Real Estate Investor · San Francisco Bay Area, CA · Member since 2016 · 66 posts · 36 votes
When it comes down to the magic number for people planning for financially independent, it seems that they will work backward down to cash flow vehicle to get there. For example, if you want 10k/month, then it means you’ll need 50 doors if each cash flow $200/month (leaving tax out to simplify).
Perhaps this is enough to get people started, but I feel the reality is different. You have more than one way to get return on your money. House gets paid down, compound/snowball effect, tax treatments, retirement accounts, etc.
For those who are financially free, could you share what’s your cashflow investment/business mix look like? How many % are in what, what are the returns?
Its a tough question. Generating income is actually pretty hard especially when you look at the risks. For someone used to a regular paycheck its not easy to get a handle on. Ive run the models and the best way I think is to build a ladder. Depending on your age etc and how much income you need you can have several sources. So lets say you are in your 50s. Then you can break down your potential sources of income by year. So from 52-59 you depend on rentals/other passive streams. At 60 you can add some distributions from IRAs if you need to. At 62 you can add social security. If you have pensions etc you can add those in when you become eligible. The trick is to actually have growing income to account for inflation. However, your spending patterns are also not constant. In your 50s maybe you want more travel. In your 80s maybe more spend on health care.