# What should be my next steps? Need to generate about 10k per month income, passively.



## wandering (Jul 5, 2014)

Here's my situation. I'm 39, sole breadwinner in the family. My wife is mid 30s. 2 kids around 10 years. She looks after the kids and their needs as they have severe allergies and they are outside the regular school system. 

I have my own business and the last several years were quite good for me overall, thank God. But the business has its vagaries and ups and downs. 
Here is my big picture situation. 

Assets:
A little over $3 million CAD in cash (in USD and CAD). 
Liabilities
None

About 200k is available in personal accounts and the rest is available in Holdco and is eligible for withdrawals in the form of dividends. 
My total monthly yield from this whole corpus is less than $1000 per month. 

I've been very conservative with my cash because my business is very high risk and can precipitously change at any time. But all these years, I was focusing more on managing my business and increasing the income and never focused on the investment side at all. 
But now I'm beginning to look at the cash I've been able to accumulate and want to deploy it. I have been renter all along because of a variety of reasons, primarily because we weren't sure where we wanted to live. Now, I think we have more certainty that we'll stay put in our current location and thanks to the oil bust, housing is becoming more affordable here. 

My business brings in anywhere from 20k to 40k per month in net profit before corporate tax, depending on how many employees/contractors work in a month. 
My monthly expenses are as follows:
Rent: 1600
Kids' Education, activities, tutors: 1500
Grocery plus eating out, includes a lot of expensive organic and special grocery: 2000
Car Insurance plus other insurance: $400
Gas:$400
Phone plus utilities: $600
Clothes, travel and other stuff: $1000
Total : $7500

I know that there's room to chop off from this, but let's keep the numbers here. 

Assuming my business dies tomorrow and I don't start anything else, what are the avenues for generating about $10k/month from the assets mentioned above? Can I afford to retire now while maintaining the above level of expenditure. 
Or alternatively, How much corpus is good for getting about $10k in monthly passive income at my age, without depleting the capital?


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## Just a Guy (Mar 27, 2012)

So, you want a guaranteed passive income right away and you have no experience or knowledge of investing...

You've done an amazing job saving money, so you must have invested a lot of time building your business. I'd suggest you try to emulate that focus and learn about investing. Any advice you get from an anonymous message board would be very dangerous to your savings without more knowledge. 

You may want to look into dividends, real estate, or maybe owning a different business. I think, at this point, you need to peruse your options (through reading about the different investing options) u till you find something that peaks your interest. Investing is as much about finding something that matches your personality as it is about making money. Once you find an area of interest, then start asking questions and read as much as you can about it.


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## tygrus (Mar 13, 2012)

You better talk to a tax accountant because getting that cash out of the business without serious tax consequences is gonna be tough. Most people hold business properties or investments in their numbered companies and can sell them for a large untaxed gain when they go to liquidate. They can also do an in kind transfer that lets you sell your business without any tax provided you invest in another active business within one fiscal year. Note I mention active business. It cant be passive like rental units or collecting interest. 

And you better do it soon because I hear T2 is gonna hit individual person corps like yours fairly hard in the upcoming budget.


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## peterk (May 16, 2010)

Just a Guy said:


> You've done an amazing job saving money, so you must have invested a lot of time building your business. I'd suggest you try to emulate that focus and learn about investing. Any advice you get from an anonymous message board would be very dangerous to your savings without more knowledge.


Yup. Great advice, and a great time in your life to dive into the investing world, wandering. It'll take a while to all figure out, not to mention the complication of working an investment strategy effectively with your corporate funds to minimize tax...

Whatever you end up doing, don't do it rashly. Start with a few thousand, then a few 10s of thousands, then after you've delved into the investing world for a year or two and have started to gain some confidence about how everything works, a few 100s of thousands. If it were me and I were starting at point zero, with $3M, I would probably expect it to take at least 2-3 years before having all those funds fully deployed in an investment strategy that you effectively understand and are comfortable with

You are just the type of guy I encourage young people on this forum to inspire to be. So busy in your 20s and 30s getting **** done and kicking *** that you never even had time to worry about investing. Now you got 3M bucks and wanna figure out what to do with it. An excellent problem to have! Better to be an ambitious guy like yourself than a wage earner who's content saving $1000/month in his TFSA and RRSP, expertly allocated and invested, and ending up with $300k at the age of 39 instead of $3M like yourself...


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## lonewolf (Jun 12, 2012)

wandering my bet would be if you did invest over the years your net worth would be worth less now as I think this is the standard. GIC holders over the years have probably beat the pants off of most investors. I think an easier way to retire is to not concentrate so much on investments making money hand over fist instead cutting down on expenses. Creativity for stretching those dollars for getting that which I valued in my life would be my goal.


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## My Own Advisor (Sep 24, 2012)

I would agree...start small, learn, take time. Take your next 1-2 years to learn about investing, how to deploy your cash appropriately; then live your life. 

With $3M, that should churn out at least $90k per year, maybe closer to $120k per year if invested well and that capital stays in tact almost forever for your children.

Congrats as peterk mentioned: you have kicked a$$.


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## OurBigFatWallet (Jan 20, 2014)

As MOA said above - congrats. That is a great scenario to be in.

I highly, highly suggest you speak to a) a fee-only financial advisor and b) a tax accountant. There are tax efficient ways to get the money out of the company but you'll want to make sure it's structured properly and all the notices have been filed. 

A financial advisor can help you start to invest based on your situation. I said 'fee-only' because you don't want someone to sell you a bunch of investment products that are high cost and low performing.

As I mentioned above - congrats! Deciding what to do with $3M is a great issue to have


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## dubmac (Jan 9, 2011)

I guess you could buy 10,000 shares of DFN (split shares) - which pays 0.10 per share. This would cost $100,000. But I'd never do it, because the I can't understand the where the money comes from!


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## wandering (Jul 5, 2014)

Here's an update from my side.
My business that got me here after all these years of effort got sold. I will have an additional 1.8 million or so available after taxes. 
But I'll be unemployed. And will try to get working on something sooner or later. But in the meantime, I have to figure out something as I don't have any cash inflows and need to preserve the capital. 
My allocation right now is as follows:
25% CAD all sitting in 2 to 3% accounts with various banks.
75% USD all yielding nothing. 

Thanks all for your help!


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## cashinstinct (Apr 4, 2009)

Congrats!

_____

I would read a lot about "lump sum" Vs "Dollar cost average"

You need to consider if you are comfortable investing "lump sum" your money or if you want to spread your purchases over a couple of months / years.

If you never invested in the stock market, investing a lot at the same time can be a fearful experience.

You could read about indexing, and trying to find the balance between stocks and bonds.

A fee-only financial advisor helping you finding answers is key... 

If you want 100% guarantee that you will preserve capital, you won't get much return on your capital. It might be enough for you though.


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## mordko (Jan 23, 2016)

- From the financial point of view you could retire and live off your investment.
- I would read a few books before investing. The Value of Simple is a good start if you want a simple approach which allows you to preserve the capital through diversification and sleep well. The Intelligent Investor by Graham is the other extreme - if you want to dedicate a lot of effort to investment and try and beat the market.


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