Passive Income.

In the simplest form - if you can put $65,000 into a high interest savings account earning 8% per annum, you'll get $5,200 worth of interest per year, or $100 per week.

The only real risk here is that interest rates drop, thus lowering your returns. There is very little risk of losing your capital.

That should really be your benchmark when it comes to measuring risk.

There are other income producing investments like debentures which produce marginally higher returns for (arguably) much higher risk (not worth it in my opinion).

Then you look at dividend yields on shares ... $104,000 invested in shares returning an average of 5% yield will earn you $5,200 per year ($100 per week). There are possibly some tax advantages with this strategy though - imputation credits. There are risks here - a downturn in profits may see dividends reduced, and the capital value of your investment may also change too.

Income producing funds like NavraInvest are a good source of higher income - if they can continue to produce 15%+ income per annum on average, then you only need $35,000 invested to return $5,200 per year in income. Again, the risks here are that a flat market may limit trading opportunities and thus income drops - and there is a chance of capital loss as well. I use 15% based on what it has actually returned in recent years - some people may prefer to use a lower figure for caution.

Using leverage to help - if you leverage to 50% in something like Navra you can generate higher returns for less of your own money. Assuming 15% returns and 10% interest, you need around $26,000 of your own money plus $26,000 borrowed to generate your $5,200 per year. Risks here are that interest rates increase and returns decrease - you can potentially end up worse off if the market crashes and you get margin calls. Limiting your LVR and the typically cash-heavy nature of the Navra fund are factors which help guard against this happening.

Cashflow positive real estate is another suggestion - but good luck finding any of that around right now (not impossible - but much more difficult than previously).

These are just some suggestions and are not the only possibilities.

 

Interest rates have been to 17% in my lifetime (not saying they are likely to ever get back there again though).

... and there is still the risk of capital loss if you gear very highly - margin calls can tend to put a nasty dent in your returns.