How it works
Passive income is capital multiplied by yield, and this calculator runs the equation in both directions. Forward: enter your invested capital and an annual yield, and it shows the income that capital throws off each month, each year and each day. Backward: enter a target monthly income, and it shows the capital required to produce it — the number that turns 'live off my investments' from a phrase into a figure. At a 4% yield, $300,000 generates $1,000 a month, and a $4,000 monthly target needs $1.2 million. The yield is the judgement call. A 4% figure matches the classic safe-withdrawal rule for a diversified portfolio drawn down gently; a dividend-focused portfolio might yield 3-4%; a high-yield savings account rather less. Higher yields are always available, but they arrive wearing risk — a 9% yield that can be cut is not the same as a 4% yield that holds. The gap output is the actionable one: the additional capital between where you are and the income you want, which is simply another savings goal with a purpose attached.
Formula
Monthly income = capital x yield / 12 | Required capital = target monthly income x 12 / yield
Tips
- 4% matches the classic safe-withdrawal rule for a gently-drawn portfolio.
- Higher yields always come with higher risk of the payout being cut.
- The gap output is your next savings goal — capital with a purpose attached.
- Run it backwards from a target income to get a concrete capital figure.
- Daily income reframes progress — even small capital buys real freedom per day.
Frequently asked questions
- How much capital do I need to live off investments?
- Target monthly income times 12, divided by your yield. At a 4% yield, $4,000 a month needs $1.2 million; $2,000 a month needs $600,000. The lower the safe yield you assume, the more capital the same income requires.
- What is a safe yield to assume?
- Around 4% matches the classic safe-withdrawal rule for a diversified portfolio drawn down gently. Dividend portfolios might yield 3-4%, high-yield savings rather less. Yields well above that are available but carry real risk of the payout being cut.
- How is monthly passive income calculated?
- Capital times yield, divided by twelve. $300,000 at 4% is $12,000 a year, or $1,000 a month. The calculator also shows it per day and per year, and works backwards from a target income to the capital required.
- Is a higher yield always better?
- No — yield and risk move together. A 9% yield that can be cut in a downturn is not the same as a 4% yield that holds. Sustainable income matters more than the headline rate, which is why the safe-withdrawal research anchors on a modest figure.
- What does the gap figure mean?
- The additional capital between what you have now and what your target income requires at your chosen yield. It converts 'I want passive income' into a concrete savings target — a number you can work toward like any other goal.