Passive income retirement plan

Discussion in '401k, IRA and Retirement' started by remnant, Apr 23, 2016.

  1. remnant

    remnant Well-Known Member

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    I tend to view retirement as a time of self discovery. One should have figured out how he or she is going to derive their sources of income. But after years of hard work and burning the midnight oil as well as part heartaches from risky investments accompanied with flagging energy levels, its time to make your money work for you. Which passive income vehicles would you recommend?
     
  2. TaurusHorns

    TaurusHorns Well-Known Member

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    While not entirely passive, my uncle retired on his 2 metal detectors (1 underwater and 1 standard that's like $6,000). While they weren't cheap, he goes out and has fun digging for treasure and is way ahead on his finances
     
  3. Corzhens

    Corzhens Senior Investor

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    Our passive income is actually our jewelries and collections. Not really a business but those assets rise in value so the increase in the market value can be considered passive income. For example a piece of jewelry that I bought for $100 in Bangkok some years ago is now valued at about $150. And it serves as a decoration in our living - a dog figurine made of jade. With our other collections like old coins and some antique items, I agree to my husband that they create a margin in terms of the market value. I just hope that we wouldn't sell it because my idea is to sell it when we are in dire need of money.
     
  4. crimsonghost747

    crimsonghost747 Senior Investor

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    Stocks that are stable dividend payers and maybe add some corporate bonds in the mix.
     
  5. GiltEdged

    GiltEdged Active Member

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    I've got several IP licences that provide regular income, (no I'm not rich, getting that is harder than you think) but otherwise a well-planned portfolio can provide a regular income, which is how I am hoping to do it.

    It means getting a good mix of stocks, bonds, REITs, commodities, and other holdings to protect against market slump. Compound the interest/dividends into the portfolio during my working life, then live on the income once I retire.
     
  6. Corzhens

    Corzhens Senior Investor

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    This reminds me of the grant that our company gives to the executives who have rendered 20 years of service. I was granted shares of stocks of our company 2 years ago. However, the dividends are still on hold and the HR said that it would take a holding period of 5 years before I can sell the stocks (and probably earn dividends, that's my assumption). And since our company's stock prices are continually rising, that shares of stocks granted to me can be considered passive income. And after 5 years (3 years and counting down) I would get hold of that passive income for my disposal.
     
  7. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Almost everyone who is retired will likely need at least a little bit of fixed income (bond) exposure.

    The less money you have in retirement, and the more conservative you are - the shorter or more uncertain your timeframe (older), the more you need to protect your principal, the more you need to limit volatility, and the more you need a stable stream of income that is not likely to be interrupted - the more you should have allocated towards investment grade bonds.

    Bonds "guarantee" a regular interest payment at regular intervals until maturity, at which time the principal is returned - at least as long as the company, country, or municipality is solvent and can meet its obligations.

    It's not so difficult for companies to cut or eliminate dividends, and there is no telling where a stock's price will go over time. Of course that doesn't mean that most retired people should totally rely on bonds.

    Some traditional portfolio theorists have preached an investment school of thought that suggests proportioning the percentage ratio of stocks to bonds in your portfolio according to your age - i.e., a 75/25 stock to bond $ ratio at age 25, a 25/75 ratio at age 75, etc.

    Of course this is a pretty simplistic guideline. A pretty aggressive retiree with 10 million bucks, no debt, and less than $200k a year in living expenses can get away with a portfolio consisting of mostly stocks (even some aggressive, high-beta investments), with a minimal amount of bonds, some REIT's, commodities, maybe some hard assets like real estate, etc.

    A more conservative retiree with $1 mil who needs $2500-3k a month to live on, is more conservative by nature, and needs to preserve principal to live out an uncertain lifespan, plus keep a little emergency savings, might have some medical expenses, etc - has a much lower margin of error to fool around with, and should probably have the vast majority of their money in fixed income investments.
     
  8. Alexis John

    Alexis John Member

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    I am confused between roth IRA and 401K?
     
  9. baudwalk

    baudwalk Senior Investor

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    Try these sources for basic information, but I would suggest talking with your CPA tax accountant and/or financial advisor re your particular tax situation.

    http://money.usnews.com/money/blogs...stor/2013/02/06/retirement-basics-ira-or-401k

    http://www.investopedia.com/ask/answers/100314/whats-difference-between-401k-and-roth-ira.asp

    http://blog.futureadvisor.com/the-differences-between-iras-and-401ks/

    http://money.usnews.com/money/blogs...1/how-to-choose-between-a-401k-and-a-roth-ira

    HTH. YMMV.
     
  10. JR Ewing

    JR Ewing Super Moderator Staff Member

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