LIVING OFF DIVIDENDS & PASSIVE INCOME

Gillette Edmunds quit his job as a tax attorney at the age of 29 and lived the “retired” life, living off his investments. His book,How to Retire Early and Live Well With Less Than a Million Dollars is one of the better ones of I’ve read on the subject.

He makes a good argument for investing in the entire market, or an index fund. Although he doesn’t recomend the usual asset allocation divided between US small cap, US large cap and US bonds because he says they all follow the same basic economy cycle.

Instead he suggest having no more than 30% of your retirement portfolio in the US market. He suggests dividing the rest between

* Foreign stocks
* Emerging market stocks
* Foreign bonds
* US real estate
* US oil and gas

and having atleast 3 non-correlated asset classes and preferrably 5.

Since most people aren’t too savy regarding real estate, he suggests holding REITs. He also thinks that oil and gas investments are a good class thats not correlated to the US stock market and will go up in the future. [the book was written in 1999 and he asually mentions that the stock market may be overvalued!]

Really good advice from someone who’s retired and been living off a $500,000 nest egg for 20 years.

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