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I’m in the US and I have an income of around $2,100 a month, after taxes. I live surprisingly well on that. I rent an apartment an I live alone. I have zero debt. I always pay my bills on time. I don’t have a car, so no expenses there. I use my credit cards to pay for everything (to build up rewards) but I pay them off completely every month. Zero balance. Zero debt. My credit score is in the 820s.

I recently received what amounts to $80,000-ish after taxes. Plus what I’d been saving, it adds to… let’s say $95K. And if I live extra frugally for the next six months it wouldn’t be too hard to get it to an even $100K.

Is it realistic to use the money to create an income?

If I could use it to bring in an extra $500 a month, that would be helpful. An extra $1,000 a month would be amazing.

Based on where I live (big city) it isn’t realistic for me to buy a home. Living in a vibrant downtown where everything I need is in walking distance is essential to me. Housing is crazy expensive here, HOA fees insane too, not to mention property taxes, etc. There’s no way I could afford that. I’m happy renting, to be honest.

I’d sure like to use the money as a way to generate a bit of income. Needless to say, I’m mostly interested in a safe/cautious approach, though I could maybe be talked into splitting the sum 50/50 and being safe with half and less conservative with the other… but I’m not a gambler at all.

A few closing thoughts: I have no interest in splurging with the money. I haven’t told anyone about it, and I won’t. I’m very private about my finances. I’m in no rush to do anything other than learn and plan. I seriously don’t plan on spending one single dime of it. I want to use it as a way to generate an income. In a perfect world, I’d be able to make a bit of money for me and put whatever else back into the sum to build it.

I don’t even know where to begin to look for this sort of info, so I figured I’d start here.

Please be gentle, but assume I know nothing, so feel free to teach and/or over-explain. I’m here to learn.


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    It’s going to depend on when you want that income. If you invest it now in tax-advantaged retirement funds and let it sit and accumulate for 20-40 years, it could certainly generate that much when you finally retire.

    If you’re talking about getting $500-1,000 per month on an ongoing basis, starting now, it’s unlikely that you’ll get that from $100k. $500/mo gross would require 6% growth per year just to keep the principal at $100k. For $1,000/month you’d need 12% growth which is wildly unrealistic on an ongoing basis. Not to mention that you’d owe taxes on that income and inflation would inevitably erode the purchasing power of the money. 3% is generally considered a “safe” withdrawal rate (there’s a thread on this), which in your case is about $250/month.

    The only way you could get to the kind of income you’re talking about right now would be to leverage the money. The most common way average Joes do this is by buying rental property – you use $100k as a down payment on a 500K property with a 400K mortgage that then hopefully rents for $500-1,000/month over your combined mortgage, tax, and maintenance. Obviously this is a riskier strategy – you’re betting that, over time, you’ll make more than you’re spending, but the potential rewards are also proportionally higher.

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      Thanks for your insightful reply! I never really considered playing the mortgage game, but now that you’ve twisted it like this, it kind of starts making a lot of sense.

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      I recommend investing that money and then forget about it. Invest in index funds. Make sure you are taking advantage of tax advantaged space and especially employer match.

      Learn about the 4% rule and the Trinity study.

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        It’s not as black and white as you’re making it sound. Investing everything in index funds and following the Trinity study blindly is, in the most direct sense like jumping off a cliff and trying to build an airplane before you hit the ground. If OP is relatively young, single, without obligations or additional mouths to feed, sure why not.

        @pepe, you didn’t mention how old you are and for how long you think you could sustain that income of yours. Also, market crashes tend to go hand in hand with industry-wide layoffs. How likely are you to lose your job in a ‘08 style crash? These are all important questions. But in either case, as explained by @boglehead, you’ll definitely have to tune down your expectations.

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          I’m a freelancer in my mid-20s so I think of adopting the more aggressive approach @yurtlife suggested.