had this when I was working professionally (20-40 years ago), it would have saved me from making some rather poor financial decisions that affected my retirement income. In a way, the internet is making up for the loss of financial security in the loss of The Defined Benefit Plan for retirement. Bravo!
Thanks David. I’m always searching the Internet for knowledge and new ideas. The Internet has done the most to level the playing field.
Please share the post with younger friends who could benefit from this post. Thanks!
Hi Sam,
Thank you for sharing your article! You did a great job saving and putting your money to work for you. Like you, I share the same financial dream of having 150-200k in passive income and traveling the world stress-free! :) Right now I’m saving about 80-90% of my active income and put it toward ETF funds and value growth stocks because I’m seeking capital appreciation. And I can tolerate a lot of risks because I’m still in my early 20’s. By the time I reach 30 something I’ll start looking into blue chips stocks that pay dividends and REIT. So I want to be where you are by that time lol. Anyways, that the plan and I’m sticking to it. Good luck on achieving your financial dream!
Sounds good! Good luck! Glad you are starting early. That’s a big part of it. Don’t let all the temptation derail your efforts!
Hi Sam,
Thanks for sharing your insights and strategy. It also looks like you’ve spent quite some effort in diversifying the source of your income stream which should give you some buffer when one doesn’t perform as well during certain times of market cycle. Keep up the good work and hope you reach your 2015 goal.
Penfed (Pentagon Federal Credit Union)….now has a 3% 5 year and 7 year CD promotion thru the Dec 31st.
I wonder if you have looke at I-bonds as a alternative to CDs or cash. I would like to find an article that lays out the problems with I-bonds becaause I do not see any.
Thanks
ARt
I’m just curious why you have so much money invested in CDs instead of low-fee index funds. I am a new reader and was surprised to see about a million dollars in CDs (if my math is serving me correctly).
Hi Frank, this is risk free money that I’ve allocated. The money is different from my investment money.
Please see this post on recommended net worth allocation by age:
https://www.financialsamurai.com/2013/02/11/recommended-net-worth-allocation-mix-by-age-and-work-experience/
Great post, there is a lot to digest here. Your passive income stream is impressive, to put it mildly. Very impressive.
I just want to point out a less known fact about Roth IRAs. The contributions to a Roth IRA can be withdrawn, at any time, for any reason, without penalty. I had to dig into the IRS publications a bit to confirm this.
More information here:
Thanks again for the great info.
This is the best post I’ve seen on passive income streams. I’m similar to you in that I worked in IBanking for a few years but wanted out. My approach is a little different, instead of starting with the CD’s, I’m trying to build up my net worth with riskier asset classes such as stocks and real estate to get the benefit of compounding. Then, as I approach my retirement year goal, I’ll start moving them into CD and bond ladders. In theory at least, it’s best to have the highest net worth just before retirement, then convert them to risk free passive income. You’re method is more patient and probably more practical than mine. I guess I’m willing to take more risks.
Yep, it’s really all about risks. I have low risk tolerance for anything that could hurt my major financial but. For my trading portfolio in my rollover IRA, I’m churning and burning!
Please like on FB and share around if you like the post! Thanks
This is a great post! I am totally on board on having a plan and building a strategy to live from the income of my assets! I am really just starting now with my dividend income.
Thanks for sharing. I am just above $6K in dividend income at this point.
Nice accomplishment. Keep it up!
Great Article! I like the quote “He who fails to plan is planning to fail.”
Here’s another one “Plan the Work, and Work the Plan”
I think it is important to highlight realistic expectations. If you are making $50K it is going to be very hard for you to save 50% of your income and as such the time frame you set up may seem impossible to someone else…Just a thought
But if you are only making 50K, then living on less than 50K is all you need. It works, b/c I lived off $40,000 in NYC and managed to put away $10K in my 401(k) and save more in after tax money. It’s about choices.
It’s definitely going to be harder saving more the less you make. But the point of the article is to start and to categorize and make an effort. If you save 30% of the 50K, you are living on around $35K a year. Achieving a 35K passive income stream is therefore all you need. You don’t need the 200K I’m shooting for. It’s pretty relative.
Awesome article Sam. This really spells it out fully how someone can create some passive income, but the creation of a goal is super important.
My passive income is slowly growing, but not anywhere near where I want it to be. It will take time, but it will be worth it in the end.
Sam —
Perhaps you’ve covered this in the comments – I didn’t read them all – but one thing I’d apppreciate knowing is the amount you have invested in each of the categories above. If you could add one more column to your chart that listed “amount invested”, then we (I) could see the sort of return you’re getting on each passive investment.
The difference it makes?
*If you generate $100k a year on $1 million invested, I’m impressed.
*If you generate $100k a year on $10 million invested, I’m not so impressed. :)
You’re probably in the middle of those two, but I’d like to know where…
You’re right. It’s in the middle of those two figures. Good thing I’m not here to impress anyone either. :)
Once you start getting into absolute figures you then got to go through risk parameters. Then there’s debt levels/mortgages/etc and it gets very complicated.
The goal is to build enough passive income to be free to do whatever. $110k is enough now, but i’d like to get it to 200k for more breathing room. I don’t plan to withdraw principle.
Very enlightening. I like that you have a number of discreet passive income streams working for you. I”m not sure about such a large CD/ bank holding though, though it looks as though its giving you a fairly healthy income. How do you feel about a rising inflation rate on your effective real cash return? I’m looking to diversify beyond my current dividend passive income. Rental income is what I expect we’ll be harvesting next. P2P lending is a little too out of my comfort zone. I had a lot of exposure to consumer credit risk models at a prior role, and it scared me the heck away from consumer lending!
Having CDs is less than ideal in a bull market, but they are great in a bear market. I plan to continue having a decent chunk of my net worth in risk free assets bc it makes me feel very comfortable.
The CD amount is also less than 25% of my net worth so that should provide better perspective. Good you are diversifying away from just stocks. One never knows!
I see you include rental income, e-book sales and P2P loans as part of your passive income. Do you not consider your other internet income as passive? Is that why it’s not in the chart? Or did you not include it because you would rather not reveal it at this point? (I apologize if this question was already answered – I didn’t read through all the comments, and it’s been about a week since I actually read this post via Feedly on my phone)
Hi Matt, correct. I don’t include blog income as passive. This 4,300 word post took around 8 hours to out together over a couple weeks.
My focus of this post is on earning income where you basically don’t have to do anything.
I am in the very beginning stages of building my passive income for financial independence, but loving the challenge.
I wish I could just convince many of my friends to start. Hopefully if they ever read my blog they can start to see even the small start that I am coming from, and how it is helping my towards my future goals.
To your point about Municipal Bonds, my concern is tax reform. While everything is mostly being worked behind closed doors (and likely wont ever see the light of day). There is still the chance they propose to limit the amount of the tax free nature of these bonds. While I dont sen panic in the streets, I do see a scenario where bond prices get additional pressure because municipalities have to increase rates due to people putting their money to work elsewhere.
Great article Sam, really opens my eyes up. I am 38 yrs old and very skewed to liquidity / cash as I work in the financial industry. I witnessed the 2007 financial debacle of almost losing everything including the firm in worked at. I am conservative to say the least.
I need to create a passive income stream that has a definable risk profile.I have $250k cash as a safety net in my savings account getting a measily 40 bps but I am somewhat ok with this as it is Not at risk or fluctuation (walk street is tougher nowadays). i have 270k in equity in my house, thinking of paying off the mortgage but probably does make sense since my rate is 3.125 on a 30 yr. I have 275k in my 401(k) and another 45k in a brokerage account that is invested in stocks that pay dividends.
In terms of buying real estate, I am not sure if I want to become a landlord per say. I would be happy generating 5-10k of passive income to reinvest to cover other expenses/ debt payments such as my mortgage principle.
What are your thoughts, am I too conservative and should I not be focused on paying off mortgage? I want to invest, but I use my 401k and brokerage account for my equity exposure.
I understand the cash portion given financial services employees are highly levered to the whims of the market.
$250,000 cash is quite a lot as a percent of your net worth. I would ask your banks private wealth arm to speak to you about hedges investments that protect on the downside but still provide 5% returns or more. This is what I’ve done with structured products at Citibank.
If it weren’t for structured products I would not have invested a couple hundred grand in the markets last summer as I’m pretty conservative as well with 80% of my net worth.
You have some great goals, Sam! Big goals like yours are the type that people accomplish, because they were set by ambitious people to whom the goal is important. I love passive income. It’s definitely something that we should all be striving for.
Extremely helpful!!!
Wonderful post!!!!!!
Thanks for sharing, Sam.
You’re doing great, and are an inspiration to the rest of us.
A+ Blog!
Great Article, very informative. These types of articles always inspire to get to a better place financially.
$57 on p2p? From all your previous posts about it I thought you were way more involved than this. I need to diversify more and go more conservative. Having all that money in CDs would drive me nuts in search of a better return. Still your 3-4% rate is pretty solid.
Enjoy Mexico!
Thank you for your kind words. I will try to invest more in p2p when my CDs come due to make you proud. I haven’t written about p2p in over six months.
I gravitate towards the path of least resistance, which has been investing in stocks. Here is an article from May. Take a look at where the stocks are now. https://www.financialsamurai.com/2013/05/02/should-i-invest-in-chinese-stocks/
Hi Sam, is whole life policy a good option to consider for tax free retirement income? The returns are projected by my FP to be around 5% through mass mutual. What are your thoughts on whole life insurance ?
Thanks
Generally not the most efficient way to invest due to the fees and selections. However, if you have maxed out your pre retirement accounts, have a healthy after tax financial nut in investments, and have lots of excess liquidity with a family to protect, whole life is a decent financial diversification.
What’s your situation now?
I invest about 5% of my pre tax income in 401k that my employer matches. Have close to 70k in cash in checking. Also,I liquidated around 40k in my 401k and not sure where to invest that in (bonds vs stocks) because of stocks trading at record high. Have a rental property that is paying itself now and I will pay off the mortgage completely in 5 years. My immediate concern is the cash in checking acct that’s not doing much. Thanks for your reply and appreciate your work. I am learning a lot
70k in checking? Liquidated 401k? I must be missing something…
THIS is why you don’t ‘time the market’. Liquidated your 401K (???) because the market was at an all time high? Compare those levels to current levels…
I get excited every paycheck because I know my investments are going to increase by a decent chunk. I use Mint to keep a close eye on what the current value is at and make goal marks to hit. Every time I hit a goal, I do a little happy dance and decide what I want my next marker to be and when I want to hit it by. I’m nowhere close to being financially independent or even debt free, but it’s exciting to see the ground work being laid and watching it grow.
Sam,
I alwyas enjoy your posts in regards to actual financial numbers. You demonstrate how dividend stocks aren’t the end all to passive income as most people think. Real estate is your best bet especially with inflation and a strengthening economy. Keep posting things like this.
I don’t mind dividend stocks at all. I just think you folks looking to retire early investing mostly in dividend stocks are on the wrong end of the risk spectrum for what they want to achieve.
Honolulu’s median household income is like $80k right? If so, it means we need much more to be comfortable unfortunately.
This is a meaty post, Sam, and it is appreciated. I’m posting one tomorrow that lays out our current 4-5 year plan and solicits advice and criticism.
After my ups and downs with online income, the “passive” income I’m most interested is exactly the type you show here: book royalties, stocks, rental properties, etc. I’m pouring as much as I can (convince my wife!) each month to get us caught up!
Great post!
It’s fun isn’t it? $500+ in online income still counts as income so don’t sell yourself short. I would really focus on branding. What makes your site unique. Good luck! Will check out the post when I return.
Thanks for this post Sam, impressive stuff.
How about one more column in your spreadsheet that shows return on investment (where applicable). Then you can calculate your overall return on investment.
Seems with a bit more risk you could boost your returns to your goal. When you get to this level I guess it is all about balance of risk/return, eh?
Might be good, but it’s largely academic so long as the returns are st least 2x the risk free rate. If I was going to manage people’s money this calculating specific returns will be good.
How’s your financial or passive income progress coming along?
Interesting perspective vs the risk free rate.
As for me, I started focusing on passive income last year, but have owned rentals for 5 years. $25k now outside retirement accounts in mostly real estate. Looking to invest another $500k cash into real estate to get about $65k, and then 1031 under performers next year to hopefully boost that a bit higher. Heavy in real estate, but feels lower risk than the stock market to me if you have cashflowing properties. Real estate is inflation adjusted, and built in cashflow raise when the loan pays off.
Thanks again for sharing your stuff.
If you can get a $65k gross return on only $500k that would be huge! Where are you investing? I’ll dump $500k in as well! Thanks
Hoping for about 8% cash on cash return.
25k + 40k = 65k
13% returns could be possible with notes though, not that I know anything about that.
Interesting perspective vs the risk free rate.
As for me, I started focusing on passive income last year, but have owned rentals for 5 years. $25k now outside retirement accounts in mostly real estate. Looking to invest another $500k cash into real estate to get about $65k, and then 1031 under performers next year to hopefully boost that a bit higher. Heavy in real estate, but feels lower risk than the stock market to me if you have cashflowing properties. Real estate is inflation adjusted, and built in cashflow raise when the loan pays off.
Thanks again for sharing your stuff.
Sure. You can also back out the nut based on the stated returns at least for the CDS. Again, my bogie is 2x the risk free rate, so 6% at current levels a year with relatively low risk.
Awesome article Sam. Generating a passive income is not that easy. It takes time and patience before you can really relax while watching the money comes in, the key to making any financial move we make successful is to plan everything very well.
Thanks Robert. It seems like time cures everything doesn’t it? We just have to balance time with our ultimate demise!
While it is important to find something that you love to do and turn it into a money making business, you do have to be cognizant of the return as you pointed out. There are many opportunities that I found and tried out that at the time seemed great. But when I took a step back, I realized that I was working a lot for very little income whereas other things I love doing brought in much more money.
This isn’t to say you should pick what brings in the most income. You have to look at how much time and effort you put into it, how much it pays and what the income potential is down the road. Something might not pay well at first, but once established, could be a cash cow.
great article,
Can you write on Master limited partnerships? I am curious about them. I feel your are a lot like Bill Clinton, an expert explainer of stuff!
Never got that one before! I’ll take it as Bill is one smooth dude.
MLPs combine tax benefits and liquidity for a certain number of investable sectors.
https://en.m.wikipedia.org/wiki/Master_limited_partnership
Hey Sam,
Quick question. I’m 21 years old and currently working full time (50 hours a week averaging about 12 dollars an hour. I was working 35 making enough to get by and save a little, but I read your post on the notion of working more than 40 to get ahead and decided a third job was best while I’m getting residency to get lower- instate tuition at OSU. So props, you had a direct influence on my life.)
I want to develop a passive income stream in the next 4 years, nothing grand, maybe an extra 500-1000 dollars a month, but I’m not sure how to go about it so I was wondering if you had any tips. I’m so-so as a writer, and am currently finishing up my second book (just write as a hobby), and in the past made about 30-50 dollars an hour as a free lance writer but that was a couple of years back, it was only for about 10-20 hours a month, and the gig just dried up. I just got particularly lucky with that. I’ve tried online poker as a means in the past, and which I learned A) was not passive income but hard work and B) I have an addictive personality which resulted in me losing the 4g I earned in 6 weeks over the span of 72 hours so that’s out of the picture. I also partook in some illegal selling of things when I was younger, but being a little older and wiser the risk-reward ratio for possibly ending up in Jail just doesn’t match up. I tried making three businesses (dog walking, house cleaning, and personal assistant) and while those all were succesful to varying degrees and earned me about 15-25 dollars an hour, they weren’t mobile and quiet honestly I don’t have the time to be a full time dog walker or run a house cleaning operation seeing as I’ll be in school, work, and athletics.
I’m hoping to have about 10g saved by this time next year, which I know is nothing huge but seeing as I’m at 2.5g right now and owned 3 dollars to my name on Aug.9 I’m pretty happy with my progress :). But at my age, without a stable career, while working part time and having to go to school full time, what is a realistic path I could pursue to create passive income online, or even income that requires effort such as writing, but one that is more flexible than working in a stationary low-paid position for 10 dollars an hour? I need to work for now to show taxable income for the government to get my residency, but after that I know my time could be better served than earning 8 dollars an hour, I’m just not sure where to go from here. I considered flipping domain names, or penny stocks, or sports gambling, but again that’s not passive income and in reality they are more or less just forms of me gambling.
Any hints or Ideas?
Regards,
Bob Iver
Hi Bob,
First of all, big props to you for working 50 hours a week while going to school full -time! Now that is work ethic which will bring you far in life. As an employer, if I knew you worked even just 20 hours a week while in school I would be impressed.
Here’s the thing I want to impress. Please make sure your academics are priority over work. If you can get great grades while working, awesome. But if you are working so much and getting bad grades then unfortunately you’re being counter productive.
The big alpha in your income will be the job opportunities after college. Join some clubs in areas of interest and crush your grades. I only graduated with around $3,500, but it was my first job that really gave a boost to income. Money is tempting as a student because we have little. But I would try to not focus on money as much.
How are you doing in school now? Is there a minimum amount of hours or money you need to earn to establish residency? Good plan, although i thought living for one year and paying bills sufficed.
Hey Sam,
Nah you misunderstood me. I’m working 50 hours a week now to get residency and only taking a couple of classes. I’ll be working 10-20 hours a week when I go back to schoool full time a year from now. I tried working 35 hours and school full time but got burned out last year so no more of that. My grades are so-so. I got a 3.7gpa in all my GE’s and really on a conservative basis planning to remain around there which would mean 1 B for every 2 A’s. To get residency realistically I got to earn 300 dollars in taxable income a week for a year, and in the meantime am allowed to go to school part time given the fact that I can pay for school with the money I have earned within the period I began to establish residency, so no outside cash because my bank accounts will be audited at the end of the year.
And I understand the whole idea of that first job really boosting up income, just wish there was a way I could focus my financial efforts on something more long term in the mean time :/.
Ah you missed out the only taking a couple classes part. Ok, I suggest you at least register your name online and work to build your brand. The longer your website is around, the better. Out your profile and resume up.
Want to expand on this response a bit? Great questions from an enterprising student! I would also love to hear your ideas for making a modest passive income on-line. Thanks! :)
I am still working on my passive income, however I like multiple income streams even more. My favorite is capital gains because it is one of the lowest rates. One of the best passive income streams is a pension/Social Security. As I near retirement, I like the concept of it supporting my needs and my 401k supporting my wants. In addition, my brokerage accounts are all at capital gains rates. Don’t misunderstand, I am still working on adding more because I like multiple income streams!
One has to think what is the end goal. To work for money or have money work for you so you can do other things. Having multiple income streams is great, but not if you have to work for them.
Social Security is going to be a great bonus for folks under 40 if it is still there when we reach our mid 60s.
I vote focus on real estate for increasing your passive income. It appears to be where you get your best returns, and that’s without building in speculative gains and tax savings. I practice real estate law and do all my investing in real estate, so I’m biased.
I’m looking at accepting a professor job. It’ll be more than a 50% pay cut. But I’ll have the same life you describe – endless summers and an entire month every winter to ski. I’m thinking in the end, eventually, I might even end up wealthier in more ways than one. Happy people tend to be the most successful. I have no desire to diversify. Dividend stocks allude me. CDs seem like a good choice for older people, but I have time on my hands and real estate knowledge, so I’m sticking with what I know, despite the fact that most people will tell me it is foolish and I should diversify.
A real estate law expert. Love it! Care to share in a guest post your thoughts on the RE market or key things investors may not be focusing on? Loopholes or risks perhaps? I think your insight would be fascinating!
I think I’ve reached my limit for real estate as I no longer want to spend one minute more on managing RE. But you are right, RE has treated me very well and I wish I had more. But as I get older I want to be more free so online is where I am focusing.
Have you considered more passive real estate?
There are options that give you the cashflow, capital appreciation, tax advantages, but none of the management. Being accredited helps there.
I have actually. One of my tennis buddies was raising money for his real estate investment company where he buys, remodels and flips. I’m just worry of allocating more of my net worth to property now. I’ve had friends lose 100% of their $100,000+ investments before.
Tell me more about the circumstances when friends lost 100% of syndication investment if you don’t mind.
Count me in for a guest post! I have some hopefully useful ideas on real estate investing I could share.
Excellent! Looking forward to reading it. Thanks
So many great tips in this big post, thanks! I think it’s so true that people should focus on the things they do well at and are interested in. And yes save, save, save in the beginning and throughout. I have several interest and dividend earning investments and am looking to expand further. Diversification is a great goal for all of us so we can avoid having all our eggs in one basket.
We got to continue to save even when we see our sizable nut grow. Like eating fruits and veggies forever!
Awesome article… Just wow..
It’s loaded with information and definitely helps me use it as sort of a guide line during my planning process. Time to really get off my rear and do something!
Please feel free to hit us with posts like this in the future!
Thanks Sam!
Hah! If only it was so easy to write these types of articles on a frequent basis! But I’m glad it helps you get motivated to start. That really is the biggest thing and second is to not fall off the wagon once you see your passive income fund grow.
Maybe you’d like to write a post on your current financial situation and plans! Let me know. It’ll be fun to publish and get feedback from the community.
Amazing that you saved between 50% to 75% living in NYC…I think that is one thing holding me back…the cost of living here. I’d like to invest in real estate, but I can barely afford to buy a place to live. I don’t need a large income to be happy, but I probably do need an income to support living in NYC as we don’t plan on leaving. The only thing I’m doing at the moment is saving in my 401K, IRA and a I dabble in stocks and P2P lending.
It was painful for the first two years. But living in a studio with another guy was like living in a college dorm room, so it wasn’t that bad. Worked a lot and finally escaped to SF after the second year. So hard to save in NYC!
Killer article here Sam.
The reason it is so good is due to transparency. You are giving real numbers and sharing a huge part of yourself with your audience. Plus you went all out and gave a fantastic amount of detail. This makes for a really, really good post.
You have inspired me to try to do the same (both with my finances, and with my writing). Thank you.
No problem Patrick. I look forward to reading your financial updates.
And to think you wrote this while taking a break in Mexico. I do enjoy these type of update, lots of information to digest. I’m not focused on any major passive income streams at this time, as I continue to work on debt repayment. Hope to soon be working on more residual -passive income streams in the future
Good luck with the debt repayment! It feels crazy wonderful to finally slay individual debt accounts. I wrote 70% of the post before my trip but did write the rest and edit the post a dozen times while on the ship. It’s fun and I’m a stickler for trying to get the content as thorough as possible. Typos abound no matter what.
This one is the key for me – Never Ever Withdraw From Your Financial Nut. Well, I’m willing to withdraw when I’m 60. Why hoard all the money? You can’t take it with you. Share the wealth a bit.
Some people are money magnet and you’re one of them. Great job and good luck making up the deficiency in a year or two. I don’t know if we will ever get close to your goal. Good luck!
Hi Joe,
Take a look at this post for the ideal retirement withdrawal rate: https://www.financialsamurai.com/2013/05/08/the-ideal-withdrawal-rate-for-retirement-doesnt-touch-principal/
The idea is to never run out of money, and leave money in a trust for our children, and those in need.
I’m sure you’ll achieve your goals! Especially with your wife willing to work for 12 more years.
Sam
Great post, Sam. I like the idea of thinking of passive income as a game… the money in my accounts doesn’t feel like “real money” anyway since I won’t be touching it for some decades!
Exactly! The government helps protect us from ourselves with their penalties in tax advantageous accounts.
Yes, I do enjoy these type of updates, so keep them coming!
We are going to start working on passive income very soon. We do little things now, but not enough as to where it matters.
OK, I’ll probably do an update once a year or so. At the very least it’ll help check progress.
I encourage everyone to try passive income because eventually everybody tires of work. It’s a race to see if one can generate enough passive income before they get tired or some bad exogenous financial event happens.
Hi Jane,
To answer your questions:
1) If your property is not under rent control, you have the ability to raise rent to market prices with proper warning. In SF, I have to give tenants a one month warning for up to a 10% increase and a two month warning for up to 60%. Rent control limits to an inflation index, usually around 2% a year, which is why initial pricing and tenant turnover is important for better profitability.
2) CC interest can be paid monthly, quarterly or annually based on what I’ve got. Sounds like you have a “bullet” payment where all interest is paid at end of term.
3) I don’t feel anxious tying up my money. Instead, I feel relieved. I don’t like having excess money to waste on things. I can’t anxious when I have too much money earning 0.2% savings interest. The feeling of having little money gives me motivation to try harder in my ventures. It’s too easy for me to fall off the wagon and go on a bender.
Awesome article…if this does not give somebody a clear roadmap, they probably were never going to get there in the first place! I’m kind of like you trying to figure out where to place “new” money and maturing CD’s in this low interest environment. Rates have to go up eventually…I dream of the days again where you can build a laddered bond portfolio paying 8%. I plan for a 5.5% blended rate of return, with big downside protection.
5.5% return with good downside protection would be a great return.
One of the things I’ve done is put a lot of capital to work in structured notes. One note I’m investing $20,000 today is a STOXX50 note that pays 5% per annum for two years if the STOXX50 doesn’t close down worse than 30% from here.
I don’t really know much about those…I should take a look from a diversification standpoint. If you don’t mind me asking, what do you target for your net effective tax rate on your passive income? Also, I’m sure you’ve probably covered this somewhere, but how do you deal with healthcare? One more dumb question…have you found that you spend more or less money than you anticipated once you retired?
As low as possible. The best is income from a business because of all the shields. To create a lifestyle business where you have to enjoy experiences, hopefully good to generate revenue is the pinnacle in my mind.
Health insurance is pretty inexpensive, read https://www.financialsamurai.com/2013/03/08/cheap-health-insurance-options-for-the-unemployed-self-employed-or-early-retiree/
Finally, you need less in retirement than you think to be happy. One also continues to adjust to his or her new income and maintain a happy state regardless of income above a certain subsistence point. I was very happy about this discovery.
Thanks for the info…I kind of figured it is really not that expensive to live if you are not an extravagant person. I could definitely figure out how to funnel expenses through a part time business…I think I keep thinking along the lines that I’m going to be paying the same tax rate after retirement, but reality is you could get pretty lean and mean if one focused on it. On a scale of 1-10 with 10 being utter panic mode, how worried are you about your “pile” lasting through a 50 year retirement now that you are a couple years into it?
I would say I’m at a 1 because this is only my passive income which I’m saving 100%. I’m working on some entrepreneurial endeavors and I might discuss active income in more detail next year. But I really am focused on trying to get my do nothing income to $200,000 so I can take even bigger risks while living in expensive San Fran or Honolulu.
Not sure if I can live for another 50 years either! I understand that taking a leap of faith after earning a lot of money every year for years is scary. But I can truly say that we have a remarkable ability to adapt and grow if needed.
o.k. I’m 100% with you…I save 100% of my passive income and probably 60% of my “salary”…so only question now is are you living on your online income only or consulting gigs? You mention $200k is your target…and you are at $110k passive, are you living off less now or is your other income stream enough?
There’s another income stream that I didn’t mention in this article because it is finite, but it is my deferred income from severance. It is very meaningful and why I would like people to read my book and never quit.
I’ll write another post on multiple income streams. But each persons living standards and cost of living is different so my numbers are probably irrelevant to yours. Best for you to figure out your numbers instead.
Would you be interested in writing a post here and sharing your story and strategies? Would love to have it. You can just shoot me an email when it’s done. Thanks!
I do remember you mentioning that & how it was your ticket to exit softly and give you time to build the passive income side. Most likely when I do exit it will either be through a sale of the business which would come along with a employment contract or if a worthy successor(s) can take it over, then the business is just another annuity throwing off income. Anyway, I’d enjoy writing a guest article after I survive the next few weeks of work and weddings.