Insider

A man who retired at 36 built 3 passive-income streams to ditch his full-time job decades early

 Summary List PlacementMichael Quan always had a desire to retire early after watching some of his relatives achieve financial freedom at a young age. After building an IT company and selling it to a private equity firm, he decided to go into early retirement at age 36. He took his...

Michael Quan

 Summary List Placement

Michael Quan always had a desire to retire early after watching some of his relatives achieve financial freedom at a young age. After building an IT company and selling it to a private equity firm, he decided to go into early retirement at age 36. He took his earnings and invested them in ways that would continue to generate passive income. 

 “My daughter was 1 at the time. So I decided, you know, this is a perfect transition to take an early retirement, be really present with my family. And that was a primary motivator, was to really be present with my family and enjoy her younger years at home,” Quan told Insider. 

He’s now 44 years old and has set up his finances to allow him to live off his net worth, continue growing it, and collect passive income. Below, he shares the top three passive-income streams that continue to bring him revenue year after year. 

//www.nextinsure.com/listingdisplay/loader/sh

var matchingConfiguration = { “src”: “665931”, “trn_id”: Math.random().toString(36).substring(2) + (new Date()).getTime().toString(36), “var1”: “”, “inventorytype”: “multistepwidget” }; //the widget will be loaded into a div with id=”qsWidgetContainer”. sh.initialize(matchingConfiguration, “qsWidgetContainer”);

1. His main source of passive income comes from real estate investments 

In 2020, Quan earned $59,000 from real estate, making up 78% of his passive income. He currently owns three properties — two single-family homes and one condominium — in Nevada. The first two properties bring in a consistent cash flow each month because they are rented to long-term tenants. The third property is rented out through Airbnb, which allows him to collect more income. 

Additionally, Quan is part of a family-owned real estate investment company. The company owns a Venice, California, property that has multi-family units. Any revenues collected from it, such as rental income, are divided amongst the owners. 

His fifth investment is a property in San Antonio, Texas. This property is a large apartment complex that Quan invested in through a real estate development firm. This allows him to collect additional income from rents on the property. 

2. He collects dividends from his investment portfolio

Las year, Quan collected about $13,00 from dividend payments, making up 16% of his passive income. He holds exchange-traded funds (ETFs), mutual funds, and individual stocks.

Instead of withdrawing the income, Quan chooses to reinvest his dividends into his portfolio so that his assets and dividend payments can increase over time. This process is called the DRIP method. 

His highest-paying dividends for last year came from three ETFs in the following order:

“Essentially I’m choosing a blended combination of growth and dividend ETFs. So in terms of passive income, to be honest, a lot of the dividends can vary from year to year [in terms of] which sector performs the best,” Quan said. 

He also holds other ETFs that add more growth to his portfolio. The combination of the two types provides him with a balanced approach to investing and growng his portfolio. 

“My general approach to ETFs is that I want a mix of growth and dividend ETFs so that I have a balanced approach within the portfolio. Because sometimes dividends are very nice to have, but other times growth is taking off as well. It’s really about being balanced because the markets grow in different ways,” Quan said.

ETFs can be found through most regular brokerage accounts. But, if you aren’t sure what’s best for you, a robo-advisor can set up a diversified portfolio based on your goals and risk tolerance. Platforms like BettermentWealthsimple, or Wealthfront are all trusted options. But there are a variety of other platforms that could also fit your needs.

Keep in mind, ETFs don’t come without risk, and they don’t all have the same risk level. Some ETFs are less diversified than others. 

3. He earns passive income from his blog

Quan now has a blog called Financially Alert where he shares money tips and ways to become financially free and even retire young. While he enjoys putting the information together, once the content is posted, he is able to generate additional income from ads, affiliate marketing, and membership dues. Last year, his online passive income streams generated about $10,000. 

Quan just released a book, “The F.I.R.E. Planner,” that talks about mindful spending, strict saving regimens, clever investments, and sustainable living.

by Michael Quan (small)Related Content Module: More Personal Finance Coverage

Join the conversation about this story »

Leave a Reply

%d bloggers like this: