Retiring & Residual Bills
Have you purchased a house or rented an apartment? You did that action once and must pay for it over and over and over. In the case of a mortgage, the payments will eventually stop, but rent payments typically don’t. Most people purchase a car using other people’s money (OPM), which they pay back over time. Again, a one-time purchase results in ongoing payments. Let’s call those residual bills.
There are other residual bills in life. Wherever you live, someone must pay for water, gas, electric and garbage service. Maybe you have more stuff than your house can hold and you have rental storage. Maybe you have a phone, cable and internet service. These are all ongoing bills, therefore residual payments that you make each month.
You can divide that 1200 by whatever you think your rate of return would be. If you think 6%, then divide 1200 by 6 and get 200. For every one dollar of income, you would need $200 of investment. Here’s a chart to help you:
|Income||At 12%||At 6%||At 3%||At 2%|