Because it is your taxable retirement portfolio that spits out passive retirement income. It is your taxable retirement portfolio that is going to allow you to retire early and do whatever you want. The ultimate goal I recommend is for everyone to shoot to save 50% of their after-tax income or more. If you can max out your 401k or max out your IRA and then save an additional 20%+ of your after-tax, after-retirement contribution, good things really start to happen.
#EASIEST PASSIVE INCOME HOW TO#
Figuring out how to properly invest your savings is even more important. Unfortunately, saving money is only the first step in building passive income. Sounds nice right? If only there was a formula or a chart like the 401k by Age chart which gives people guidance on how much to save and for how long in order to reach financial freedom. Best Passive Income Investments Starts With Savingīy far the most important reason to save is so you can have enough money to do what you want, when you want, without anybody telling you what to do. The best passive income rankings are born from my own real-life experiences attempting to generate multiple types of passive income sources over the past 22 years. After all, tax treatment can significantly affect returns. A key difference to my best passive income investments ranking is the inclusion of taxes as new ranking variable. I’m updating my passive income rankings for 2022 given so much has changed since my original passive income rankings came out in 2015. Now I’d like to rank the various passive income streams based on risk, return, feasibility, liquidity, activity, and taxes. We’ve discussed how to get started building passive income for financial freedom before. 2022 will hopefully be the third year in a row of generating over $300,000 in passive income so we can remain stay at home parents in expensive San Francisco. Today, I estimate my wife and I will generate roughly $350,000 in passive income (see the chart at the end with a breakdown of various passive income sources). And it wasn’t until 2017 when I was able to generate enough passive income to take care of a family ($200,000).
#EASIEST PASSIVE INCOME FREE#
It wasn’t until 2012 when I generated enough passive income (~$80,000) to break free from work. I’m sure many people are feeling the same way about their occupations during the global pandemic as well. The previous financial crisis made working in finance no fun. However, it wasn’t until the 2008-2009 financial crisis where I became obsessed with building passive income. Thus, I started focusing on generating passive income in 1999. There was no way I could last for more than five years working in a pressure cooker environment like Wall Street. I needed to generate more passive income to break free. Working in investment banking was wearing me out. Why I Focused On Building Passive IncomeĪfter about the 30 th day in a row of working 12+ hour days and eating rubber chicken dinners at our company’s free cafeteria, I decided I had enough. When it comes to achieving financial freedom, the hope is that we achieve it as soon as possible given our time is limited. Unfortunately, they can’t generate passive income to live on until after you turn 59.5, in most cases. Maxing out your 401(k), IRA, and Roth IRA are great moves. However, the only way to generate useable passive income is by building a taxable investment portfolio, which includes investing in real estate, alternative investments, and more. Too many people fail to live their truth due to a lack of passive income. If you have enough passive income to cover your desired lifestyle, then you are free at last! You can say and do whatever you want.
Passive income is the holy grail of personal finance. This post will highlight the best passive income investments in our current low interest rate environment. If you’re looking to achieve financial freedom before a traditional retirement age (60+), you must build passive income.
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