Passive Income Update

I’ve stopped posting about my various investments that I use to generate passive income because no one cares. Sure they want to find out some ideas but there’s plenty of ideas to glean from StockTwits or Reddit forums. Right now everyone is focused on the meme stocks like $BB or $GME, but those are flashes in the pan. Just the normal noise in the market every day.

I’m doing pretty damn great for 2021.

I, on the other hand, have been steadily adding to my dividend income-producing stocks to help me generate monthly and quarterly income. The goal, as I’ve posted before is to generate enough monthly income once I reach 59 1⁄ 2 so I can retire early and just live off the dividends till I can withdraw from my 401k and live happily ever after. The good news? I’m getting closer to critical mass, or what’s often called Coast FIRE.

Coast FIRE

Coast FIRE is not a forest fire along a coast. The FIRE part is short for Financial Independence / Retire Early. The Coast part means that you’ve amassed enough seed money that left along will generate enough money for you to live when you retire into perpetuity. You’ve essentially set yourself up for the future. Here’s a handy Coast Fire calculator I use.

Master the money and your life will follow…

The concept is really easy to understand and you can get there faster if you start early. I know, not everyone HAS the luxury of investing money, but you can start small if you’re young. This is one of the big reasons why I’ve opened up custodial IRA accounts for my kids. They’re busy earning money at summer jobs and they can put that cash into an IRA and invest in ETFs. My daughter is long $XLV and my son is busy evaluating the market. Not bad for a 16 and 14-year-old.

If the world doesn’t die in a fiery death (aka climate change) and there’s no social unrest, my kids are setting themselves up for a Coast FIRE a lot earlier than me. I think that’s a good thing because who wants to keep trading their life for money? Master the money and your life will follow, don’t be a slave to money.

How am I doing?

I’m doing pretty damn great for 2021. I’m having the best year so far for dividends, surpassing my record as early as May of this year. I’m averaging $400 per month in dividend income that I just reinvest. Most of the biggest gains I get are from RYLD and QYLD, which are higher risks but I have 9 years to ride out any market fluctuations. Am I on target? Not quite. For someone in my income range and the quality of life, I expect to continue to live on, that $400 per month has to be closer to $5,000 per month. On top of that my wife wants to retire at the same too so that number is probably closer to $10,000 per month or $120,000 per year. We should get a boast in this after I reach 62 and start collecting social security.

Still, $120,000 per year is really high considering our house would be paid off and the kids out of college and (hopefully) on their own. We haven’t made up our mind yet but moving out of New Jersey is definitely something we’re considering, preferably to a state with low taxes or no state income tax.

What would be a great interim goal is to generate enough monthly dividend income where I could match my future social security income? I don’t know the exact number that that would be somewhere between $2,000 and $3,000. Building up my dividend income to $2,000 a month seems very achievable for the short-term.

I’m “stream of consciousness” writing this because nothing is clear yet. In the meantime I spend my time just pouring money in my 401k and adding to our dividend stocks when I can. And that’s the best thing I feel I can do right now and wait for the picture to get clearer over the next few years.

Learn Stock Trading, Investing, and Risk Management

There are a handful of financial and trading books that have made a HUGE impact on my investments. If you want to trade and learn about money and risk management then I suggest you get the Van Tharp book. If you want just focus on long term investing, get the Random Walk Down Wall Street book.

Hell, get them both. I owe my wealth to what I learned in those books.