Passive Income Targets – September 2012

avatar By: IS
Date posted: 09.25.2012 (5:00 am) | Write a Comment  (3 Comments)

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After starting this new series last month, I received a lot of positive feedback. Every month. I talk a lot about the need accumulate different passive income flows. As time goes by, my objective is to be able to live entirely off of these new income streams. In many ways, that is what’s behind my interest in dividend income. For now, I prefer to avoid using actual numbers (might change later on) so what I will do is express all of this data in %. The objective of course is for all of these flows to end up generating 100% of my current income. In terms of income, I will be using my gross household income. Counting the bonus would only make things more difficult to track and would not represent how I currently live on my finances.

For example, if my base salary is currently 100K, my objective is to make 100K of passive income on an annual basis. This could be done through a variety of methods which I will be exploring of course.

Why Am I Doing This?

I’m a strong believer in working with clear objectives but also holding myself accountable so writing about these objectives will without any doubt help me reach financial independence more quickly.

Current Passive Income Flows:

3.6% – Dividend/Investing Portfolio: I am currently generating a dividend yield of about 3.50%. This portfolio will be increasing over time, especially on year end bonuses. I use a bucket system which I will be writing more about but the main retirement components are a long term dividend portfolio (see the Ultimate Sustainable Dividend Portfolio) and an ETF portfolio (see BuildYourETFPortfolio for more details on how I build mine).

4.8% – Private Investment In My Online Company: I have discussed how my web company has been the best investment of my life so far. Currently, the company is paying back very little as it is focused on repaying debts (we acquired a few companies, see more on TheFinancialBlogger) and we are still very much focused on growth. This certainly has the potential to increase over the next few years but probably not until 2013.

Total: 8.4%

It’s not spectacular by any means yet. That being said, I am 31 years and do have a decent base (I could live with less easily).. I will continue to work on getting that total as close as I can do 100%:)

Passive Income Ideas

0% – Real Estate: One thing I’d certainly like to own at some point is real estate that would generate very diversified, consistent cash flows. The main challenge will be that I’d prefer not spending much time working on it but we’ll see what I can figure out.

0% – P2P Lending – This is a new idea which I will certainly discuss in the near future, one that could add some extra passive income

0% – Annuity – No intention of buying an annuity for the time being

0% – Other ideas – I could end up starting other businesses or proejcts will I’ll certainly keep you posted about.

What I Am Not/Will Not Include

-Pensions: I do know that the government will be paying me a sum of money once I retire. However, given how poor government finances look like these days, I personally think it’s crazy to count on the government actually fulfilling its promises. It won’t happen. Yes, there will be money, but not anywhere what is currently being promised. Whatever I do end up getting will be a nice surprise.

-I feel like I am being extremely conservative here. By not including my government pension and also not including the fact that lower revenues will mean less taxes to be paid, I’m overestimating the amount of passive income that is truly needed. That is more than fine by me. I’d also like to think that my house will be paid by then making my level of spending lower all things being equal.

Do you have any questions or comments? I’d love to hear any ideas or how you’ve been managing on your end as well!

More on this topic (What's this?)
Passive Income Trading Strategy Video
Working on my Terms in 2012
Read more on Chun YU Works, Passive Management at Wikinvest
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3 Comments

  1. Comment by Blogging Banks — September 25, 2012 @ 7:19 pm
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    I find this post to be very inspiring. So essentially, your target passive income is approximately $24,000/year?

    Your dividend portfolio has ~$25K, yields 3.50% = $875/annual dividend income. This generates 3.60% of your total income target, therefore 875/.036 = $24,300/ annual passive income. To me that seems achievable. At 6% yield, you only need to invest $400K in dividend stocks, and then you will hit your target.

  2. Comment by IS — September 26, 2012 @ 10:44 am
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    @Blogging Banks – Nice try:) Actually my income targets are significantly higher. The dividend portfolio is higher and it is just part of my retirement account (have other dividend stocks, and a lot of ETF holdings). I did start the USDP with a 20K notional for simplicity purposes. Nice attempt to calculate it all but all I’ll say is that my target is a bit higher than my example, so a bit over 100K:)

  3. Pingback by Weekly Dividend Links | The Dividend Guy Blog — September 28, 2012 @ 4:01 am
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