Passive Income Targets – February 2013

avatar By: IS
Date posted: 02.12.2013 (3:00 am) | Write a Comment  (0 Comments)

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43I’ve gotta say, I never could have imagined how well this would be turning out to be. Since starting to do monthly updates about my passive income project, my revenues have been increasing steadily almost every single month. Part of it is expected as investments continue to compound and I reinvest all income. Another important part though is that since I know that every month I’ll be reporting my numbers here, it makes me think about it a lot more. I’m trying to be smarter about my expenses, creative in finding new income sources, etc.

As time goes by, my objective is to be able to live entirely off of these new income streams but also be able be diversified enough to be ok no matter what happens. 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. I also want to gradually make sure that my income producing assets are not all locked away in accounts that will only be available upon retirement. 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. A few people tried to figure out how much capital I have by looking at the USDP size. The main issue is that the USDP is only part of my dividend income. I also get income from my ETF holdings, etc.

My primary objective remains to generate 100K in passive income on an annual basis as soon as possible, ideally from a few different sources

February Updates

-I was able to increase the monthly revenues from my online company by $120/month or so as our balance sheet gets stronger

-Last month, I made my passive income objectives very year up until 2028.. I can of course change and adjust but it does give me a moving target, I will now be updating a chart on a monthly basis which will give myself and all of you an idea of how well I’m doing!

How Much Do I Really Need?

I am aiming for an income of 100K or so, before taxes as a first goal. To be clear, I feel like I need significantly less than that. Why? I’ve described how I am living off of significantly less right now (I’m paying taxes, paying my house, saving, etc). I also have the option, as discussed of retiring in a foreign location.

Overall, I feel like aiming for the same level of income as I am currently making is very very reasonable and I could easily live with less but why aim lower if I’m confident I can reach that 100K?:)

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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:

5.47% – Dividend/Investing Portfolio: I am currently generating a dividend yield of about 3.41%. This portfolio will be increasing over time. 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). I saw a slight increase here thanks to markets rising and a similar yield.

6.48% – Private Investment In My Online Company: I have discussed how my web company has been the best investment of my life so far. The company continues to be focused on debt repayment so I don’t expect to see huge increases from these flows in 2013 but we did just increase my monthly payments by $120 which certainly helps

Total: 11.92%

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%:)

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Passive Income Ideas

0% – Real Estate: I have started writing about adding real estate to my income flows. One aspect that I love about Real Estate Investing is how much of an inflation hedge it will represent for my portfolio. So I started looking into some aspects such as investing into residential or commercial real estate.

0% – P2P Lending – I started exploring the idea and wrote my first post about it here :)

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

0% – Farming – I know it sounds crazy but I’ve started looking into it as you can see from my post a couple of weeks ago

0% – Other ideas – I could end up starting other businesses or projects 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.

My Long Term Passive Income Objectives

January 2014: $12,000/year
January 2018: $25,000/year
January 2023: $50,000/year
January 2030: $100,000/year

I feel like my January 2014 objective was perhaps a bit too easy to reach but it at least gives me some momentum and I know that I could suffer some setbacks so I’ll work hard on getting to that 25K per year as soon as I can!

You can see that little blue dot… slightly above the red line:)

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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!

 

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