What would you do to generate passive income?

funkymasterr

I just paid off our mortgage on our forever home and quit my [high pay/high stress] job.

I have almost 700k in liquid assets (cash & equities), and pensions are in decent shape too.

I am 43 with 2 young kids (under 7), happily married and wife works in decent job (150k per year)

I am incredibly lucky & privileged.

What would you do to generate passive income?

Bonus question for fun - what would you do in life in general at this point? Go back to work, try to semi-retire, change career?

the 12 th man

Let your wife work and enjoy spending the 700K

SuperBowserWorld

Give back to those less fortunate than you ?

Wanderer78

drugs, definitely drugs….

best of luck with the early retirement…

daheff

i'd stick the money into deposit accounts for the moment until you decide what to do. at least earn the 4% interest on offer -thats about 28k a year.

Be a stay at home daddy for your kids till they get older?

elperello

You could put your skills to work in the voluntary sector.

It would help to keep you focused and maybe do some good, perhaps in a field you are interested in.

If you decide to return to a more formal employment it wouldn't harm your CV either.

sk8board

identical situation here, with job/house/family - I cut and ran over 7 years ago when I was 38.

I spent a few years (before I left) investing the money in yield-generating assets that would cover my monthly outgoings (note: monthly outgoings, not my full salary). I’m a minimalist with an aversion to lifestyle creep, which helps.

work out your precise monthly outgoings for the past few years, if possible.

It’s a different world now, but I invested in:

1. Portfolio of rental property’s, bought based on rental yield. Self manage everything.
2. A diversified portfolio of global large cap ETFs. not ideal from a tax perspective
3. Have about 10% of net assets in cash, mostly in state savings bonds when they were offering 25% tax free over 10 years, which Protected it against inflation over that period.
4. A diversified portfolio of large cap dividend paying stocks. I still do a lot of research on this, and stuff like DCF valuation models, which I enjoy.
   

Generally speaking, the rent and dividends grow annually in line with inflation - you note I’ve mentioned inflation a few times now - “inflation is the greatest tax on wealth”, and you’ll need to actively work to protect your assets against it.

drury..

https://www.boards.ie/discussion/comment/122137998#Comment_122137998

You're not actually earning though are you

Merely keeping up with inflation

Peregrinus

The term "passive income" is both fairly broad and fairly loose. I'd understand it to refer to income that you don't earn from an employment trade, profession, etc you get without much expenditure of time or effort. Your pension is generally not included in "passive income" because you earned it; it's deferred compensation for your work.

You've got a portfolio of cash and equities worth about €700k. That's going to generate passive income. Your question really boils down to how you want to use that amount to generate passive income, and that's going to depend on your attitude to risk. But you're only 43 and presumably want your portfolio to hold its real value for decades to come, so that suggests you should be substantially invested in real assets - equities and/or property. Property is more work to manage (especially if you do it yourself, without involving an agent) but does offer the opportunity of leveraging your investment, if you don't mind the risk attendant on that.

sk8board

https://www.boards.ie/discussion/comment/122137998#Comment_122137998

I see nothing above 2.6% on deposit accounts for large lump deposits and long term limits - and in todays market, after DIRT tax and inflation, your money is losing value over time for sure.

You will not have €28k of income, or anything close to it, and bear in mind you only protect against inflation if you don’t draw out that interest in the first place.

As a general rule, you’ll need annual returns of about 5-6% just to cover tax and inflation.

daheff

https://www.boards.ie/discussion/comment/122148417#Comment_122148417

look harder then.

try askabout money best buys thread

Agreed that DIRT/Inflation can eat into your return, but taxes & inflation will eat into any investment.

sk8board

https://www.boards.ie/discussion/comment/122192972#Comment_122192972

I don’t need to ‘look harder then’, I do this for a living 🙄.

Taxes and inflation do indeed eat into any investment, but they eat into cash deposits the hardest. They’re very much a negative return investment for a number of years, which isn’t really an ‘investment’.

Your recommendation of putting a massive sum like €700k on deposit to generate €28k of income is both poor advice, but also the suggested income generated is factually incorrect and miles wide of the reality.

If this person puts €700k on deposit they’ll generate maybe 1.8% after dirt tax, but about -2% in real buying power.

But they won’t get 1.8%, because the €700k will require separate accounts in at least 5-6 retail banks for the deposit protection scheme to cover their risk.

i know our posts here aren’t investment advice, but still I think this needs to be flagged.