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Generating Online Income Compared With Generating Investment Income

4 May 2010 5 Comments

My monthly online income & blogging report will be released here in the next few days, and I’ve had a spike in the income.  I’m thrilled about it.  In advance of this report, I want to do an exercise that I’ve done on here before but it’s one that I think is worth doing repeatedly.

For this exercise we will be considering an online income stream that produces $1,000 per month – this is a nice round number that is suitable for this illustration, and as you will see in my coming report, this is a number that I’ve reached.

Investment Returns

So, the objective here is to show you what you would need to generate the equivalent amount in investment income that we’re generating in online income, or more simply stated, the objective is to show what you’d need in order to generate $1,000 in investment income each month.

If you assume an investment that earns 10% each year (a nice investment), you would need $120,000.  If you assume an investment that earns 5% (still respectable), you would need $240,000.

Now, how long would it take you to save up $120,000 or $240,000?  If you put away $10,000 a year, you’re looking at 12 or 24 years to get to the point where you’re generating that $1,000 a month.  Ouch.

Dividend Stocks

For kicks, let’s look at some popular dividend names to do a similar comparison.

  • Philip Morris Int’l (PM) - 4.5% Yield – You would need $266,666 worth of PM stock or approximately 5,442 shares to generate $1,000 each month in dividend income
  • McDonalds Corp (MCD) - 3.1% Yield – You would need $387,096 worth of MCD stock or approximately 5,452 shares to generate $1,000 each month in dividend income
  • Pfizer, Inc. (PFE) - 4.3% Yield – You would need $279,069 worth of PFE stock or approximately 16,913 shares to generate $1,000 each month in dividend income

Conclusion

If you can’t see the obvious, my point here is to show you how hard it is to generate $1,000 a month in investment income (especially for young people).  Simply put, you need a huge chunk of money in order to do this.  While it’s possible, and you should still shoot for this level of savings and investments, in the short run, it is much more profitable to pursue an online income stream.

I’ve gotten my online income up to approximately $1,000 per month within 2 years of starting from scratch (and that includes a 6 month period of doing nothing – so really 1.5 years is all that it took).

Imagine what an extra grand each month would do for your financial situation?  Imagine the boost to savings or the investing you could do.  Plus, the income stream is still growing.  A year from now, I could easily see the income stream anywhere from $2,000 to $3,000 a month.  We will see.  I will continue to post the updates as I go!

If you’re new to the blog or haven’t taken the time to really dig deep into some of the content here, one of my main goals is to provide real, accurate and transparent data into this journey to building online income streams.  There are so many websites that tell you “how to make money online” yet they don’t even provide real data into making money themselves.  I want this website to be a real, authoritative resource for people looking to really generate online income. For additional information, check out the Online Income resource page and look for my April results report to be released here in the coming days.

5 Comments »

  • 20smoney said:

    Yes mainly advertising. Moving forward I'm looking at expanding both the traffic of this site and expand to more sites. The only problem is lack of time, so I could be looking for some partners.

  • Jacob@ERE said:

    On the other hand it is hard to imagine a blog with a longer lifespan than a blue chip company. Not that bluechip companies don't go out of existence, but blogs are more likely to do so.

  • 20smoney said:

    That's why you funnel your blog earnings into a blue chip company investment :)

  • blogc2011 said:

    If you assume an investment that earns 10% each year (a nice investment), you would need $120,000. If you assume an investment that earns 5% (still respectable), you would need $240,000
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