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- Michael Quan decided he desired an early retirement after observing his uncles follow the same path.
- He dedicated funds and hours to create income sources that would require minimal effort so he might quit his 9-to-5 job.
- Currently, he gathers funds from property investments, stock payouts, and through his blog.
Michael Quan wished to retire early after seeing several of his family members attain financial independence while they were still young. Following the establishment and subsequent sale of his IT business to a private equity firm, he stepped down from his career at just 36 years old. Utilizing his profits, he channeled them into investments designed to consistently produce additional income for him. passive income .
"My daughter was 1 at the time. So I decided, you know, this is a perfect transition to take an early retirement, be really present with my family. And that was a primary motivator, was to really be present with my family and enjoy her younger years at home," Quan told Insider.
Quan, now in his 40s, has set up his finances to allow him to live off his net worth , continue growing it, and collect passive income. He shared the top three passive-income streams that continue to bring him revenue year after year.
1. His primary stream of passive income comes from investing in real estate.
In 2020, Quan made $59,000 from investing in real estate This constitutes 78% of his passive income. He possesses three real estate assets in Nevada: two single-family houses and one condo. The initial pair of properties generate steady monthly revenue as they house long-term residents. His third property, managed via Airbnb, adds extra earnings due to short-term rentals.
Furthermore, Quan is associated with a family-run real estate investment firm that possesses an asset comprising multi-family residences in Venice, California. The earnings generated from this property, including rent revenues, are shared amongst the proprietors.
His fifth venture involves a substantial apartment complex in San Antonio, which he acquired via a real estate development company. This enables him to earn extra revenue from rentals.
2. He receives dividend payments from his investment portfolio.
The previous year, Quan garnered roughly $13,000 through dividends, accounting for 16% of his total passive income. His portfolio includes exchange-traded funds, mutual funds, as well as individual stocks.
Instead of withdrawing the income, Quan reinvests his dividends in his portfolio so that his assets and dividend payments can increase over time. This process is called the DRIP method.
His highest-paying dividends for last year came from three ETFs in the following order:
- Vanguard Developed Markets Index Fund ETF (VEA)
- Core MSCI Emerging Markets ETF by iShares (IEMG)
- Core S&P 500 ETF by iShares (IVV)
"In essence, I’m opting for a mix of growth and dividend ETFs. Therefore, regarding passive income, honestly speaking, many of these dividends tend to fluctuate from one year to another with respect to which sector excels the most," Quan explained.
He possesses additional ETFs that contribute both growth and diversity to his investment portfolio.
"I typically aim for a combination of growth and dividend ETFs in my portfolio to maintain balance. Dividends can be quite beneficial at times, whereas growth may surge elsewhere. Achieving this equilibrium is crucial since market gains vary over time," explained Quan.
ETFs can typically be accessed via most standard brokerage accounts. Should you remain uncertain about which option suits you best, a robo-advisor could create a diversified investment portfolio tailored to your objectives and risk appetite. best robo advisors include well-known platforms like Betterment or Wealthfront , but there's a variety of other options that could also fit your needs.
Remember that ETFs aren't devoid of risk, and their levels of risk can vary—some ETFs offer less diversification compared to others.
3. Passive income flows into his account thanks to his blog.
Quan owns a blog titled Financially Alert Where he offers financial advice and strategies for achieving early retirement. He mentioned that although assembling this information brings him joy, it also provides extra earnings through advertisements, affiliate marketing, and subscription fees. In 2020, his digital passive revenue amounted to roughly $10,000.
Quan authored a book titled, " The F.I.R.E. Planner " which discusses conscious consumption, rigorous savings strategies, smart investing, and eco-friendly lifestyle choices.
The initial publication of this article took place in May 2021.
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