Work Once, Let Money Roll in Forever

I remember my first full-time job, which I got the summer after my freshman year of college.

For the first time, I experienced the thrill of earning money.

As the weekly paycheck arrived, it felt good. Back then, the hourly wage was much lower. I was only paid $5 per hour, but it was a better wage than working at a McDonald’s, so I felt satisfied.

That’s when I realized that exchanging my time for money was a good deal. If I showed up and worked hard, I’d get a paycheck to cash on Fridays and be able to buy whatever I wanted.

Back then, there were paper paychecks, and we were just entering the technological era of direct deposits.

I always tell my wife stories about my early life in the United States, when people would line up at the bank every Friday afternoon to cash a check.

Imagine having to put in an extra hour of work just to get your wages.

You’d hear stories about people being robbed as soon as they stepped out of the bank after cashing their checks. As a result of technological advancements, we have fewer of these instances.

If you got paid on a Thursday, you were lucky because you could go to the bank in the evening and deal with a smaller crowd.

So, while getting paid to do the work was very encouraging at the time, the true power of wealth and work was unleashed when I discovered the power of passive income.

The sweetest income is passive income.

It comes to you regardless of what you are doing in life. Whether you’re having fun or dealing with a difficult life situation, eating, napping, or pooping.

It can appear in any of your accounts at any time, and sometimes unexpectedly.

And the journey began…

My journey to passive income began in 2006, when I started contributing to a 401(k) (k).

On the one hand, I was receiving dividends in my 401(k), but I was also paying more in bank loans and credit card interest than I was receiving.

It took me a few years to realize that I needed to change the equation in my favor. And in order to do so, I needed to think like a banker or, better yet, a real investor.

With passive income, we can work once for the money and then have the money work for us.

We intend to retire early and live off of this passive income. We achieved financial independence two months ago as a result of our extreme savings efforts over the previous five years, and we now have the option to live off passive income!

We were able to reach this milestone by focusing on growing our income-generating assets rather than purchasing depreciating assets and paying interest on them. That accelerated our progress toward our goal, and we now have a nice stream of passive income.

These money fountains are already doing a lot of work for us and showering us with joy. It’s as if a third person in our family is working and sending us their entire paycheck, which we continue to invest in because we’re still working.

But what makes up our portfolio income?

Portfolio income

Our portfolio consists up of mutual funds and exchange-traded funds (ETFs).

Due to our passive investment strategy, we own shares in over 2,000 companies worldwide and don’t have to worry about tracking them separately.

After ten years of investing, investment returns account for approximately 25% of our portfolio. That means that one-quarter of our portfolio was created with very little effort on our part.

It’s the equivalent of your boss paying you for four days of work while only requiring you to work three.

How do we do it?

We simply stay the course.

Our portfolio generates income in two ways: dividends and capital gains.

Dividends from retirement accounts are automatically reinvested, while dividends from non-retirement accounts are reinvested based on our asset allocation.

We did some tax-loss harvesting last year and reported a total loss of $2,043, despite having a decent annual portfolio return of more than 9%.

We report losses on our portfolio when we use tax-loss harvesting, but we don’t actually lose money because we invest it in a similar asset. According to the IRS, it simply cannot be invested in the same fund.

Our 2016 passive income streams and other unearned income sources

Bank Sign-up Bonuses$1,200 We opened a few bank accounts and got some nice bonuses.
Class Action Lawsuit Settlements$692 These were surprise checks we got in the mail.
Credit Card Cash Back Rewards $480Tatiana manages the credit card rewards programs and got us some nice cash back.
Dividends $18,745Index fund investments$53If you would like to save with Ebates, you can sign up using our link. This is an affiliate link, which means we receive a commission if you sign up using this link, and you get a kick back bonus too.
Gifts$268Cash-equivalent gifts. We include them because this money can be used any way we want.
Interest $394Interest from savings/CDs
Rental Property$11,442 
Total PI $33,274 

If we stopped working today and continued to live in our apartment as is, the passive income from dividends and rental property would cover all of our essential expenses, including food, housing, and transportation.

Furthermore, we could go a step further and withdraw some capital gains from our index funds for discretionary spending.

The good news is that our lives after early retirement will involve moving to a lower-cost-of-living area, so we won’t have to sell many investments to supplement our passive income.

Given that we have another 2-3 years before we retire, we may never need to sell any investments to cover our expenses.

A closer look at our dividend income

Dividends are the income stream that grows the most while we sleep. Last year, we increased it by 52% to $18,745. Since we are still in the accumulation stage, this figure will be even higher when we retire.

Our dividend income is complicated by the fact that the majority of it comes from retirement accounts. That means we won’t be able to count on a large portion of that money right away, or even within the first five years of early retirement.

We’re only getting about $2,000 in dividends in our non-retirement accounts right now that we can spend.

The remaining funds will come from savings and capital gains from our brokerage accounts, where we will have enough in low-risk investments to cover our essential expenses for the first five years.

How our passive income has grown

Last year, our passive income increased by 36% over the previous year.

That’s a fantastic raise.

We now have an extra $33,274 on our side.

We have more time because there is less effort required!

We are more excited about income from investments than income from our jobs for one simple reason: it does not require much effort on our part.

There are no performance reviews to worry about, and we are not at the mercy of management when it comes to raises and bonuses. The investments are working for us!

Our soldiers are gradually replacing our efforts so that we can plan our exit strategy and spend our time as we see fit.

We gladly provide corporations with seed money through index fund investments in order for them to produce something and, in turn, reward ourselves with investment gains.

The key is to work once for your money and then let it work for you again and again. Do the work once and you’ll be paid indefinitely. It’s a lovely thing.

Don’t you agree?

What kind of passive income streams are you creating? What actions are you taking to boost your passive income?


After dedicating 13 years of his career to Vanguard, José retired from the corporate world at the young age of 44. During his tenure at Vanguard, he expertly coordinated the production of both electronic and print educational materials for 401(k) participants. Now, he relishes in his early retirement, cherishing time spent with his family, indulging in his favorite hobbies, seeking out new experiences, and savoring meals in the comfort of his own backyard.

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Jana Goodlife
7 years ago

It is a beautiful thing. Once the hubby and I started talking about early retirement, we realized we would need to build our non- retirement accounts if we wanted to avoid pesky penalties, so we focused our savings efforts on that.

7 years ago
Reply to  Jana Goodlife

Hi Jana!
Yes, having enough investments to fund the first 5 years, if one is thinking about doing the Roth conversion ladder, is crucial for an early retiree. Cheers to the loopholes that make early retirement still a possibility without the penalties!

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