Assuming an individual has $200,000 in investments and it is generating 5% dividends a year. Is it right to simply assume that the person will receive $10,000 of passive income a year which amounts to $833.33 a month ? Or should the calculation be more complex than this?I tried to understand this question and so here is my interpretation. My reader is trying to find out if the formula is REALLY that simple. So here is my take. If you have a $200,000 worth of financial asset that can continue to generate returns of 5%/yr . it will be able to gain $10,000/yr. This is equivalent to $833.33/mth. So that is not wrong.
This is a question about whether we are missing some deeper factors in a very simple wealth building idea:
