Life as an Income Investor 2: How to Become a Cool Kid

I always wanted to be a cool kid, but sadly, this wasn’t the case. I never thought I would have the chance to be the coolest kid on the block—but then I became an income investor.

Becoming an income investor isn’t about bragging to others about how much money you make. Instead, you get a quiet confidence knowing that everything will be alright.

Yesterday, I took an old Marine Corps buddy to lunch. We sat outside watching the beautiful Gulf Shores of Florida while eating our food. The tab was $70, and I paid it all with money from my dividends. That’s what is so cool about income investing.

Stock & Bond Investing in Your 70s

How to become an income investor. I’ve come a long way from being broke and in debt. In fact, it was only five years ago that I was $77,000 in debt.

I wasn’t broke because I was an idiot or reckless; I was broke because of serious structural problems with how Americans handle money.

They taught us to spend everything we earned and to leverage our future (via debt) instead of saving and investing.

There wasn’t any proper financial education in high school or the military; therefore, my wife and I did the best we could with our limited knowledge.

Eventually, in June 2019, I had finally had enough. I decided to take matters into my own hands and figure out how to dig us out of our financial grave. I learned how to become an income investor.

Getting Started with HYSAs

Once you are finished living under the status quo (read: being broke), you can become an income investor. Conversely, if you love working for money while living paycheck to paycheck, it’s easy to live that way forever.

One simple rule. Only one thing separates the rich from the poor—assets. Therefore, you must obtain assets to convert yourself from poor to rich.

My parents taught me to work for money. This means that I went to work, received a paycheck, and spent my money to pay bills. I then ran out of money and had to go back to work. I repeated this loop for over 20 years.

Robert Kiyosaki, my favorite author, taught me to work for assets. In June 2019, I started going to work, purchasing dividend-paying stocks, and then spending the rest of my money on my budget.

That’s right; my focus went from paying bills to purchasing assets. This simple shift in focus has made me understand how the rich keep getting richer. Let’s take a look at a simple budgeting difference between the rich and the poor.

House Hacking to Defeat Credit Card Debt

Inside a simple budget. Let’s say the Smiths make $10,000 per month in household income. They save $500 in a high-yield savings account and budget $9,500 toward expenses, wants, and needs.

Unfortunately, the Smiths will work until they reach 70 because they have no path to victory. They don’t have any assets to set them free.

The Johnsons make the same $10,000 in monthly income. They set aside $500 for an emergency fund and then invest $2,000 per month toward their income-investing portfolio. Finally, they live on the $7,500 they have left.

The key to income investing is taking that $2,000 and investing in high-yield products that yield over 9%. Let’s see what happens if the Johnsons invest $2,000 per month into Pimco Dynamic Fund (PDI) that yields over 10%.

Living By a Hardcore Budget is Empowering

The Johnsons have paid $720,000 into their income-investing portfolio. If they reinvested all of their dividends, they would have $3.3 million in 30 years.

More importantly, that $3.2 million would pay them $320,000 in annual dividend income. That’s a whopping $26,000 per month in free money!

This can’t be true. There is no way it’s that simple, right? We cannot simply invest in high-yielding stocks and funds and receive large amounts of cash flow, right?

It’s not only true, it’s amazing! I am five years into my income-investing journey. Today, I earn $2,200 per month in dividends. Can you imagine if I continue this for another 25 years? It will be incredible; that’s why I feel like such a cool guy.

Stock & Bond Investing in Your 60s

So why don’t most people open a brokerage account and become income investors? The main reason is that it takes hard work to build the capital to purchase assets.

Most people do not want to reduce their spending from $9,500 to $7,500 to start generating the required cash flow to start investing.

I consider myself a cool kid because I understand the game—do whatever it takes (legally) to obtain more capital to invest in dividends. Here are some things I am doing:

1. Reinvesting the $2,200 back into my portfolio.
2. We have a roommate that pays us $1,000 per month.
3. I go to college to earn $1,730 monthly from the VA.
4. I teach Marine Corps students online for $600 monthly.

All these monthly payments feed back into my income-investing portfolio to keep my cash flow growing. The more I put in, the more I receive, and the more I reinvest.

I am 43, and my portfolio currently sits at $350,000. Let’s say I can add an additional $2,000 per month (beyond reinvestment) for the next 30 years.

Struggle-Mania 2: Is Your Mindset Keeping You Down?

If I can keep up this pace, I will have $10 million in my portfolio. It would pay me $1 million yearly in dividends, or $83,000 monthly.

Can I achieve this feat? Absolutely! I can achieve these high numbers because, as an income investor, I never rest on my laurels. 

I will continue to find real estate, start businesses, and reduce taxes to add even more to my portfolio. I will never stop finding new capital to grow my passive income streams.

Life as an income investor. Life as an income investor is more than living on the amazing cash flow from dividends. It’s about the constant search for new capital to purchase more assets.

Once I find new capital, I invest in the six types of income-investing products: preferred shares, closed-end funds, business development companies, dividend ETFs, mortgage REITs, and high-yield dividend stocks.

Nothing gives me greater pleasure than receiving dividends; I simply love understanding how money works. The harder my money works, the more I want to work to obtain more money. I want to continue growing my income base until it is ridiculous.

The Most Challenging Part of Passive Income: Enjoying It

Conclusion. The best part is that I can start to pass on this wealth and cash flow to my kids. Most importantly, I can teach them how the financial process should work.

Our jobs are just a means to an end. Ultimately, the goal of our financial lives is to obtain assets. Without assets, we will continue to work for money—forever!

So, do I feel like a cool kid? Yes, I do. I keep pushing myself to obtain more and more assets. These assets allow me to purchase more assets.

I am building cash flow via assets instead of building debt on my credit cards. They never taught us how this could work in school.

I read all of Robert Kiyosaki’s books, and those empowered me to understand the process. That’s why I feel so cool when I can take my friends and family to dinner.

I understand that my assets will continue to work for me, even when I don’t work for them. That’s the magic of becoming an income investor.

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