March 14, 2019

The Ultimate Passive Income Strategy to Retire Early

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MTO8- Podcast on the ultimate passive income strategy to retire early. Note, I am not a financial advisor these are just my opinions that have been formed from researching different studies and books. Please, please, please do your own research. Remember, knowledge is power! There may be affiliate links in this article, read the full disclaimer here.

  1. 7 reasons you should invest in index funds today
  2. How to invest in index funds
  3. The ultimate passive income strategy using index funds


Everyone knows that the way to retire early is to find a passive income stream. However, it can be hard to know what is the best way to actually achieve this. 

Most people will be willing to put in hard work now if it means they can reap the rewards later on in life. You may be thinking that there really isn’t such a thing as passive income because no matter how you make money you will have to put in some work at certain points. Well, this strategy is the closest thing to earning true passive income.

This podcast will reveal the ultimate passive income strategy to retire early. 


How Much Money do I Need to Retire Early? 

(1 min) 

Work out your own “financial freedom figure” so that you would never have to work another day and live off this passive income forever. 

The only number you need to know is how much money you spend each year (annual expenses). 


Here’s the maths:

Annual expenses x 25


e.g. $50,000 x 25 = $1.25 million


Now, I can almost hear your mind saying… How the heck am I going to get $1.25 million? 

This is a great question and is the whole point of this website and podcast. To help you make money, retire early and make more time in your life. 


Before we really get into that remember this important quote:

If you aim for nothing you will hit it every time.



Financial Freedom Book Review

Why Make Time Online? Financial Independence Retire Early Blog


Tony Robbins Freedom Stats

(4 min)

These freedom stats will help you to realise why you should start investing ASAP:

  • Corrections (a drop by at least 10%) have happened on average once a year since 1900
  • Less than 20% of corrections turn into a “Bear Market” (fall by over 20%)
  • Nobody can predict the market
  • The stock market rises over time despite many short-term setbacks
  • Bear markets have happened every 3-5 years, historically
  • Bear markets always become bull markets (see chart below)
  • The greatest danger is being out of the market (see chart below)



Why the Stock Market Goes Up Over Time

(5 min)

There are 2 main reasons why the stock market goes up over time:

  1. Inflation
  2. Current financial system

As you absorb this information you’ll realise our current financial system needs growth to survive. You may have heard on the news about how a 2-3% annual growth is healthy for our economy and is good news. 

The fact is it doesn’t have to be!

If there was a set amount of money in the world and it was all backed to something that was finite (such as gold… which is what the economy used to be before 1913…) then growth wouldn’t be needed at all. 

Our current financial system relies on quantitative easing and would implode if deflation was to occur. This means the powers that be do everything in their power to prevent a deflationary economy (resulting in more money being printed, hence an increase in the stock market prices and all assets over time!)



How our wealth is being stolen- The power of Inflation

Save Hours of Time with these Resources


How This Strategy Allows Your Pot to Grow (…and Earn Passive Income)

(6 min)

Remember a 7% return each year is a conservative number compared to the growth of the stock market over the last 100 years.

  • The US stock market has averaged 10.16% annual return between 1920 and 2016- Stat from Andrew Hallam’s book Millionaire Teacher
  • The S&P 500 returned an average of 10.28% a year from 1985 to 2015 (if you invested $50,000 in 1985 that would be worth $941,613.61 in 2015) – Fact from Tony Robbins book Unshakeable

So let’s assume the index fund returned a conservative 7% interest rate (suggested by Grant Sabatier in Financial Freedom). This means you can take 4% out to live on ($50,000) and leave the extra 3% in your pot to allow it to grow!


In the example this means:

  • 1.25 million would increase to 1.2875 million

This would mean the following year you could live off $51,500… and your pot would grow to $1,326,125. Are you beginning to see how this strategy is inflation proof?

To learn more about this ultimate passive income strategy to retire early check out this related post:

Examples to Reach Your Figure

(7 min)

So going back to that great question you asked earlier…

“How am I going to get $1.25 million?”

Well, if you could save and invest $20,000 a year you would reach your figure in 23 years. If you’re a high earner this could easily be within your reach as long as you don’t live beyond your means. And don’t you think that sounds better than working for 50 years on the off chance your pension pot pays you when you’re old enough to retire?


If you think that would be impossible to save this amount each year, then you may have to find an additional stream of income. After all, if you currently earn $18,000 a year the most you could possibly save is $18,000!

But don’t worry that is where this website will come in handy to help!



Do you remember hearing that there are 4 main asset classes to invest in?

  1. Paper (Stocks, Shares, Bonds etc.)
  2. Property
  3. Business
  4. Commodities 

Investing in these appreciating assets is crucial to building long-term wealth.

If you have no idea where to start I would highly recommend focusing on learning new skills that can be monetised in the future. 

Skills are your future equity. 


Can you imagine learning marketing, website design and copywriting skills all whilst making an income? Jumpstart your own profitable website by following this 11-day course for free. 




(12 min) 

There are 3 pieces of action for you to take today that your future self will be very grateful for…

1. If you haven’t already, the first step is to understand what your own financial situation is. Work out where you spend money and how you earn money. 

You can get your free financial statement planner and the tips on how to use it below to easily work out your annual expenses. 




2. The second main way to ensure you are making good financial decisions is to learn more about the current financial system.

You probably know that most people do not understand how the economy works. 

The more you learn about the way that money is used within society the more informed decisions you can make about what to do with your money. By watching these 30 minute YouTube videos you will learn more than what the vast majority of people know about our current financial system. 

If you haven’t got time now, pin this page and come back to it later on for some quality Netflix and chill time 😉




3. Just start! Open an account with Vanguard if you are living in the UK, US or Australia. If you live somewhere else or are an expat you can open an account with Saxo to invest using ETFs. 

Even putting in the lowest amount possible may seem ridiculously far away from your “financial freedom number”. But it is infinitely closer to that number if you currently are not investing anything (I guarantee it’s the hardest step to take, but it’s actually very simple to do!)

Learn more about how to do this in the 2nd episode of this series.


The Ultimate Passive Income Strategy to Retire Early Summary

Little by little you begin to notice this ultimate passive income strategy to retire early could be possible. It doesn’t mean getting there is super easy but it certainly can be done!

Taking these small steps and actions will compound over time to make your future situation that much better!



Keep changing for the better,




P.S. Please do subscribe and leave a review here… If you are reading this on a computer find the podcast by going into your podcast app and search for Make Time Online. 


P.P.S. Leave a comment on whether you found this mini 3-part series useful on investing in index funds and what you would like to hear more about in the future. 

About the Author

Mike Beatty has built a passive income online whilst working as a full-time PE teacher without any marketing or technical experience. Learn more about how he's done it here.

Mike Beatty

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