I've been doing a lot of thinking lately about quitting the rat race, the corporate cycle, the employee lifestyle. I want to pursue my own passions, without worry of having to pay my bills, while living a comfortable and even somewhat luxurious life.
One of the key ways is through passive income from dividends.
So how much AUM do I need to retire at 45 and get paid via dividends?
There are a few key variables here.
1) AUM
2) Annual Return
The simplest maths to spit out a number is as follows.
First, how much would I want to live on where I can pay my bills, AND live comfortably? Let's put the figure at $4,000 per month. This is quite a handsome sum.
Secondly, we begin to work backwards using the $4,000, by next assuming a realistic dividend yield. Let's use 5%.
Then if I want 4,000 X 12 = $48,000 annually, and assuming all my investments deliver a 5% dividend yield in total, I would need an AUM of 48,000 X 1/0.05 = $960,000.
Do I have $960,000 in the bank?
That is the tough problem.
I have 5 years to save this amount.
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