I received a lot of queries pertaining to the amount of little cash that I’m holding for my investment purpose so I thought I’ll use this chance to explain the thought process on my portfolio construction.
Our goal as a family has always been to ensure that we have $5,000 / month worth of passive income in order to reach our definition of financial independence. Working back the maths, this means we would need $60k/year or $1m portfolio at 6% yield.
While this amount would give us financial independence, we also know that we needed some sort of margin of safety so over the long term we also aim for our passive income to exceed our expenses by 1.5x in order for our capital to grow.
With this in mind, our objective would look like this:
1.) $1m Liquid Portfolio at 6% yield -> Provides Cashflow which covers …