How much do you need to “live on unearned income”?

◆ 40% of working people “want to reduce working hours”
Working people are always hard. When I’m working, I have a lot of hardships that I can’t say, such as “Why do I have to do such a boring job?” There is.

For that reason, there are probably many office workers who think “I don’t want to work …” in my heart.

According to a survey conducted by Macromill, 40% of working people answered that they would like to reduce working hours. Also, according to a survey of changing jobs, the first reason for working is “to earn income.” It seems that there is a strong awareness of “working for money.”

In other words, many office workers say, “I always want to quit the company, but I have no choice but to work because I don’t have the money.” No, the reality is quite harsh.

I think, “If you don’t want to work, why don’t you quit your current job and find a new job?”, But from the perspective of the person concerned, “If you change jobs, you will be busier and you may fail. To be honest, I don’t like it! “

That’s why I don’t like the company and I can’t help it. And maybe you dream of “I want to live on unearned income!” Therefore, I will explain in detail “How much do you need to think realistically to live on unearned income?”

◆ Average expenditure per household is “320,000 yen per month”
First, let’s check from the point of “How much unearned income do you need in the first place?”

According to a household survey report released by the Statistics Bureau of the Ministry of Internal Affairs and Communications, the average monthly expenditure of two or more households among working households is about 320,000 yen. The average monthly expenditure is 320,000 yen, which means that the annual expenditure is about 3.84 million yen. Therefore, if you are aiming for an unearned income life, it can be said that it is enough if you earn “4 million yen a year (after tax)”.

Next, check “How to make unearned income?” For example, many people think of “stock dividends” and “rental income from real estate leasing” as a way to generate unearned income. Both of these are valid methods. So it’s worth considering both.

However, there are two things to keep in mind when making unearned income.

The first is the “degree of effort”. In the first place, unearned income is “income that can be earned without working.” Nevertheless, if it takes a long time to manage and clerical work, it is no longer “unearned”.

The second is “high reproducibility”. There are many forms of unearned income, but there is no such thing as a mechanism that depends on luck or bad luck. According to a study by Christopher J. Boyce et al., Most people “decrease their income and their happiness.”

If it is unstable like “This year’s unearned income was 5 million yen, but next year it may be zero yen …”, I can’t afford it. Therefore, it is important to create a system that can earn unearned income in a stable manner at all times.

Based on the above two points, I feel that the best way to make unearned income is, “Isn’t it index investment?” Index investment is a method of earning unearned income by buying an investment trust linked to the stock market.

Index investment is an investment technique packed with the economic theory of Nobel Prize products. All you have to do is “accumulate money”, so it doesn’t take much time and you can expect the reproducibility to be outstanding.

Therefore, from now on, we will proceed from the perspective of “how much do we need to save to live on the dividends obtained from index investment?”

◆ Zubari, the required funds are “310 million yen!”
According to the domestic stock index released by Nikkei Inc., the expected dividend yield of the Nikkei Stock Average is 1.64% (as of March 31, 2021). Of this amount, 20% of the dividend will be taxed, so the actual dividend you can receive will be about 1.3% of the accumulated amount.

Therefore, let’s calculate the amount of reserve required for living on unearned income on the premise that we can earn unearned income with a dividend yield of 1.3% every year. As mentioned above, the annual expenditure of ordinary households is “about 4 million yen”.

Therefore, let’s cover this amount with dividends. The answer can be calculated from a simple equation.

・ Required funds x dividend yield (0.013) = 4 million yen
・ Required funds = 4 million yen ÷ dividend yield (0.013) ≒ 310 million yen

As a result of the calculation, I found that “To live on unearned income alone, you should save 310 million yen in index investment!” If you are dreaming of living on unearned income, it is a good idea to save money with this amount as your goal.

◆ Summary
Money is always a pain. However, money is nothing more than a “out of paper”. It’s unbearable to be influenced by something like this.

To prevent that from happening, we should learn the right knowledge of money. And I want to get a “life of manipulating money” instead of a “life of being swayed by money”.

Reference: How much do you need to live on unearned income? (Https://allabout.co.jp/gm/gc/477157/)

Sentence = Ryota Nakahara (Money Guide)