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How would you create $1000 a month new cashflow in current markets
Old 08-19-2017, 01:59 PM   #1
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How would you create $1000 a month new cashflow in current markets

I know there are many different investment vehicles in use by the people here and I am just trying to get an idea of the thought process of people rather than argue right/wrong or best/worst.

I would like people to explain what they are hoping to avoid or get benefit of by the choices. ie tax efficiency, gross gains. A rough idea of your age might help make choice decisions more apparent. (ie 40 yr zero coupon bond for a 20 yr old)

Also harvesting capital gains say from an index works too, if that is your plan.

Per the wall street journal site currently 30 yr US treasuries are paying 0.02776 so $12,000 a year that way needs $442,276.66 laying around.

Per Schxxb at my age and state to get 1,000 a month for life on just myself and all premium not paid out returned it would be $150,428. ($133,223 pure insurance no return of premium if I croaked second day of policy)

If I lived another 20 years and just took from some savings account paying 0% I'd need $240,000.

I like to mix and match different things and I am around traditional retirement age. So have some CDs, Bonds, zero coupon bonds, Preferred stock, dividend stock(US & international), cash, income funds, some stock more for capital gains than pure dividends, REITs, MLPs, and even some of the unpopular Immediate annuities.

Had some limited partnerships, but never could convince myself they couldn't "bite me" somehow.
I've thought about selling calls on stock but don't want to miss any potential breakout gains to the upside if company is acquired at a huge premium.

I tend to overthink things, so why not just ask to see what others are doing?

I am curious how little other people need to generate this $1000 a month on.

(If I could actually make 18% buying property tax properties this would only take $66,666.67...)
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Old 08-19-2017, 02:03 PM   #2
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I would go with a dividend ETF, like HDV or DVY. You may even get some growth. $400K would do it.
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Old 08-19-2017, 02:14 PM   #3
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I'd do what I've been doing for quite a while now:

I'd invest tax-efficiently in a passively managed set of index funds with an asset allocation of 60/40. I'd take $1,000 a month out in the most tax efficient way and spend it.
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Old 08-19-2017, 02:18 PM   #4
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I'd do what I've been doing for quite a while now:

I'd invest tax-efficiently in a passively managed set of index funds with an asset allocation of 60/40. I'd take $1,000 a month out in the most tax efficient way and spend it.
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Old 08-19-2017, 02:28 PM   #5
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"How would you(I) create $1000 a month new cashflow in current markets?"

Get a side gig. Umpired 4 games/week last month for $75 cash. Made $1200 for the month.
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Old 08-19-2017, 02:43 PM   #6
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Not sure what you mean by "new' cash flow or what you have in mind in terms of guarantees.

If you want close to iron-clad then you need to go with a SPIA or a CD/bond ladder.

If you're willing to accept some moderate risk I would plunk $150-200k in Wellesley or Wellington and set up a $1,000/month automatic redemption to your bank account.

Both have 10 year returns of ~7% and current yields of 2.3-2.7%.
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Old 08-19-2017, 02:51 PM   #7
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Put $300,000 in VTI, pays 1.8% dividend which is $5,400. You need $12,000 which is $6,600 more. So sell $6,600 in shares annually which gets you to $12,000.
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Old 08-19-2017, 03:19 PM   #8
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Put about 225K in PIMIX. That should throw about 1K per month without touching the principal.
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Old 08-19-2017, 03:36 PM   #9
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Quote:
Originally Posted by LOL! View Post
I'd do what I've been doing for quite a while now:

I'd invest tax-efficiently in a passively managed set of index funds with an asset allocation of 60/40. I'd take $1,000 a month out in the most tax efficient way and spend it.
X+1!

I'm a "total return" kind of guy (well, actually, the math is a "total return guy", and I've learned not to argue with the math, assuming it is applied properly).

Although, annuitizing some of the portfolio might be a good diversification approach. I'm not sure we have enough info to say that's reasonable or not. But worth consideration (though the conventional wisdom is this isn't a good time to buy an annuity, due to the low interest rate climate).

-ERD50
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Old 08-19-2017, 03:49 PM   #10
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Quote:
Originally Posted by LOL! View Post
I'd do what I've been doing for quite a while now:

I'd invest tax-efficiently in a passively managed set of index funds with an asset allocation of 60/40. I'd take $1,000 a month out in the most tax efficient way and spend it.
Just so I and others understand,

assume your 60/40 meant 60% stock index fund 40% fixed index fund.

How much money would you put in total to get the 12k annually? (1k a month)
(wondering if you spend the account down to 0 during projected life span or fund with enough to preserve principal)
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Old 08-19-2017, 04:05 PM   #11
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Quote:
Originally Posted by LOL! View Post
I'd do what I've been doing for quite a while now:

I'd invest tax-efficiently in a passively managed set of index funds with an asset allocation of 60/40. I'd take $1,000 a month out in the most tax efficient way and spend it.
That's exactly what I do with all money intended to
support me for the rest of my life. It took a few
financial bruises over the decades for me to
figure out that this is the absolute best bet at
any point in time. Wish I would have been convinced
of this 40 years ago.

Quote:
Originally Posted by LuckyDog View Post
Put about 225K in PIMIX. That should throw about 1K per month without touching the principal.
My "bucket list" fund, intended to be spent in the next 5-7 years,
is all in PIMIX. If I needed to generate income for a few years and
could accept a small risk to principal, that is where I'd go. PIMIX
has handily beat Wellesley since inception at a much lower volatility.
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Old 08-22-2017, 07:55 AM   #12
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Just so I and others understand,

assume your 60/40 meant 60% stock index fund 40% fixed index fund.

How much money would you put in total to get the 12k annually? (1k a month)
(wondering if you spend the account down to 0 during projected life span or fund with enough to preserve principal)
I'd put ALL my money in total into this and I would spend the account down to 0 and not worry about preservation of principal.

Money is money. Money is fungible.

What else are you going to do with your money?
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Old 08-22-2017, 08:03 AM   #13
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I'd put ALL my money in total into this and I would spend the account down to 0 and not worry about preservation of principal.

Money is money. Money is fungible.

What else are you going to do with your money?
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Old 08-22-2017, 08:45 AM   #14
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I've been tossing the idea of dumping my silver holdings for some income, I can generate close to $1000 a month with a 6% yield
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Old 08-23-2017, 03:59 PM   #15
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I'd put ALL my money in total into this and I would spend the account down to 0 and not worry about preservation of principal.

Money is money. Money is fungible.

What else are you going to do with your money?
Maybe I've read too much science fiction over the years, but should some genetic research reset telomeres and we can now live until some accident takes us, I don't want to have to go back to WOR*.

My goal is to have enough that won't happen and should science wait until the day after I die to find it. . so much better for my kids... well at least financially.
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Old 08-23-2017, 08:34 PM   #16
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My stock portfolio generates about 3% dividends, so I would buy $400k more of the individual stocks I already own to get +$1000/month.
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Old 08-23-2017, 08:57 PM   #17
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How would I "create" $1000/month?

My first thought was a high quality color copy machine!
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Old 08-23-2017, 11:05 PM   #18
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My first choice for having an extra $1K in income per month would be to commit to an annual IRA withdrawal of $12K. We're not going to run out of money at that pace, and we don't dip into our fairly large IRA (yet) for anything.

If I wanted to generate a steady $1,000 per month in additional income over a long term, I would spend about $200-225K to add another single-family rental property to my portfolio. With skilled Broker-led management in place, it's not a heavy lift and they know my requirements; so they find me the best deals on local property that fit my specs before they hit the market, and bring them to me.

One home would generate about $1,500/mo. less expenses and would probably net me about $1K net of expenses monthly and a $1,800/yr. repair fund. The asset appreciation, annual depreciation and preservation of capital are also big plusses for me. Rent pretty much keeps up with inflation, though it usually lags until tenants turn over. Homes can also be refinanced or used as security for borrowing more money unlike most stock.

In this 'up' market for property, I would make my $1K with one property. If the market were to turn, I would wait for the bottom and seek to get multiple properties with the same money to take advantage of the upside appreciation and refi after the market comes back. It would take a lot more work to get the money, but it would be worth it.

As an example, by leveraging equity to buy more properties, we grew $175K in equity to $475K between 2012 and 2017 in N. Carolina - a very stable market not known as overheated or overpriced, but very soft when we got in. That was on top of the $1,500 in monthly net income, increase in mortgage equity, and tax savings from depreciation that brought our already low taxable income to zero.

By refinancing all our properties last year, we were able to add another $2,400 monthly to our cash-flow post-ER. That felt good, but it was also the first time I realized the mortgage time-horizon would easily outlive me, and I'd likely be passing the property along to someone else.
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Old 08-24-2017, 04:06 AM   #19
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Get your basic expenses down to less than your SS (and pension, if you have one) income. If you are not yet eligible for SS, budget like you are.

Once your basic living expenses are "automatically" covered, you can do whatever you want for additional income, since it will all be discretionary. 2% CD's? 4% withdrawals? 7% return on real estate rentals? Mix and match? Whatever. No worry about spending down and outliving it.
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Old 08-28-2017, 09:01 PM   #20
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I bought 11 Bit coin in summer 2015 because I read about some joker who was stuck vacationing on a Greek island during their melt down and everything else like ATM's and CC's and bank drafts were frozen He couldn't get home except he had some Bit coin. It seemed like interesting insurance, so I thought I'd try it out. You can buy ice cream, Gyros, Ouzo and an airplane ticket out of there with BTC, especially in Europe which is very friendly to the currency. At the time (2015) it was about a 3K buyin for my 11 Bit. It's grown 15 times since I bought it and still seems to be doubling couple times a year. In Jan 17 it was worth about $900 and today $4200, So 10K today would buy 2.4 bit. When you sell BTC it's taxed like property i.e stocks and bonds as opposed to income or dividends. I have no idea how high this rocket might fly.

Best
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