Below is the Financial Samurai passive income portfolio update for 2018 and for 2021. I'm revisiting this post in 2021 to see how far I've come since 2018.
Ever since landing my first job post college in 1999, I've been determined to build enough passive income in order to not have a job. A future that included getting into work by 5:30am and leaving after 7:30pm each day for decades seemed too brutal to endure.
In 2009, I decided that if I could earn about $80,000 in passive income, I would leave my job permanently and work on Financial Samurai while traveling instead. So I left work in 2012 at the age of 34 with three million. Once my wife decided to join me in 2015, also at the age of 34, I decided to shoot for $200,000 in passive income.
With $200,000 a year in passive income, I would have enough income to provide for a family of up to four in San Francisco given we bought a modest home in 2014. Now that we have a son, I'm happy to say that $200,000 indeed does seem like enough, especially if we can win the public school lottery to avoid paying $20,000 – $50,000 a year in private school tuition.
The Keys To Building Enough Passive Income
A passive income portfolio is vital for achieving financial independence. Here are the keys to building a large enough passive income portfolio.
1) Save until it hurts each month.
Most people think they are saving enough through their 401(k) or IRA, but they are not. Developing passive income requires an aggressive after-tax, after-401k/IRA savings amount each month because you can't draw from your pre-tax retirement accounts before the age of 59.5 without a 10% penalty.
You must sacrifice the pleasures of today for the freedom you will earn tomorrow. In my 20s, I shared a studio with my best friend from high school and drove beater cars worth less than 10% of my annual gross income. I'd stay until after 7:30pm at work in order to eat the free cafeteria food. International vacations were replaced with staycations since work already sent me overseas 2-4X a year. Clothes were bought at thrift shops of course.
2) Focus on income-producing assets.
Internet growth stocks may be sexy, but they provide no income. To build a large enough passive income stream to survive, you must invest in dividend generating stocks, certificates of deposit, municipal bonds, government treasury bonds, corporate bonds, and real estate.
You're free to invest in non-income producing assets for capital appreciation too. Growth stocks are preferred for those still aggressively trying to accumulate capital. You just want to earn reliable income when the day comes to leave your job.
My favorite type of semi-passive income was rental property because it was a tangible asset that provided reliable income. As I grew older, my interest in rental property waned because I no longer had the patience and time to deal with maintenance issues and tenants.
Online real estate became more attractive, along with tax-free municipal bond income once rates started to rise.
Every passive income portfolio should include online real estate like a blog, consulting page, merchandise website and more.
3) Start as soon as possible.
Building a livable passive income stream takes a tremendously long time largely due to declining interest rates since the late 1980s. Gone are the days of making a 5%+ return on a short-term CD or savings account.
I knew I didn't want to work 70 hours a week in finance forever. My body was breaking down and I was constantly stressed. As a result, I started saving every other paycheck and 100% of my bonus since my first year out of college in 1999. By the time 2012 rolled around, I was earning enough passive income (~$78,000) to negotiate a severance and be free.
4) Calculate how much passive income you need.
It's important to have a passive income goal, otherwise, it's very easy to lose motivation. A good goal is to try and generate enough passive income to cover basic living expenses such as food, shelter, transportation, and clothing. If your annual expense number is $30,000, divide that figure by your expected rate of return to see how much capital you need to save.
Unfortunately, you've got to then multiply the capital amount by 1.25 – 1.5 to account for taxes. For example, $30,000 / 3% = $1,000,000 in capital needed to generate $30,000 gross. But since you must pay tax on the $30,000 income, you really need closer to $1,250,000 to generate $30,000 in after-tax income at a 3% rate of return.
With the birth of our son in 2017, we raised our passive income goal to $250,000 a year. Then, with the birth of our daughter in 2019, I decide to shoot for $300,000 a year by 2023.
5) Make sure you are properly diversified.
Capital preservation is underrated. We saw a lost decade for tech stocks between 2000 – 2010 after the first dotcom burst. It actually took 13 years for NASDAQ investors to get back to even.
Investors in the Borsa Istanbul Turkey stock market index gave up 10 years worth of gains after they saw a plunge in their currency. This was partially due to increased tariffs by the US and no-confidence in the government. Your passive income needs to be properly diversified in order to take the hits.
Then of course we experienced the March 2020 sell-off and the global pandemic until today. Having a diversified passive income portfolio is important.
I currently have 10 main sources of passive income as you'll see in the chart below, with bonds as my largest source at 30.4% of total. I've worked through the 2000 and 2008 meltdowns, and don't plan to ever lose so much money again.
Passive Income Portfolio Review
In 2017, I sold my San Francisco rental home which had been generating roughly $60,000 a year in cash flow after expenses, but before taxes. Selling the house brought my passive income down to roughly $150,000 a year, which was a significant 28% step backwards.
Within six months of selling, however, I had reinvested the proceeds from the home sale and brought total passive income for 2018 back up to an estimated $203,724. Without a clear plan for reinvesting the proceeds, I'm not sure I would have sold the house since I'm bullish on the SF housing market long term.
However, because I did have a plan and the challenges of raising a newborn and dealing with rowdy tenants left me feeling a bit stretched, I decided to simplify and sell.
Interest Income ($7,620/year, 3.7% of total)
I've got a $185,000 CD generating 3% interest coming due. Although the return is low, it's guaranteed. The CD gave me the confidence to investment more aggressively in risk over the years. My online interest income has come down since I aggressively deployed some capital at the beginning of the year and again during the February market correction. You'll see these figures in my quarterly investment income update.
Don't underestimate the value of your cash and risk-free income, especially during times of uncertainty. The last thing you want to do is be a forced seller in a downturn because panic will be everywhere. Cash allows you to take advantage of corrections, pay for unexpected expenses, and worry less about your risk assets.
With rising rates in 2022, CD rates are finally more attractive again. My go-to bank for the highest CD rates is CIT Bank. And they've been offering some attractive CD rates on certain durations. For example, as of October 2022, you can get 3.5% APY on 13-month CDs and 2.75% APY on no-penalty 11-month CDs. (Rates subject to change)
Click on the link below to view the latest and greatest CD rates. It only takes 3 simple steps to open a CD account and start earning interest.
Related: How Much Savings Should I Have Accumulated By Age
Stocks & Bonds Income ($103,344/year, 50.7% of total)
In 2017, I ended up deploying roughly $611,000 into stocks and $604,327 into municipal bonds. The stock allocation should boost dividend income by ~$12,500 a year and the municipal bond portion should boost income by ~$18,000 a year after tax ($26,000 pre-tax). Therefore, total passive income gets a ~$38,500 lift, which recovers over half of my $60,000 loss from selling the house.
A good portion of my stock allocation is in growth stocks and structured notes that pay no dividends. The dividend income that comes from stocks is primarily from S&P 500 index ETFs. Although this is a passive income report, as I'm still relatively young, I'm more interested in building a large financial nut through principal appreciation rather than through dividend investing. As an entrepreneur, I can’t help but have a growth mindset.
With interest rates reaching two-year highs, I will be allocating more cash flow to short-term bonds and savings for the remainder of the year, thereby boosting passive income.
Related: The Proper Asset Allocation Of Stocks And Bonds By Age
Real Estate Income ($43,080/year, 21.1% of total)
I've now only got a SF rental condo and a Lake Tahoe vacation rental in my real estate rental portfolio. Although I miss my old house, I certainly don't miss paying $23,000 a year in property taxes, another mortgage, dealing with leaks and managing terrible tenants. I drove by the other day and couldn't believe how much noisier and busier the street was than where I currently live. I wouldn’t be comfortable raising my son there.
In January 2018, I missed my chance of raising the rent on my new incoming tenants because it didn't come to mind until very late in the interview process. I didn't write about my previous tenant's sudden decision to move out in December 2017 after 1.5 years because they provided a relatively seamless transition by introducing their long time friends to replace them. I didn't miss a month of rent and didn't have to do any marketing so I felt I'd just keep the rent the same.
After these tenants move out, I'm thinking of just keeping the rental empty with furniture. It sounds stupid to give up $4,200/month, but I really hate dealing with the HOA, move-in/move-out rules, and maintenance issues. Given the condo doesn't have a mortgage and I have to pay taxes on some of the rental income, I'm not giving up that much. The condo can be a place for my sister, parents, or in-laws to crash when they want to stay in SF for longer than a week or two.
The Lake Tahoe property continues to be 100% managed by a property management company. It feels amazing not to have to do anything. I can't wait to bring up my boy this coming winter to play in the snow! I could go up this winter, but I want him to be able to walk and run comfortably before he goes. I've been dreaming of this moment for over 10 years now. The income from the property is highly dependent on how much it snows. Summer income is always very strong.
Alternative Income ($49,680, 24.4% of total)
Book sales ($36,000/year): Sales of How To Engineer Your Layoff continue to be steady. I expect book sales to rise once the economy starts to soften and people get more nervous about their jobs. It's always best to be ahead of the curve when it comes to a layoff by negotiating first. Further, if you are planning to quit your job, then there is no downside in trying to engineer your layoff so you can get WARN Act pay for several months, a severance check, deferred compensation, and health care.
What's crazy is that my book income is more than my SF rental condo income. Yet, I didn't have to come up with $1,200,000 of capital (minimum cost to buy my condo today) to create my book. All I needed to create my book was energy, effort, and creativity. I truly believe developing your own online product is one of the best ways to make money.
Venture Debt ($12,240/year): The first venture debt fund has returned almost all my initial capital so I decided to invest $200,000 in the second fund. I took a risk investing $150,000 in my friend's first fund, so I'm hoping there's less risk in the second fund given he has four more years of experience on top of his 12+ years experience running a venture debt portfolio for another company.
The whole idea of investing in venture debt is trying to get a mid-to-high teens annual return with less risk than private equity. Venture debt lends money to well-funded private companies with a 1-3 year terms. They go in and out, collect their interest and sometimes gets a warrant. They're higher on the capital structure as well.
P2P Lending ($1,440/year): I've lost interest in P2P lending since returns started coming down. You would think that returns would start going up with a rise in interest rates, but I'm not really seeing this yet. Prosper missed its window for IPO in 2015-16, and LendingClub is just chugging along. I hate it when people default on their debt obligations, which is why I haven't invested large sums of money in P2P. That said, I'm still earning a respectable 7% a year in P2P, which is much better than the stock market is doing so far in 2018!
Real Estate Crowdfunding ($9,600/year): Once I sold my SF rental, it was natural to reinvest some of the proceeds into real estate crowdfunding to keep sector exposure. I didn't invest a lot in some of my favorite REITs because I felt a rising interest rate environment would be a stronger headwind for REITs. But if I could be more surgical with my real estate investments by identifying specific investments in stronger employment growth markets, I thought I could do better.
In the summer of 2017, I first reinvested $250,000 into a RealtyShares Domestic Equity Fund. I already had $250,000 invested with them and I liked the projects they were choosing. After spending the rest of the year making low ball offers on SF real estate and losing, I invested another $300,000 in the fund in December 2017. Given 100% of my real estate crowdfunding are equity investments, there is no set monthly dividend. Each of the 12 investments in the fund have different timetables and objectives. I’m simply estimating that I’ll earn $9,600 for the year.
If my Fundrise investments achieves their objective blended return of 15% a year, I could earn a compounded $70,000 – $120,000 a year, which would really boost my passive income returns. However, I don't expect them or any private investments to achieve their target. Instead, I'm hoping for a solid 8% a year return instead.
Financial Samurai Passive Income Portfolio Update 2021
Below is my latest passive income streams. In 2018, I had roughly $203,000 in passive income. In 2021, I'm estimating at least $300,000 in passive income.
The reasons for the big jump include: 1) a huge bull market in 2019 and 2020, 2) more reinvested capital from my online income, 3) and more investments in real estate crowdfunding.
Because I now have two children (daughter came end of 2019), I'm more motivated than ever to build my passive income streams. Further, the pandemic shut down a lot of fun things to do. Hence, my focus to make more active and passive income as well.
My favorite investments are rental properties and real estate crowdfunding. Given rates are low and we're all spending more time at home, the intrinsic value of real estate is going up.
Feels Good To Simplify
It was easier recouping the lost $60,000 in rental property income than I expected. For so long, my primary mindset for passive income was rental income. Having $815,000 less mortgage debt, but still generating roughly the same amount of passive income with a much larger cash balance feels great. Further, my passive income portfolio got even more passive, which is good as a stay at home dad to a newborn.
In order to live off $200,000 a year in gross passive income in expensive San Francisco, we own a humble 1,920 square foot, three bedroom, two bathroom home and drive a car worth less than 1/10th our gross income. We never buy any new clothes and we take full advantage of all the free things the city has to offer during the weekdays.
$200,000 Passive Income Minimum
$200,000 a year might sound like a lot to you, but the median home price in San Francisco is roughly $1,400,000, or 7X our annual passive income. For a family of three in 2019, the Department of Housing and Urban Development [HUD] declared income of $105,700 or below as “low income.” Therefore, I consider us firmly in the middle class.
We will continue to save and invest in more passive income generating investments just in case our son doesn't win the San Francisco public school lottery. That's right. Even if you pay $20,000 a year in property tax for a decade, your child has no guarantee of going to your neighborhood's public school.
Although we forewent many luxuries since we graduated from college, there is not a day that goes by where we aren't thankful for being able to leave our jobs for good at 34. We could have made more money working, but we decided being free was more important. There's always another dollar to make, but never another second to create.
Real Estate Investing Suggestions
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.
If you're interested in a hands off approach to real estate investing, consider investing in a publicly traded REIT or in 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.
My favorite two real estate crowdfunding platforms are:
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends.
Both platforms are free to sign up and explore. I have personally invested $810,000 in real estate crowdfunding in 18 projects to diversify and earn income passively. I believe real estate is the best way to generate passive income for most people.
For more nuanced personal finance content, join 100,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. Everything is written based off firsthand experience.
Your passive income numbers are truly astronomical, congratulations! It makes my $60k/year goal look like child’s play. :) You are inspiring me to push my ceiling higher – thanks for that!
FT
Hi Sam. Thanks for being out there friend. This thread on passive income brought up a lot of questions for me. At 54 yrs old my partner (53) and I only have an estimated 250k in retirement accounts. 2 yrs ago, due to stress and burnout, partner resigned from a high paying medical job – leaving our rental real estate our sole source of income (We manage the real estate ourselves). We have extended mortgage terms and tightened up living expenses and are living simply. We owe $2.5million on an estimated $3.5million portfolio of residential real estate. After debt service, insurance and taxes our income is appoximately $80k. Rising interest rates have me concerned about our bottom line. The real-estate market seems stable in our home city of LR, AR. So I don’t anticipate falling value, though rents have stabilized due to the increase in new residential inventory. Would you have any advice for us? My partner would like to sell all the rentals (65 units over 12 buildings). I feel that this is unrealistic as it’s our sole source of income.
Thanks Sam. What stocks are in your portfolio that produce the dividend payouts? Also, how often do you rebalance?
New to the site as I now find myself in the same situation as Sam – a recently laid off financial service professional now seeking passive income in case I don’t make my way back into the corporate world.
I’m selling a piece of land which costs me $7k in negative cash flow due to property taxes, I wrestle with the idea of using the 1031 exchange and put the proceeds into a rental. In this manner, I would save $70k in capital gains tax, and turn my negative $7k in cash flow into something positive. The idea of being a landlord though pains me. Just don’t know if it’s worth the hassle; clearly not if I make it back to the corporate world.
So how did you start off? I’m 19 and only have about 1500 at the end of the month to invest. Would love to hear your advice! Thanks! Also, you could air bnb the place when you don’t have family there- no long term commitment and some extra money!
I started investing in stocks at about 19 years old with about $1000 from the money I made working at McDonald’s. Investing in the stock market led me to wanting to work on Wall Street.
Here’s my journey to $1 million.
https://www.financialsamurai.com/the-first-million-might-be-the-easiest-how-to-become-a-millionaire-by-30/
You should really look at Real Estate Secured Notes. Very passive.
What was your income and living expenses when you worked?
This article is interesting and great, but doesn’t seem to apply for my situation. I’m curious about your starting conditions (salary each year, living expenses, college debt, etc.) so I can figure out how to scale your advice to my own situation. It would definitely help me understand how much “saving until it hurts” translates to for me.
I’ve got your article saved as a reminder for future reading as well.
Hi,
For your return from stocks, do you mean total return or dividend return? Because s&P’s current dividend is <2%.
If you mean total return, then that money is not readily accessible, because stocks are highly volatile.
Dividend return. My goal since 2012 is to only spend the income and never touch principal.
See: https://www.financialsamurai.com/the-ideal-withdrawal-rate-for-retirement-doesnt-touch-principal/
I hope I can reread this and maybe may have to do it again but when I do I then I have questions- I would love for someone to be able to work with me who’s at rock bottom with extreme poor financial choices and still continues to go through a terrible vicious cycle. Currently I do have a secure full time job with many benefits however been on medical leave this year and falling behind – Christmas is around the corner and I can’t even handle back school! I have two savings accounts that I can’t save in and a checking account overdrawn – desperate need of help – you think come out of this hole and by next year and 1/2 can save that $80,000 – but I am in despair – pride to side – please consider charity case till money starts coming back in
What do you think about Fundrise?
Very impressive, but how do you make 10% on muni bonds. I would really enjoy that amount of return. Thanks and continued good luck.
I’d love to know too. I shoot to make only 3% – 5% gross a year with my bond position.
See: Investment Strategies In Retirement, for the various return profiles of different weighting compositions.
How do you return $103,000 a year in dividends and interest on a total investment of about $ 1.2 million in stocks and bonds? Makes no sense to me. Am I the only one befuddled by this? You even state a high percentage of those pay no dividends. What am I missing? A reasonable return on income generatimg stocks and bonds is closer to 4%. Even grossing up for net tax effect of munis does not get to anywhere near these returns,
Sure. The $1.2M is money that I reinvested From the $1.8 million I got from selling my rental house in 2017. Another five or $50,000 of the proceeds was invested in real estate crowdfunding. The $1.8 million is expected to generate about $60,000 and passive income.
I have much more than $1.2 million in stocks and bonds.
I came across your site a few weeks ago and love to read whenever i get some spare time. Your content is not only informative but relatively easy to understand (even though i have to sometimes read it several times) for someone that does not have a financial background like myself. My question is regarding muni bonds. Any simple rule to picking muni bonds that pay a dividend and are relatively low risk? I am working on building my passive income stream and am interested in low risk investments that can still generate a consistent passive income stream.
Also, can you explain why an increasing interest rate market is not a good time to buy muni bonds?
I’m wondering what else your bond portfolio constitutes of, and the size of it? 4-5% on munis is definitely a nice yield at a very low level of risk.
In general I found that senior loans, unconstrained bonds (typically EM-heavy) and preferred stocks of REITs were especially good diversifiers for an otherwise equity-heavy portfolio.
By putting 20% each in the three just mentioned asset classes, then 20% in high dividend stocks and 20% in low volatility stocks, I got to a portfolio with 5.2% income at 4.8% vol. But then senior loans are inherently risky and REITs won’t do great in the rising rates environment..
My e-product is currently in development, but I think it could reasonably bring in 1/25 of my income in the first year with minimal promotional effort. If it takes off, maybe 1/5 of my income. Building that up so that I could direct all the proceeds to paying down student loans is a great incentive. I need to focus there, but I also have a few other non-traditional digital products in mind. I need to test the market there before expending too much time or energy.
Nice photo! Was that taken in Santorini?
And I agree, it’s not always about maximizing returns. The older you get, the more you realize time is more important than money.
I really appreciate your nuanced view of not just maximizing returns but taking into consideration stress and quality of life!!
It becomes more and more about quality of life the older I get!
Hi Sam! Thank you for all the posts and writing you do, love getting your reflections when market dynamics change.
Would love your feedback: I’m in the process of shifting a $1.5M Bay Area property in a great neighborhood into the rental pool so I can downsize and have more passive income. But of course I know managing it will be stressful and I’m looking to reduce stress for health reasons.
The following factors are making me wonder if I should sell instead: market is still very high and inventory is even tighter than last year, but economy might change directions this year, rate hikes coming, I might be able to get the same cash flow from a REIT, and I have no intention of moving back in.
No right answers, just curious how you or others would approach this question.
It’s my only property. I”m living in an SF rental and biding my time for a correction to buy again (maybe). One other thing I do like about the house is that there is dry powder in it that I’m paying zero interest on and can pull out to buy another house. I don’t know a lot of other ways to achieve that. I don’t have a traditional job, so the house is my only source of loans currently which I’ve been using to fund my 4-yo company.
THANK YOU!!!
Hi Jess, can you share some background of what this $1.5M Bay Area property is and why you are renting something else? Did you pay it off or inherit it?
It’s boom time now, but things can change quick as we saw with the 11% correction in the stock market in February. Without knowing your net worth and how you acquired this property, it’s hard for me to say.
Thanks for the post. Two questions on the passive income report. For equities are you only using the dividend yield? I think thats correct for income. And 2) are you using the YTW for the muni bonds or the cash yield which is a lot higher given most bonds are 5% coupon bonds but clearly trading at a premium in this rate environment.
Thanks.
Chris
Yes. YTW.
Sam, what is your strategy for the muni bonds? I’m assuming you’re planning to hold until maturity, since the rising interest rate environment will reduce the price of the bonds, should you decide to sell.
I plan to just hold them to maturity and get back principal and earn the annual coupon for my individual holdings. For the bonfire and ETFs, that is a different decision all need to make later. But I’m comfortable holding bonds of these levels.
Interesting post. Really appreciate how open you are about all your investments.
It looks like you are defining passive income from stocks, bonds, and other investments directly as the income it produces (dividends, interest, rent, etc). What do you think about the 4% rule? (Using an assumed safe withdrawal to draw down income and principal instead of using the dividend or interest payment as a guide.)
Most of what I have read on reaching financial independence revolves around that topic. Just curious what your thoughts are.
I believe the ideal withdrawal rate in retirement touches no principal if you are under the estate tax limit.
Long time reader- really appreciate your transparency.
Do you include dividends from retirement accounts in your calculation?
You have one of the best financial websites on the web. Loved this post. Love that you post all the streams of passive income you have. Most of my money is in in stocks and CDs which generate about 70- – 80 k a year in passive income. My biggest mistake was selling a duplex in San Jose, my only other rental property besides my primary residence. Looking into the crowdfunding real estate.
I am in my 60s so now looking at derisking to preserve principle.
Always look forward to your posts.
Hi Mark, when did you sell your duplex? It’s not so bad if you reinvested the proceeds and made some good returns right? I know I’m gonna regret selling my rental house in 2017 years from now, but us because I’ll forget what a pain in the ass it was to manage.
Hi Sam
I sold back in the mid 80s. We took a second from the guy who purchased it. He paid us 7% a year on the amount he borrowed. That was actually a good thing. In a couple years, he paid the loan off early but we had an early payment clause that paid us six months of interest. I invested the proceeds in the market which was hot at the time. So, that was good. It turned out to be a great investment. My only regret was for diversification purposes, and that guaranteed income stream. We had one section 8 tenant who kept the place spotless, and we could always count on the government to pay. Plus if I had a good tenant, I would keep the rents low but with section 8, it didn’t matter, the government paid most of the rent and increasing the rental didn’t affect the tenant that much.
But I agree with you on the pain to manage. We had one tenant, my biggest learning experience that trashed the place. We sued him in small claims and won, then he appealed. In small claims, you can bring an attorney on appeal. He did and the amt owed was reduced. He had purchased a house so we put a lien on it. Then he filed bankruptcy, and we received a letter from his attorney telling us to take off the lien. We did. So we received nothing. Our corporate attorney at work was advising me along the way. I always remember what he said when it was all over. ‘Chalk this up as a lesson in jurisprudence”
Thanks for sharing. Man… I having to sue someone is not the stress I need now as a father. I’ve really got to simply my finances more.
Keeping my condo empty once the existing tenants decide to move is feeling like a better and better idea!
Haha! When I read your posts, Sam, especially ones that divulge your finances, I feel worthless and weak. And that’s a good thing. My ego needs to be subdued. Thank you, sir.
Hah! Well hopefully you don’t feel worthless and weak, that would be counterproductive to the purpose of this post. I’ve bashed my ego down long ago. That’s why you don’t see monthly reports, selfies, and net worth reports!
Thanks for this post, Sam.
There are some numbers I don’t get though.
You said you have $185k in CD giving you a 3% return with a total of $7620, but this number would be right with a 4,1% return.
Same for the stocks & bonds, you said it gives you a 4-5% return, but with $103k a year of income from $1.2 Mill is more like an 8.5% return.
About your rental properties, for a $43k income, what’s the condo’s worth? Around 1Mill?
Basically, you have a net worth of around 2.4 Million that bring you a 6.5% return?
I’m currently with a $1.35 Million invested that brings me a monthly $4750 (approx 4% return).
Now, I’m gonna stop investing and start saving for a downpayment for a house (I’m still renting an apartment with a roommate….) But I’m scared about the market in California, I don’t see how the new law is NOT gonna affect the market next year.
A 4% return is great. It’s hard to calculate my net worth when I’m just highlighting passive income, excluding my business, and keeping other assets off the books. I think you’ve misread the CD portion wrong. Check out the chart again. Most importantly, focus on improving your own cash flow.
Related:
Remain Stealth Wealth If You Know What’s Good For You
Why Cash Flow Is More Important Than Net Worth