Things have changed quite a lot since my 7 Year to One Million Dollars post.
Not only did my financial knowledge progress since then, my goals have changed as well. Although I do still plan on getting to that one million mark, I feel like I may have miscommunicated my intentions previously.
My new goal for 2020 is to build a net asset worth of one million dollars and to be financial free from any day job. By then, I would have retired and begun travelling around the world.
In order to do this, I would need to have a monthly passive income to sustain my life style. At this point in time, I have calculated that a monthly passive amount of $3,000 would be required. I would be focusing on building my passive portfolio from now on as that will take priority over the one million.
As I have mentioned before, the three pillars to my investment strategy includes real estate, business and stocks. Considering how my goals have changed now, it is only fitting that I re-evaluate my goals for each of these.
Properties may not be the right move
The original plan was to end up with 5 properties by the year 2021. After purchasing my first property, I have come to realize that this is no longer realistic. One property should be enough for the time being. At the very most, I could purchase an additional property every 2 years and end up with 3 properties in total by the year 2020.
Properties are always nice to have especially since I plan on renting them out. Unfortunately, I have only recently come to see that properties are not very liquid. Assuming that mortgage is $1000 for each property and all 3 of my properties are rented out in 2020, I will be building an equity of 36000 a year. What bothers me is that this amount would not be accessible until I sell the units. There is no doubt that the property game is a good long term plan but it simply does not align with my goal to retire by 2020.
What I need to make freedom possible is a steady passive income of $3,000. Even if I manage to rent out all three of my properties in 2020 at a positive cash flow of $200 per month (which is already an extremely generous estimate), that only equates to $600 of passive income.
Assuming that each property will go for a closing of $300,000, I would have already committed $180,000 ($60,000 each at a rate of 20%) on down-payment. If I invest this $180,000 in stocks or even dividends that yields 3% a month, I would have generated a monthly positive cash flow of $5,400. This is almost 1000% more in passive income compared to the $600 I get in collecting rent.
Businesses are the wildcards in my plan
The business category in my financial game plan has always been a wildcard. I have not given this that much attention so far but I know not to underestimate it.
However, I do plan to start an online business as well as an offline business (which the plan is to be a restaurant right now) some time in the near future. It is definitely something I will take more seriously as I believe that the bulk of my passive income plan will come from this.
Retiring on Stocks and Dividends
As for my stock investments, I am officially cash poor at the moment considering that I had just put down $60,000 for a property. This will immobilize my stock moves for at least a few months until I can rebuild some sort of a chip stack. Paper investments will definitely play a key role in reaching my passive goal.
As you can see, things are looking quite bleak for me right now. The only thing that I can do right now is to continue building my knowledge in personal finance and chip away on my online business. With all things considered, I will continue to push for the $3,000 monthly passive I strive for and I am quite confident that I can get there by 2020.
What are your thoughts on all of this?
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