Passive Income Calculator
Calculate how much you need invested to generate your target passive income.
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Frequently Asked Questions
What are the best sources of passive income?
Top passive income sources ranked by typical yield: dividend stocks 2-6%, REITs 4-8%, rental property 5-10% cash-on-cash, high-yield savings and CDs 4-5.5%, peer-to-peer lending 5-9% (higher risk), bonds 4-6%, covered calls on stocks 8-15% (requires active management), and digital products (highest potential but requires upfront work to create).
How much do I need invested to live off passive income?
At a 4% withdrawal rate (the FIRE standard) you need 25x your annual expenses. For $3,000/month ($36,000/year) net you need approximately $900,000-$1,200,000 invested depending on tax rate and yield. With dividend stocks at 4% yield you need $900,000. With bonds at 5% yield you need $720,000 gross. Tax-advantaged accounts (Roth IRA) reduce the gross amount needed.
Is rental property good passive income?
Rental property generates 5-10% cash-on-cash returns but is not truly passive — it requires tenant management, maintenance, and occasional large capital expenditures. Professional management costs 8-12% of rent. REITs provide similar real estate exposure with true passive income: no tenants, no maintenance, fully liquid, and dividends paid quarterly. For most investors REITs are more practical than direct ownership.