[pabloholder]

Obviously some people can achieve it, even much more.

but for the average joe, can he be able to invest in a way that $1000 is generated daily?

Given he has a strong work ethic, is intelligent, willing to work overtime, does his research, spends wisely, and is patient?

I am willing to put in the hard work now, so I can live more freely and easier in the future

I have read countless articles and books. I decided that the property market, and google adsense and a full time job will suffice

 

[moderator2]

pabloholder: I see you are a new member. I just want to remind you that advertising products or services is not permitted in this forum.

 

[gardner]

Is generating $1000 a day from passive income a realistic goal for most people?

No. 350K would put someone well above the 99 percentile -- probably top 0.5%. By definition, well ahead of "most people".

 

[james4beach]

I agree, completely implausible unless you have a huge amount of capital. The only way this can happen is if you invest $9 million in dividend-focused equities, then you could generate $1000/day in passive income.

The average joe does not have $9 million to invest.

You can pull off some high yields with effort, but probably not much more than 4% or 5% max. Beyond that point you're getting into dangerous territory that often leads to capital destruction and catastrophe. So within this realm of plausibility, even to generate an annual passive income of about 50K you still need at least $1 million to invest.

 

[Rusty O'Toole]

I believe 10% or 12% a year is the upper limit for passive investing, and has been achieved consistently over a long period of time by only a few superstar investors like Warren Buffet, Peter Lynch and Sir John Templeton. There may be others investing as individuals we haven't heard of, in fact some experts say it is easier to achieve high returns from a smaller amount of capital.

So, if you want $250,000 a year ( $1000 X 250 work days per year) you would want capital of $2,500,000 or more. This seems possible. I know it is definitely possible in real estate investing. In the stock market it would be an ambitious goal indeed but not so far out of reason as to be impossible.

What is Google adsense and what does it have to do with investing?

 

[Gruff403]

Sure once I win the $1000 per day lotto, but then again I would probably take the lump sum.

No for most people but $150 - $200 could be reached my many but even that would be a stretch for most people.

 

[james4beach]

I believe 10% or 12% a year is the upper limit for passive investing, and has been achieved consistently over a long period of time by only a few superstar investors like Warren Buffet, Peter Lynch and Sir John Templeton.

Those numbers are unrealistically high. Even when equities perform that well, the investor faces sequence risk. I can illustrate:

The S&P 500 has done amazingly well. The SPY return since inception in 1993 is 9.4% annually (of course, very few investors back in 1993 used this ultra low fee ETF but let's pretend for the sake of argument that an investor had amazing foresight and chose the single best index investment possible with perfect foreknowledge). However, sequence risk changes everything. Just because SPY has achieved 9.4% annually -- on average -- doesn't mean that an investor can routinely take out that % from the portfolio.

Here's an exact calculation using portfoliovisualizer: if you start with $1 M in 1993 and withdraw $100 K every year, with no inflation adjustment, you might think this works fine because stocks are returning about 10% per year. The result looks really good for the first 15 years and your balance stays above $1 M. However in a stretch of bad years, the portfolio dropped down to $700 K at its lowest. The final balance today would be $1.5 M.

Seemingly ok, right? That's a 10% yield and you still have lots of capital today. But now, change the start date.

This time: start with $1 M in 1972 and again withdraw $100 K every year, with no inflation adjustment. Again the intuition of most equity investors is that this should be fine -- perhaps even better -- because the great long term performance of stocks. But an investor trying this would have had several problems. First, the high inflation during the 70s and early 80s would have meant their $100 K annual income didn't buy very much... a significant loss in effective (real) income. Next, their portfolio would have shrunk to $500 K by 1977. That's only 5 years in, and they've already lost half their money. By Christmas Eve of 1987, their capital runs out and their portfolio now has $0. Not a very fun Christmas present.

That's equity risk and sequence risk. Get a lucky starting point, and you do fantastically well and can pull off 10% annual withdrawals or "yield". Get an unlucky starting point, and it ends catastrophically. There is a huge potential range of outcomes.

 

[Rusty O'Toole]

James I agree. What you describe is one of the reasons this goal would be easier to achieve in real estate. But, as a goal for a young investor with a time frame of 20, 30 or 40 years to retirement it looks ambitious but not completely out of the question. I agree that once a certain level of capital has been achieved and one is going to retire it would be safer to put the money into something like dividend stocks, and bonds and would have to be prepared to cut back on spending if there was a bad year. Or simply not spend the whole $250,000 a year to begin with.

 

[Beaver101]

My answer to the thread question is a simple "no". "$1K per day", "realistic", "most people=average Joe" - far from it.

Maybe in a half a century from now, when bread costs $100 a loaf and/or a salary (if it still exists) is $1M+ per year, then it's possible.

 

[lonewolf :)]

Increase productivity through technology advancement could give us a life style as if we were making $1000 a day more @ some point in the future. Government is destroying our productivity by punishing the productive to give to the none productive which decreases the incentive to be productive. The math has to be taken past that of Newton to that of cycles. Just because the last few hundred years technology advancement has vibrated higher does not mean the trend will continue higher for the next several hundred years.

If productivity was to stay the same. If someone makes 1000 a day of passive income to enjoy the spoils of the productivity of the economy there would have to be a lose of $1000 of productivity by others in the system.

 

[Beaver101]

Increase productivity through technology advancement could give us a life style as if we were making $1000 a day more @ some point in the future. Government is destroying our productivity by punishing the productive to give to the none productive which decreases the incentive to be productive. The math has to be taken past that of Newton to that of cycles. Just because the last few hundred years technology advancement has vibrated higher does not mean the trend will continue higher for the next several hundred years.

... how is it not? Wait until AI becomes a full reality.

If productivity was to stay the same. If someone makes 1000 a day of passive income to enjoy the spoils of the productivity of the economy there would have to be a lose of $1000 of productivity by others in the system.

... and so the 1% get richer, and the poor get poorer.

 

[lonewolf :)]

... how is it not? Wait until AI becomes a full reality.

... and so the 1% get richer, and the poor get poorer.

We are probably in the part of the cycle where we get global cooling for a while which has produced famine & less productivity so technology will not have the wind against its back. The mood of the masses also effects weather we advance or destroy productivity, If we are in war mood a few bombs can destroy our productivity very fast

 

[Rusty O'Toole]

Increase productivity through technology advancement could give us a life style as if we were making $1000 a day more @ some point in the future. Government is destroying our productivity by punishing the productive to give to the none productive which decreases the incentive to be productive. The math has to be taken past that of Newton to that of cycles. Just because the last few hundred years technology advancement has vibrated higher does not mean the trend will continue higher for the next several hundred years.

If productivity was to stay the same. If someone makes 1000 a day of passive income to enjoy the spoils of the productivity of the economy there would have to be a lose of $1000 of productivity by others in the system.

It's a fallacy to think that when one person makes money it automatically reduces someone else's income. Look at Microsoft . Their software has been of great benefit to the world's economy and has helped produce more wealth in millions of ways. Microsoft's profits are only a small fraction of the total benefit they have given the world. Examples can be expounded endlessly. The simplest may be a farmer who plants seed and reaps a harvest 100 times what he plants. These days one farmer feeds more than 100 people, and does it without hurting anybody.

Wealth is created by work, and when genuine business is going forward and people engage in voluntary trade wealth is created every day.

To suppose that wealth simply drops from the sky without effort, and some people are grabbing more than their fair share is childish in the extreme.

 

[Pluto]

Those numbers are unrealistically high. Even when equities perform that well, the investor faces sequence risk. I can illustrate:

The S&P 500 has done amazingly well. The SPY return since inception in 1993 is 9.4% annually (of course, very few investors back in 1993 used this ultra low fee ETF but let's pretend for the sake of argument that an investor had amazing foresight and chose the single best index investment possible with perfect foreknowledge). However, sequence risk changes everything. Just because SPY has achieved 9.4% annually -- on average -- doesn't mean that an investor can routinely take out that % from the portfolio.

Here's an exact calculation using portfoliovisualizer: if you start with $1 M in 1993 and withdraw $100 K every year, with no inflation adjustment, you might think this works fine because stocks are returning about 10% per year. The result looks really good for the first 15 years and your balance stays above $1 M. However in a stretch of bad years, the portfolio dropped down to $700 K at its lowest. The final balance today would be $1.5 M.

Seemingly ok, right? That's a 10% yield and you still have lots of capital today. But now, change the start date.

This time: start with $1 M in 1972 and again withdraw $100 K every year, with no inflation adjustment. Again the intuition of most equity investors is that this should be fine -- perhaps even better -- because the great long term performance of stocks. But an investor trying this would have had several problems. First, the high inflation during the 70s and early 80s would have meant their $100 K annual income didn't buy very much... a significant loss in effective (real) income. Next, their portfolio would have shrunk to $500 K by 1977. That's only 5 years in, and they've already lost half their money. By Christmas Eve of 1987, their capital runs out and their portfolio now has $0. Not a very fun Christmas present.

That's equity risk and sequence risk. Get a lucky starting point, and you do fantastically well and can pull off 10% annual withdrawals or "yield". Get an unlucky starting point, and it ends catastrophically. There is a huge potential range of outcomes.

Why, in 1972 would one withdraw 100,000? and why would you claim you can't buy much with 100,000 in 1972? In Toronto in 1972 I think one could buy about 4 decent average houses, maybe more. I forget car prices, but I'd hazard a guess at about 3000 for a fully loaded Pontiac GTO.

I guess my point is you are assuming 100,000 is a pittance in 1972, but it isn't. A 100,000 then is more like 625,000 today. And a million then, is like 6.25 million today. There is no way anyone in 1972 would realistically need to withdraw 100,000 a year in order to live. BAck then, somone earning 20,000 per year was living high off the hog.

 

[james4beach]

Why, in 1972 would one withdraw 100,000? and why would you claim you can't buy much with 100,000 in 1972? In Toronto in 1972 I think one could buy about 4 decent average houses, maybe more. I forget car prices, but I'd hazard a guess at about 3000 for a fully loaded Pontiac GTO.

I guess my point is you are assuming 100,000 is a pittance in 1972, but it isn't. A 100,000 then is more like 625,000 today. And a million then, is like 6.25 million today. There is no way anyone in 1972 would realistically need to withdraw 100,000 a year in order to live. BAck then, somone earning 20,000 per year was living high off the hog.

The point of starting in 1972 was to show the sequence of returns problem that occurs when you are withdrawing out of equity. I realize that you'd have to inflation adjust these numbers, so the starting $ value would be different. That doesn't change the result... either way, if you withdrew 10% of the value you would quickly deplete all capital. The absolute numbers weren't intended to be realistic.

My comment about inflation is regarding the rapid devaluation that occurred in those years. You can see it here: https://www.multpl.com/inflation/table/by-year

Let's say you started in 1972 by withdrawing $20,000 a year. By 1980 you would have gone through some very high inflation years (annual inflation of 9.39%, 11.80%, 6.72%, 5.22%, 6.84%, 9.28%, 13.91%, etc) which would have made the annual $20,000 amount worth considerably less in real dollars. A person would then be forced to increase their $ withdrawal, stressing out their capital and depleting it even faster.

Another example with more realistic historical numbers

The year is 1972, and you have $200 K of capital invested fully in equities. You will withdraw 20K (10%) the first year and then increase your withdrawals with inflation. As you point out, 20K is a good amount of income back then, but due to runaway inflation you soon have to start withdrawing more for the same purchasing power.

This investor completely ran out of money (capital is gone) in just 7 years. If somehow you tighten your belt and don't increase the 20K withdrawals with inflation, the capital lasts a bit longer... 15 years. Note however that 20K purchasing power in 1972 is equivalent to 54K purchasing power after 15 years. Ignoring inflation is not viable. A person can not still be living on just 20K after all that inflation; that's a 60% reduction in real income after those years.

The important point of all this is realize that the 10% CAGR rate of return on stocks does not mean it's feasible to live off 10% annual withdrawals from a portfolio, especially if there's inflation. Both inflation and sequence of returns can work against you, and the 1970s demonstrated that. Investors have been very lucky in recent years to be in both a high performance period of equities and low (almost nil) inflation. This combination can make it look like it's easy to make capital last a long time using a high equity allocation, even with high withdrawals.

Historically, it hasn't always been possible. And personally I would not be comfortable assuming that both low inflation and high equity returns continues.

 

[Rusty O'Toole]

I did some calculations in high school in 1969 when I first got interested in investing. I calculated that $200,000 invested at 5% would give an annual income of $10,000 which would be ample for any reasonable person. In fact that was a lot of money at the time, equal to $150,000 or $200,000 today. Back then you could buy a fully loaded Cadillac for $5000 and a brand new 3 bedroom 2 bath brick split level on a 1/4 acre lot for $22,000. Today for those prices, you might get a sharp team of harness goats and a one car garage, no land.

 

[Longtimeago]

The point of starting in 1972 was to show the sequence of returns problem that occurs when you are withdrawing out of equity. I realize that you'd have to inflation adjust these numbers, so the starting $ value would be different. That doesn't change the result... either way, if you withdrew 10% of the value you would quickly deplete all capital. The absolute numbers weren't intended to be realistic.

Part of the reason why I do not consider withdrawing equity and SWR as being 'passive income'. Living on passive income means living on the income your capital generates, without touching the capital at all. If you touch the capital, you are then living 'off savings', not on passive income.

So whether the person who started this thread is a troll who has so far not come back or not, was really looking for an answer or not to the question of 'is generating $1000 a day from passive income a realistic goal', anyone commenting on that question needs to talk about passive income, not living off savings.

The question is simple really. Can someone earn $1000 per day in passive income? The answer is yes. It is the second part of the OP's question that is a problem, 'a realistic goal for most people?' The answer is no.

No other answer needs to be discussed unless the OP were to return and start providing some criteria that might influence the second part of the question and whether it would be possible for the OP as an individual to achieve that goal. As asked, the question is silly. Most people will never achieve that much income even when working and it doesn't take any explanation of anything to know that.

 

[Mukhang pera]

The question is simple really. Can someone earn $1000 per day in passive income? The answer is yes. It is the second part of the OP's question that is a problem, 'a realistic goal for most people?' The answer is no.

No other answer needs to be discussed unless the OP were to return and start providing some criteria that might influence the second part of the question and whether it would be possible for the OP as an individual to achieve that goal. As asked, the question is silly. Most people will never achieve that much income even when working and it doesn't take any explanation of anything to know that.

You are right. One of those most inane questions ever to grace this forum. Not sure why it garnered so much response. As you note, the OP never came back. Not at all a serious question. Just setting the cat among the cmf pigeons. If speaking as I have gets me banned for speaking plainly, I am with jargey (see his comment in the "Hot Button thread)...been kicked out of better places.

 

[kcowan]

If speaking as I have gets me banned for speaking plainly, I am with jargey (see his comment in the "Hot Button thread)...been kicked out of better places.

Good point. Some sophisticated boards actually allow member votes so you can quick detect is it is a cat causing trouble, or a respected contributor offering advice. Welcome back.

 

[Longtimeago]

It seems that 'hot button' has been removed from the 'general' part of the forum. It no longer shows up for me anyway.