A great article posted at www.forbes.com, debunks the myth that passive income is achieved without a great amount of work. In fact, one should be shooting for creating a huge passive income stream to enable their earning power to grow over time rather than dwindle. Of course the underlying philosophy is that money flows to those helping the most people. So in building this passive income stream, you are undoubtedly growing yourself personally and attempting to provide greater value to your community.
So what is Izu's PIN-W number? Let's paint a picture to give you a good idea. Suppose you make $150,000 per year, own a house worth $800,000, carry a $300,000 mortgage at 3.8% and have a booming retirement account that is at $400,000 making a decent 5% per year. With this oversimplified picture, your net worth is $900,000 and you make a whopping $8,600 per year. Your passive income to net worth ratio is .95%.
This basically means that you are setting yourself up to work until age 65. If you love what you do, this is great. However, my question is what happens if you unexpectedly lose your job? What happens if you unexpectedly get sick?
This post was reposted from http://finlit.biz/retirement-2/do-you-know-your-pin-w-number/, originally written on February 3rd, 2013.
No comments:
Post a Comment