AnIntentionalRoad
Recycles dryer sheets
Hi,
2014 will be our second full year of ER. I'm trying to figure out a meaningful way to compute WR when we have earned income. We operate 2 small very part-time businesses and then we have a small ownership stake in another full-fledged business, but we are not involved in operating it, that pays out a significant amount each month in dividends.
Here are some stats:
Income biz #1: 30,000
Income biz #2 0
Dividends from biz #3: 90,000
Total 120,000
Annual spending: 156,000
Taxes (guess): 40,000
Investable Portfolio: 6,200,000
So, would I be best to calculate WR as net of cash flows divided by investable portfolio? Or, spending minus earned income divided by investable portfolio. Or, as spending divided by investable portfolio?
Scenario 1: (196,000 - 120,000) / 6,200,000 = 1.2%
Scenario 2: (196,000 - 30,000) / 6,200,000 = 2.6%
Scenario 3: 196,000 / 6,200,000 = 3.1%
Also, in investable assets, I include about 350k in equity we have in a rental beachhouse. I include it because it is a real estate investment and could easily sell it and invest the equity. Not sure if this is correct thinking.
Thanks for any input.
2014 will be our second full year of ER. I'm trying to figure out a meaningful way to compute WR when we have earned income. We operate 2 small very part-time businesses and then we have a small ownership stake in another full-fledged business, but we are not involved in operating it, that pays out a significant amount each month in dividends.
Here are some stats:
Income biz #1: 30,000
Income biz #2 0
Dividends from biz #3: 90,000
Total 120,000
Annual spending: 156,000
Taxes (guess): 40,000
Investable Portfolio: 6,200,000
So, would I be best to calculate WR as net of cash flows divided by investable portfolio? Or, spending minus earned income divided by investable portfolio. Or, as spending divided by investable portfolio?
Scenario 1: (196,000 - 120,000) / 6,200,000 = 1.2%
Scenario 2: (196,000 - 30,000) / 6,200,000 = 2.6%
Scenario 3: 196,000 / 6,200,000 = 3.1%
Also, in investable assets, I include about 350k in equity we have in a rental beachhouse. I include it because it is a real estate investment and could easily sell it and invest the equity. Not sure if this is correct thinking.
Thanks for any input.