Hello, everyone, this is my very first post on this site. Hope you can give me some good advice.
Here's my situation:
I am a 42 year-old single male (no kids) with a full-time job as a New York City subway train operator (a.k.a. 'motorman' or 'train driver'). I've had this job for a little over 3 years.
I currently earn about $75,000 a year.
Since I started this job I made a goal for myself to retire by age 50. My reasoning was that if I could accumulate at least 500k in about 10 years, I could live off the interest of this principal for the rest of my life.
Now, don't get me wrong, it's not that I don't enjoy my WORK, I do. I just don't enjoy my JOB. In fact, I don't enjoy ANY job. It's simply too smothering, and I love my free time too much to hand 2/3 of it to any employer.
Right now I have 74k (face value) in 4 corporate bonds:
(1) 20k in Goldman Sachs; 6.3% annual interest
(2) 12k in Selective Insurance Group; 7.4% annual interest
(3) 30k in Pactiv corp. (Teneco); 8.3% annual interest
(4) 12k in Sara Lee corp; 6.1% annual interest
I also have another $29,000 in cash at my local HSBC bank.
I have no debt whatsoever, so my net worth is currently about $103,000.
Last year, between my salary and my investment income I made $81,000, before taxes.
I have no car and no cable tv. I have a $35/month cell phone plan, and a $49.95/month internet bill. I also pay about $30/month for electricity.
Now, for my living situation.
I live by myself in an apartment of my parents' 3-family house. I live virtually rent-free. I've offered to pay at least 50% of market value rent to them, but they simply refuse to take my money. They are fairly well off, and really don't need it.
I have a close relationship with my family, so I won't be going anywhere any time soon.
I calculated that my annual living expenses is about 17k. I like to travel twice a year internationally, so this jacks up my costs, otherwise I could probably get by with about $12,000 a year.
My question is, what is the fastest way I can reach my financial goal? Please keep in mind that I will never be touching my principal, only most of the interest (the rest will be reinvested to offset inflation).
I am getting some decent interest on my corporate bonds, and my initial plan was to just keep buying these until I had half a million's worth, but I have read some books and articles and have expanded my investing knowledge a bit.
There are many options, and I am confused and paralyzed as to what to do.
These are some of the options I am aware of:
*Corporate bonds (pros: stable, reliable income. Cons: BBB bonds may be too risky, and I may get a better overall yield elsewhere with similar risk. Higher grade bonds yield too little).
*Dividend-paying stocks (pros:potential for great growth. Cons: a dip in their share value can undermine my retirement income).
*Mutual funds, stock/bond index funds, etc (pros: safety in numbers; low risk of default. Cons: yields may be too low precisely because of its safety).
*Reits,ETF's (pros and cons same as stocks).
*Municipal bonds (pros: tax-free stable income. Cons: yields are too low).
*Annuities (pros: I MAY be able to get a higher annual income from these than is possible with other vehicles. Cons: you must forfeit your principal, and they don't pay THAT much more to do this. Also, risk of insurance company default).
*Purchasing real estate & collecting rent(Let's not even go there. I DON'T want another job after I retire. Plus, people move out, don't pay...the headaches are anathema to everything I am trying to accomplish).
*Starting a business (no comment).
Maybe you guys have other ideas?
FYI: I SHOULD get SSI when I am 65, plus I will get a partial pension from the MTA at 62. The problem is having enough money from my retirement savings to live off the interest between 50 (at the latest) and 62.
I don't ever plan on getting married or having kids. No, thanks.