I’ve been thinking about this a lot lately.
If you are looking for safety, as I am, I was looking at three potential sources:
1) T-bills. Basically, I found out these suck. If you want to keep up with inflation, you make like 0.5% per year after taxes.
2) Rental real estate. Buy a house and rent it. If you own the house, you can get some cash flow.
3) Fixed inflation-adjusted annuities. At my age, I can get one from Vanguard that generates about the same cash as rental real estate with less hassle. The problem is, when you die, there is nothing to pass on to your estate.
4) Dividend-rich stocks
Overall, I have found NO solution that earns you better than 3-4% per year after inflation, so if you want to make a living on your passive income, you need a LOT of investment money.
–>Adam