Work out how much you need invested to earn a set monthly income without selling assets, or how much income your current portfolio can pay. Mix dividend stocks, interest-paying bonds and savings, and rental property, each with its own yield, and see how long your savings plan takes to get there.
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Calculate
$/mo
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0 for a pre-tax goal; target is treated as after-tax
Income mix (allocation and yield)
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%
%
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%
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Net rent after costs ÷ property value (cap rate)
Getting there (optional)
$
$
%/yr
Income + growth, reinvested, before you start withdrawing
%/yr
Raises the future goal so it keeps today's buying power
Enter your values to see the result.
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How to use the Passive Income Calculator
Choose the mode: capital needed for an income goal, or income from what you already have.
Enter the target income per month (or your portfolio value) and an optional tax rate.
Set your income mix: what share sits in dividend investments, interest-paying assets and rental property, and the yield of each.
Optionally add your savings plan: what you already have, your monthly contribution, the expected return and inflation.
Press Calculate to see the capital needed or income, the blended yield and the time to reach your goal.
The passive income formula
Passive income from investments is simply capital times yield. Turned around, it tells you how much capital a target income needs:
Capital needed = (monthly income × 12) ÷ (blended yield × (1 − tax rate))
The blended yield is the weighted average of each source: for 50% in dividend funds at 3.5%, 30% in bonds and savings at 4.5% and 20% in rentals at 5.5%, it is 0.5 × 3.5% + 0.3 × 4.5% + 0.2 × 5.5% = 4.2%. A $3,000 monthly goal ($36,000 a year) before tax then needs $36,000 ÷ 0.042 ≈ $857,000.
The time-to-goal estimate grows your current savings at the expected total return, adds your contribution each month, and stops when the balance reaches the target, which itself rises with inflation.
Capital needed at different yields
Monthly income (pre-tax)
At 3%
At 4%
At 5%
At 6%
$500
$200,000
$150,000
$120,000
$100,000
$1,000
$400,000
$300,000
$240,000
$200,000
$2,000
$800,000
$600,000
$480,000
$400,000
$3,000
$1,200,000
$900,000
$720,000
$600,000
$5,000
$2,000,000
$1,500,000
$1,200,000
$1,000,000
$10,000
$4,000,000
$3,000,000
$2,400,000
$2,000,000
Sources of passive income compared
Dividends: paid by companies and stock funds. Income tends to grow over time, but prices swing and dividends can be cut.
Interest: savings accounts, CDs, Treasury bills and bonds. Predictable income, but it falls when interest rates fall and does not grow with inflation.
Rental income: direct property or real estate funds. Rents often rise with inflation, but direct ownership brings costs, vacancies and work.
Diversify: mixing sources smooths income when one of them has a bad year.
Frequently asked questions
How much do I need to invest to make $1,000 a month in passive income?
Divide the yearly income by the yield. $1,000 a month is $12,000 a year; at a 4% yield you need $12,000 ÷ 0.04 = $300,000, at 5% you need $240,000 and at 3% you need $400,000, before taxes.
What is the formula for passive income capital?
Capital needed = annual income goal ÷ blended yield. If the goal is after tax, divide by the yield × (1 − tax rate) instead. The blended yield is the allocation-weighted average of the yields of each income source.
What is a realistic yield for passive income?
Yields change with markets and interest rates. Broad stock index funds have paid roughly 1.5% to 2% in dividends in recent years and dividend-focused funds roughly 3% to 4%, savings and bond yields move with interest rates, and net rental yields are often in the 4% to 8% range after costs. Use current figures for what you actually own.
Is this the same as the 4% rule?
No. The 4% rule assumes you spend some of your capital over about 30 years. This calculator assumes you live only on the income (dividends, interest, net rent) and never sell the assets, which usually needs more capital for the same income but can last indefinitely.
Does the calculator account for inflation?
In the time-to-goal estimate, yes: the target capital rises with the inflation rate you enter so that the goal keeps today's buying power. The capital-needed figure itself is in today's money.
Is rental income really passive?
Rental income usually needs some work or a property manager, and costs such as maintenance, insurance, taxes, vacancies and management fees. Enter a net yield (net rent after costs divided by property value) so the estimate stays realistic.
Are higher-yield investments better?
Not necessarily. Very high yields often come with higher risk, such as a dividend that may be cut or a bond that may default. A slightly lower, more reliable yield can produce steadier income over time.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.