Passive Income…

I apologize for being absent but its taken more than a week at home to get synced back into my normal schedule (and time zone!) since my return from our Italy vacation.  I actually developed a bad cough last week and minor upper respiratory infection, I guess I needed more recovery from this trip.  Anyway, I’m returning to consistent blog posts starting with this one on passive income.

One of the basic tenants of financial independence is building a stream of passive income as a means to replace your regular (job-related) income.  In preparation for my planned early retirement, over the past two years I’ve been building an income portfolio.  This portfolio is unconventional as there is barely a trace of dividend paying stocks.  The lions share of my portfolio is investment in Real Estate Crowdfunding.  These investments pay me a preferred rate of 8%, some monthly and a few make large quarterly payouts.  This is a generous yield in the market environment we’re in, with bond yields at all time lows.

The other significant portion of my income portfolio is invested in a fixed income mutual fund, the Semper MBS Total return fund.  To be fully transparent and to give you an idea of the monthly income generated from this fund; I have invested $250,000. in this fund and my monthly income is over $1200.  This is a low risk bond fund in my opinion, its actively managed by a capable team who specialize in mortgage-backed securities, and I’m extremely pleased with the monthly payout.

Another area I continue to earn consistent monthly income from is Selling put options.  This has been a winning strategy for me over the past couple of years and I can realistically see myself doing this throughout my retirement.  Recently I sold puts on AT&T, Kimberly Clark and Proctor & Gamble.  These are the types of stocks I target for put selling; liquid stocks of solid companies that have sold off based on headline risk alone, with no fundamental problems.  My monthly income from option-writing averages between $1400-1700/mo.  NOTE: If you haven’t purchased the book I recommend on put selling, go the link above and follow the amazon link to purchase it.  Its a great read and very informative and I base my money-making system on the lessons learned from this book, written by Dr. Robert Valuk.

The remainder of my income portfolio is invested in a ladder of CD’s.  I purchase them in my Charles Schwab account and I ladder them from 3 months, out to 12 months in duration.  As one matures I roll the cash to a new 12-month CD.

All total my income portfolio is generating approximately $52,000. Per year.  This is terrific considering that I am still employed full time.  I do not spend a dime of this passive income, I reinvest it in the Semper MBS fund as well as CD’s.  If the crap hit the fan, if I lost my full time job; could I retire today given the amount of my passive income?  Yes I could, though I’d feel much more comfortable earning a minimum of $75,000 annually in retirement.  When you factor in my annual property tax bill (in 2017 it was $10,400!) and the cost of health insurance (the subject of a future blog posting)  there wouldn’t be much left over for things my wife and I enjoy doing.

Start finding ways to build up a passive income stream.  Its very rewarding AND enjoyable.  I get excited when I see dividends hit my bank account several times per month from my various investments.  For my female readers; HAPPY MOTHERS DAY!


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