Let’s try something different today. Let’s do an exercise on how to invest some theoretical money. I hope you have been reading all my articles and books because we will draw on the power of retirement planning, investing, real estate, cryptocurrencies, and business.
I am currently on the late-night flight from Tokyo to Dallas/Fort Worth⏤en route to see my wife for the first time in a year. It’s crazy that I wrote “The Biggest Book on Passive Income Ever!” over the course of a year. Even crazier that I hadn’t written anything before I left. Life is good. Blah, blah blah. Let’s get into it.
Now, I say we received $300,000 after taxes from a workplace asbestos settlement. Our goal is to invest this money and create a nice income stream for the rest of our lives. Let’s see how much income we can derive from our investments.
J.O.M.O. – The Joy of Missing Out
Real Estate. I always like to start with real estate because it is the most expensive. We also need to decide how to allocate our real estate assets: full cash or leverage.
Depending on your ability to manage properties, you will have to decide how many houses in a small city you want to purchase. For this example, I want to pay cash for a $120,000 home in Meridian. Mississippi. I don’t have access to the internet right now, but let’s say I can cash flow $1,000/month from this purchase.
If you wanted to use leverage, you could buy 3-4 houses for the same amount. It all depends on where you are at in life.
Investing. I am going to go all out on this one. Since this was free money, except for asbestos eating my lungs, I will go all in on high-yield products. I will invest $100,000 into high-yield with the intent to get an 8% dividend yield across the board. Some of my favorites are AGNC (REITs), PCI (Closed-End Funds), and GLOP.C (Preferred shares).
I will have to average in over a year to ensure I am not overpaying. After I complete my purchases, I should be receiving $667/month in dividends.
Retirement Planning. I will max out my Roth IRA for the year with $6,000 invested into VTI (Index Fund).
Cryptocurrencies. I’ll also try something different here. Since I went all-in on some riskier dividend investments, I will stay ultra-safe here. I will put $50,000 into stable coins, mainly USDC.
Retirement Planning in Your 30s
This will level out my risk and still pay me 9% interest. Amazing. The monthly total will be $375. Not bad at all.
Business. This leaves me $24,000 to invest in companies. I think I will buy an 18-Wheeler trailer and rent it for $400/month. This business plan should be very passive, which fits nicely into my lifestyle.
Final tally. Let’s add everything together and see what our monthly income adds up to.
- Rents- $1000/month
- Dividends- $667/month
- Retirement Planning- $0/month
- Cryptocurrencies- $375/month
- Automated Business- $400
- Total- $2442/month
Wow, that is an excellent wage, and the income is mostly passive. Most importantly, we are well diversified across multiple asset classes to withstand recessions, stock market manipulation, and pandemics.
I will run more of these experiments as time goes on. Maybe I will make it part of my airplane battle rhythm. Remember, if you can’t invest $3,000, you won’t be able to invest $300,000. Even when you receive smaller lump sums, diversify the cash and build an income.
Learning how to invest, build wealth, create income, and protect principles are all important to your journey. You never know when a lump sum of cash may fall into your lap. WIll you know what to do with it when the time comes?
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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