My latest income statement from Amazon states that I made about $250 in September 2012. Most people would laugh at this income and I don’t blame them. What I am going to tell you in this article is the importance of this $250 per month and how it can help me to achieve my early retirement.
Currently, I have a full time job so any side income is saved 100%. Assuming my amazon earnings doesn’t grow and it stays at $250 for the next few years. By next year, I would have saved $3000 for this side income.This can then be used to buy another site that generates $200 per month. Using this methodology, let’s see how long it will take for me to generate $3000 per month in online income.
Year 1: $250 per month from Amazon (saved $3000 by year end and invest in a website earning $200 per month)
Year 2: $450 per month ($250 from amazon and $200 from new website) (saved $5400 by end of year 2 and invest in a website earning $350 per month)
Year 3: $800 per month ($450 from year 2 + $350 from new investment) (saved $9600 by end of year 3 and invest in a website earning $600 per month)
Year 4: $1400 per month ($800 form year 3 + $600 from new investment) (saved $16800 by end of year 4 and invest in a website earning $1000)
Year 5: $2400 per month ($1400 from year 3 + $1000 from new investment) (saved $26800 by end of year 4 and invest $16800 in a website earning $1000)
Year 6: $3400
With $250 in hand now, I can grow that income to $3400 after 5 years. However that is not the main point of the post. If you looked at the above, there is a couple of things to take away:
- With a high enough return (60-70%), it doesn’t take much to grow to a sizable monthly income. You can’t repeat the above with any interest, rental or dividend income
- Compounding the high returns yearly gets you into serious returns within a short time frame
- You can easily do the above by saving $250 per month, rather than having a site that generates $250 per month
Early retirement is not a dream. If we learn to exploit better investment strategies and be systematic in our investment, we can easily achieve a monthly online income that parallels what we earn currently.