We are already generating $5k pm of passive income. We will need to save another $240k for us to generate another $1k pm ($12k pa) of dividends. We can actually retire now if we want to as our passive income exceeds our expenses but we prefer to have a buffer of $2k pm extra amount. Also getting a monthly payout from our
CPF Life when we reach 65 is an added bonus. We will most likely retire at 58 to join our friends who have retired earlier as they are more successful financially than us.
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Originally Posted by Unregistered
It is wise to continue working as long as you can. Should try not to count on your children contributions to household expenses as they will need to start off their own lives and families.
How much would you need to generate the $6k pm passive income and how far away are you from it now?
From my experience, if you are depending on stocks dividends for passive income, it is a slow and challenging process.
For eg. to grow a passive income from $40k pa to $45K pa at 5% dividend returns, you will need to invest another $100k ! (or from $800k to $900K investment!). Meaning for every additional $5k pa returns, you will need to inject $100K investment!
The initial steps or build up was difficult for us, but with constant re-investment of our dividends and savings, you will start to see the real impact/benefit of compounding returns in the later years. We have now achieved $120k pa. moving slowly but surely to our goal of $150k pa.
The compounding effect kicks in because you find your passive incomes more than adequate to cover your annual expenses leaving you to save all of your yearly incomes! And when you invest these savings yearly, the returns really grow and fast! Imagine how fast it can grow for a couple earning more than $300K pa combined. If they invest this amount yearly, it gets them conservatively $15k additional passive income every year. And some more this does not include the capital appreciation!
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