Well, my goal of finding high yielding investments isn't concrete enough for me to make measurable progress. So I'm refining my goal.
My current base salary is $170K not counting bonus and stock options. With my current cash on hand of $800K, I want to generate enough cash flow to replace my base salary. So I'll set a cash flow target of $200K per year. Of course 25% return a year is impossible without high risk (unless I buy lots of high-yielding tax lien certs??), so I will need to grow the $800K first. I may change my parameters if I come across any good deals.
Since I posted my starting point net worth a week ago, my stock portfolio has already made some significant gains. But I don't want to count any capital gains towards this $200K figure, I only want to count pure cash flow.
Outside of my salary, bonus, and stock options, I currently have virtually no positive cash flow. All I have are fed and state tax-free muni bond interest (with yields of 2-3%, even $470K of muni bonds doesn't generate much cash flow), taxable CD interest yielding > 5%, and some dividend payers like DVY which pay measly dividends. We'll see how the out-of-state real estate development goes later this year.
Wow, this means that for the cash-flow generating portion of my current portfolio, $470K (munis) @2.5% tax-free + $250K (CDs) @ 5% + 50K (real estate development) @ 22% = $770K (total) is projected to generate only $35,250 in passive income annually, before taxes! Setting a goal of $200K passive income from a new cash injection of $800K seems too aggressive, especially when I anticipate making some mistakes, but I'll run with it for a month or two...
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Yes, it's definitely a waste. That's why I'm working on putting it to use. But I definitely don't want to invest it all at once, it's best to dollar cost average.
In the meantime, it's collecting ~5% interest in the brokerage where it's sitting.
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