I always love reading blogs about other investors’ investment income. Watching other people’s investment income rise is my second favorite thing (the only thing better is watching MY investment income rise!)
Here is our investment income for January, 2020. This report includes income from dividends, interest, mutual funds, and rental properties.
Overview
Another year has started and I’m very excited to see what 2020 has in store for us. Christmas and New Year’s Eve are behind us and it’s time to get back to our normal life.
The first month of each quarter always has the lowest dividends, so I’m never too excited to run the numbers, but this month was a surprising exception.
It looks like the additional properties we purchased last year plus the combination of new investments and organic growth of our existing investments has resulted in some exciting year-over-year (YOY) growth.
Without further ado, here’s what our investment income looked like for the month:
Dividend & Interest Income
Total dividend income for the month was $3,637.60. This is up 106% from last January’s total of $1,761.75.
Whew! That’s a big jump in one year. Looking at my statement from January, 2019, I see that the big jumps are due to additional investments we made in Disney, Altria, and Philip Morris.
We obviously aren’t going to have our dividends up by 103% for the whole year, but this is a pretty good start to 2020.
Overall, an awesome month.
Rental income
This category includes net income from the 6 rental properties that my wife and I own, plus 50% of the income from 4 rental properties that we own with my mom. This number does not include appreciation of the properties or the decrease in the mortgage balance (those numbers show up in the net worth report).
However, this income is net of all mortgage, tax, and insurance payments. That is, this is a true cash flow report for our rental properties.
January was an ok month for our rental income. Total rental income for the month was $2,714.93. This is up 48% from last January’s income of $1,829.89.
Our average rental income for the last 12 months is $1,973.00, which is the highest trailing 12-month rental income we’ve ever had.
As with the dividend income, this is a solid start to the month.
Total investment income this month
Total (dividend + rental) income = $6,352.53
Although our total investment income was unimpressive, this still represented a big milestone for us – our trailing 12-month income just exceeded $100k! More exactly, our trailing 12-month income was $102,025.80
Looking at our trailing 12-month total income, you can see that our passive income has been doing exactly what we want it to do – it’s been trending up and to the right.
This is a good start to the year and our goal to hit $115,000 in passive income.
Changes
No changes to our portfolio this month. We are still holding $300,000+ in cash, waiting for an interesting investment at a reasonable valuation.
Recap
January was a great month. We finally crossed $100k for our trailing 12-month income.
How did everybody else do with their investment income this month?
Are there any investments out there trading at reasonable valuations that I should be looking at?
Very Nice!
We might have talked about this before but what is the significance of $120,000 in annual passive income? What happens when you hit that number?
For us, $120,000 represents our annual spending average for the last five years, which is why I have a similar goal.
We now have $92,000 per year in recurring residual commissions from software sales in my business, but I share 25% of that with my business partner – so $69,000. Then we have about $30,000 in other recurring income.
That puts us neck and neck at $99,000 vs. your $102,000.
Dom
Great question. The $120,000 target was originally selected because it represents our approximately level of ongoing spending. However, there’s a BIG caveat – that level of spending assumes that our house is paid off, we aren’t paying for child care for our kids, and the kids’ 529 accounts are fully funded.
So the reality is that the $120,000 target isn’t a feasible retirement income target today. It’s more of a feasible target in maybe 5-7 years. If we wanted to retire TODAY we’d need something closer to $200,000 in annual income.
We’ll hit the child care goal first, as we have one more year of preschool for our son, and that will cost approximately $14k.
I suspect we’ll hit the 529 goal second. We are funding each child’s account to the tune fo $500/each/month, or $6,000/kid/year. The current balance are $34,000 each, which translates to roughly $100k at age 18. I suspect we’ll want roughly $150,000 for each kid, as that would fully fund a public school education (assuming in-state tuition).
The mortgage goal is further away. We have a current balance of ~$529,113, and although we could pay about $350,000 of that off with the cash we are holding, I think we’ll be better off long-term by holding the cash and swooping up bargains when the market corrects.
So, when we finally hit the goal of $120,000 of passive income PLUS the other three milestones, then we’d be financially independent and would no longer need to work to maintain our current lifestyle. That doesn’t mean I’d necessarily retire, but I can definitely see myself making the full-time change to being a financial planner/wealth manager.
Your business is going to catapult your passive income past us in pretty soon. At your growth rate I suspect that your passive income will pass ours in Q2 of this year!
My passive/dividend income is $193,358.89 a year (100% reinvested). Still teaching 3 days a week (working income around $42K a year). Based on your response to the last poster – $120K seems like you will need to up that to have a buffer. I am single with no children.
My top 5 holdings – 3 don’t pay a dividend – GOOG, AMZN, BRK and the other 2 V, MA have dividend yields below .50%. Out of the next 5 – 3 (DIS, FOX, AXP) have yields of below 1.25% and 2 (FB, MNST) have no dividends. So as a dividend investor my top 10 really sucks. High net worth – low passive income – I keep working because I will get creamed in a bear market.
I started out using the Boglehead method “dividends are evil”. Just switched over to the dividend income a couple years ago – that really set me back.
You’ve clearly done a lot of things right if you’re generating that much passive income, especially if your top 5 investments generate little to no dividends.
Could you share how you’ve managed to create such a high net worth? What’s your secret?