High Earning Investment Options

High Earning Investment Options – If you want to achieve financial independence before traditional retirement age (60+), you need to build passive income. This post will highlight the best passive income investments in our current economic climate.

Passive income is the holy grail of personal finance. If you have enough passive income to cover your desired lifestyle, then you are finally free! You can say and do whatever you want. Many people are not living their truth because of the lack of passive income.

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And the only way to generate profitable passive income is to build an income-producing investment portfolio that includes investments in real estate, mortgages, mortgages, and more.

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Expanding your 401(k), IRA, and Roth IRA is a big step. Unfortunately, they can’t generate passive income as long as they’re alive, until after you’re 59.5, in most cases. The hope is that when it comes to achieving financial freedom, we achieve it as soon as we have time.

After working 12+ hour days in a row and eating chicken nuggets for dinner in our free cafeteria, I’ve decided I’ve had enough. Working in investment banking had exhausted me. I need to generate more passive income to break even.

There was no way I could have lasted more than five years in the stress-free environment I was on Wall Street. So in 1999 I started focusing on generating passive income.

However, it wasn’t until the financial crisis of 2008-2009 where I became obsessed with creating passive income. Before the financial crisis, the financial crisis was no joke. I’m sure many people feel the same way about their jobs during the global pandemic.

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Prior to 2012 I had generated enough passive income (~$80,000) to be free of work. And not before 2017 when I can generate enough passive income to take care of my family ($200,000).

Today, I value my wife and make about $380,000 in passive income. We’ve discussed how to build passive income for financial freedom before you get started. Now I want to list the different passive income streams for risk, return, profitability, liquidity, activity and income.

I am adjusting my passive income for 2023 nothing has changed since my original passive income in 2015. The key difference in my best income passive investment plan is the addition of taxes as a new variable plan. Finally, it significantly affects the tax treatment.

The best passive income rankings are born from my real life experience. I have been working on building passive income since I took my first job in 1999.

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By far the most important thing is that you have enough money to be able to do what you want, when you want, without anyone telling you what to do. Best Financial Freedom!

Sounds good right? I wish there was a formula or chart like the 401k Chart for Age that guides people on how much to save and how long to reach financial freedom.

Unfortunately, saving money is only the first step in building passive income. It is important to know how to invest your savings properly.

If you can get your 401kor maxed out and then save 20%+ of your after-tax, post-retirement portion, things really start to happen. The last goal I recommend is for anyone who is sending to save 50% of their taxable income or more.

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Your retirement income is a portfolio that allows you to stay awake and do what you want. Because it’s your tax-deferred retirement portfolio that offsets passive retirement income. You can’t tap your 401(k) and IRA before 59.5 without a 10 percent penalty.

The pandemic has shown us that if we want to save more people, we can. Before the pandemic started, the US personal savings rate was hovering around 5% – 7%. Now it looks like the average savings rate is consistently above 10%.

Below are eight of the best passive income investments to consider. Each stream of passive income is calculated based on risk, return, feasibility, liquidity, activity, and revenue. Each criterion has a number between 1-10. Better, better.

To make the ranking as realistic as possible, each score is related to each other. Additionally, income criteria are based on generating $10,000 a year in passive income.

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Let’s take a look at my overall best passive income investment ranking chart. This has recently been done to reflect the changing financial situation. Interest rates are likely to remain low for some time, which makes it more difficult to generate significant passive income.

Compared to previous best passive income investing charts, fixed income/bonds moved from 3rd best to 5th best. While physical real estate rose from 5th best to 3rd best, partly due to higher net rental yields and lower prices. Inflation increased in 2023, but eventually comes down.

Dividend investing is still the best passive income investment that is preferred by no. But it may not be the best for you given your high volatility and low relative yields.

Private real money, on the other hand, offers much less hassle and even higher returns. During bear markets, private real estate funds like Fundrise tend to outperform.

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They give money directly to friends, family and strangers in exchange for hard cash. Friendships and relationships are often lost because of money. Therefore, I do not recommend doing this unless there is a serious concern. In such a situation, it would be better to give a loan or a gift.

To borrow money less personally, you can borrow in a P2P way. P2P lending started in the mid-2000s with Lingo Club and Prosper in San Francisco. The idea of ​​peer-to-peer lending is to bypass the banks and help the borrower get a rate as low as possible compared to the rates of large financial institutions.

The biggest problem with P2P lending is that people don’t e.g. Borrowers default on loans. There is something that just isn’t right when people break contractual obligations.

Over time, the P2P industry has seen its returns decline due to higher competition and more regulations. For this reason, I believe that investing money through P2P is one of the worst ways to generate passive income today.

Active Vs. Passive Investing

Private equity investments can be a source of great capital appreciation with the right funds. If you find the next Google, that income will blow every other passive income investment out of the water. But of course, finding the next Google is a difficult business when most private companies fail. Moreover, the best investor always has the most connected asset pool.

The most liquid types of funds are private equity funds, which invest in equity or credit hedge funds, real estate funds, and private equity funds. Private debt financing also includes venture capital and real estate. There is usually a lock-up period of 3-10 years, thus the low Liquidity Score. This fund should provide for at least semi-regular passive income distribution.

The least liquid type of private investment is when you invest directly in a private company. You may be locked out forever and receive no profits or distributions.

Access to private investment is generally limited to approved investors ($250K income per individual or $1 million net worth for exclusive primary residence), which is why the convenience score is only 2.

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The action score is 10 because you can’t do anything even if you want to. You invest a lot of time without the daily noise, which is why I enjoy investing in private funds, even if they have high returns. The risk and return score is highly dependent on skill and investment style.

A $10,000 a year private equity investment is hard to figure out unless you invest in real estate or an income fund. These funds typically target 8-15% of annual income, requiring $83,000 – $125,000 in capital.

Anyone can go to their local bank and open a CD of their desired duration. In addition, CD and money market accounts are FDIC eligible up to $250,000 per individual and $500,000 per joint account.

Now you can typically only pay a cash market or online payment account ~3.2% (as of 1H 2023), which is the aggressive rate that the Federal Reserve is seeing in fed funds. Until January 2023, the second best option is to use CIT Bank’s Savings Connect account offering 4.05% APY. CD interest rates are also just up.

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It still takes a lot of money to generate any significant amount of passive income with savings now. $312,500 in capital is needed to generate $10,000 per year in passive income at 3.2%. At least you know your money is safe, which is great in bear markets.

Relatively low interest rates make it wise to lower your interest rate in retirement and/or build a larger net worth before you retire. In addition, it takes a large amount of capital to absorb the current risk of generating the same amount of income.

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