When it comes to investment, the goal of most people is retirement.

With the rapid expansion of the F.I.R.E movement (financial independence, retire early), people are shooting for their 4% number.

Developed by William Bengen in 1994, the 4% rule is the math-verified theory that if you withdrew a maximum of 4% from your investment portfolio each year, your investments would theoretically continue to grow and support you for the rest of your life.

But what if you don’t want to withdraw from your investments at all? What if you hate the feeling of selling shares, but still want to get paid?

Well, I never sell anything, but I’m paid handsomely each month, and I’ll tell you how I go about this.

Let me break it down for you.

*While this is an honest breakdown of my investment strategy, it does not constitute as financial advice. If you’re looking for financial advice, please seek out a registered fiduciary financial advisor.

Dividend Paying Stocks

I am an enormous fan of dividend paying stocks, and will rarely invest in anything that doesn’t pay a dividend.

But beyond that, in the last year I’ve become fixated on stocks that pay dividends on a monthly basis. I love this, because dividends that are paid monthly can either be taken as a passive salary if needed, or if not needed, can be re-invested into buying more stocks.

I don’t need the money, I’m employed full-time, so I reinvest everything I earn into whatever I’m eyeing at the time.

Why would I stay employed if I don’t have to? Because I love to work, and because (being in my 30’s) these are the most productive years of my life. I would kick myself later if I wasted my healthiest years lying around like a lard-ass just because I could.

With ETF’s, the best strategy is to buy, buy, and continue buying indefinitely. ETF’s are relatively safe and are a brilliant way of padding out your portfolio with stocks that pay regular dividends, without the risk of individual shares.

One such ETF I own is the Vanguard Long-Term Bond ETF (BLV) which pays out every month like clockwork.

An alternative to ETF’s are the much less well known ETN’s (exchange traded notes).
These are a lot like bonds in that they’re basically debt, but unlike bonds, they typically don’t pay out interest.

The way of profiting from an ETN is by buying low and selling high, which is why it’s not very popular with retail investors. However, I found one recently called Credit Suisse X Links Silver Shares Covered Call ETN (SLVO) that does indeed pay out interest on a monthly basis. So I’ve bought a stack of these and will keep an eye on how they perform.

But if you’re looking for bigger payouts per month, the real money comes from individual shares.
These are much riskier, because unlike ETF’s which are so safe because many companies are bundled together, you’re betting on just one.
This means that if the company dies, it takes your money down with it. That’s why, with my individual stocks, I protect myself.

I buy an amount of stocks, then hold as they increase in value. As the value increases, I sell the shares in accordance with its growth. If it grows by 30%, I sell 30%. Eventually, I make back the money I spent on buying the shares.

Once I do, I don’t sell any more and reap the benefits indefinitely. Basically, I have the same amount of shares as when I started, but I’ve gained back all the money I spent on buying them.

The reason for this is that if the company ever tanks, I neutralise my loss. (I count dividends as part of this value repayment, which speeds up the process by a lot).

I’ve done this with all of the companies I’ve invested more than $1,000 into, all of which pay dividends monthly. My two favourite companies are Prospect Capital Corp (PSEC) and Pennant Park Floating Rate Capital Ltd (PFLT).

Obviously, I can’t say that I recommend these companies as investments, but I can say that I’m invested in them and am paid monthly.

My Property

Unfortunately, as of yet, my combined dividend payments do not form a large enough monthly payout to support me.

What makes up the difference is the rent I receive from my investment property.

I used to own two, but I sold one of them and used the proceeds to pay down the mortgage on the second one.

These days, the mortgage on the remaining property is in a sweet spot. The mortgage is high enough that my accountant can use it to declare loss on my taxes, helping with tax somehow (I dunno). But while the mortgage still exists, it’s not so high that it’s taking too much of my rental income.

So of the roughly $1,500 my tenants are paying per month, I get to keep about $800 after all costs. Combined with the dividends, it’s enough that I could live off it.

Living off Passive Income

Can I imagine myself living off a combination of my rental income and dividend payments? Hell no, I’d be bored in seconds. I can’t imagine how people don’t go mad spending all day lounging on the couch doing nothing.

Will I move to Mexico and rent out a $200 per month villa like so many others featured on YouTube? Also, hell no.

I have no intention on becoming a burden to a less privileged country that really doesn’t need some lard-ass lying around, contributing nothing. I don’t get how all those people don’t see how problematic it is that they pack up all their wealth and move to struggling countries, then gush all over Instagram at how cheap everything is, not stopping to wonder why it’s so cheap, or if they’re adding to societal problems by attracting more of their lard-ass friends to join them.

Lard-ass = person who does nothing.

No, I’m going to keep working (and contributing) for as long as I can. But I’ll be working with the peace of mind knowing that if I am suddenly incapacitated for some reason, I’m not going to starve.

Anyone can get this level of safety and security if they really want, it just begins by doing what the F.I.R.E people are doing.

No, I don’t mean moving all over the world, contributing to rising rent prices. I mean putting aside an enormous amount of your paycheque every month, as much as you can. 50% or higher is ideal. If you can do that, invest it all, and avoid spending from it, you’re well on your way to freedom.

*A reminder that this article was not meant as financial advice. Professionals exist that can make you a tailored plan at a cost. Insist on a fiduciary.