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Table of Contents<\/p>\nToggle<\/span>

Asset Allocation Models for Passive Income Portfolios<\/a><\/li>
The Classic 60\/40 Stock\/Bond Portfolio<\/a><\/li>
Allocating to Alternative Income-Producing Assets<\/a>
- Peer-to-Peer Lending<\/a><\/li>
- High-Yield Savings Accounts<\/a><\/li>
- Certificates of Deposit (CDs)<\/a><\/li>
- Investing in Real Estate<\/a><\/li><\/ul><\/li>
- Classic Asset Allocation Models<\/a>
  - The\u00a060% Stocks, 30% Bonds, 10% Cash+ Model<\/a><\/li>
  - The\u00a070% Stocks, 20% Bonds, 5% Cash, 5% Alternative Assets Model<\/a><\/li>
  - The\u00a080% Stocks, 15% Bonds, 5% Cash Model<\/a><\/li><\/ul><\/li>
  - Optimizing Asset Location for Taxable vs. Tax-Advantaged Accounts<\/a>
    - Taxable Account Assets<\/a><\/li>
    - Tax-Deferred Account Assets<\/a><\/li><\/ul><\/li>
    - Passive Income Portfolio Models<\/a>
      - The\u00a0Dividend Portfolio<\/a><\/li>
      - The\u00a0Income Bucket Strategy<\/a><\/li>
      - The\u00a0Perpetual Withdrawal Strategy<\/a><\/li><\/ul><\/li>
      - Key Considerations When Constructing Passive Income Portfolios<\/a><\/li>
      - Conclusion<\/a><\/li>
      - FAQs<\/a>
        What is the best asset allocation for passive income?<\/a><\/li>
        How much income can a $500,000 portfolio generate?<\/a><\/li>
        What percentage of a retirement portfolio should be in bonds vs stocks?<\/a><\/li>
        What are some good stocks for passive income?<\/a><\/li>
        What ETFs are best for passive income?<\/a><\/li>
        Which withdraw rate is safest for passive income portfolios?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n
        <\/span>Asset Allocation Models for Passive Income Portfolios<\/strong><\/span><\/h2>\n $\"Asset$
        Asset Allocation Models for Passive Income Portfolios<\/p><\/div>\n
        Building a passive income portfolio takes careful planning and asset allocation.<\/a> Choosing the right mix of assets to generate consistent cash flow without much active management is crucial. This allows an investor to meet their income needs while preserving capital over the long run. There are several proven asset allocation models that can aid in constructing effective passive income portfolios.<\/p>\n
        <\/span>The Classic 60\/40 Stock\/Bond Portfolio<\/strong><\/span><\/h2>\n $\"Asset$
        Asset Allocation Models for Passive Income Portfolios<\/p><\/div>\n
        One of the most well-known portfolio models is the 60\/40 stock\/bond allocation<\/strong>. This approach entails holding 60% in stocks<\/a><\/strong> and 40% in bonds<\/a><\/strong>. The equity portion aims to provide strong capital appreciation over time while the fixed-income portion provides steady income and stability. This balanced approach moderates risk while still allowing for portfolio growth.<\/p>\n
        Some examples of assets for the stock portion include dividend stocks<\/a><\/strong>, equity index funds<\/a><\/strong>, and REITs<\/a><\/strong>. The bond portion can hold investment-grade corporate, municipal, and government bonds along with bond index mutual funds and ETFs. The 60\/40 split can be adjusted based on an investor’s risk tolerance.<\/p>\n
        <\/span>Allocating to Alternative Income-Producing Assets<\/span><\/h2>\n
        Beyond traditional stocks and bonds, some alternative assets can also generate consistent passive income streams:<\/p>\n
        <\/span>Peer-to-Peer Lending<\/strong><\/span><\/h3>\nPeer-to-peer lending<\/a><\/strong> (P2P) platforms allow investors to lend money to borrowers while earning interest. Returns may range from 5-15% based on the loan risk level. Top P2P lending platforms make the process easy by aggregating loans and automating payments.<\/p>\n
        <\/span>High-Yield Savings Accounts<\/strong><\/span><\/h3>\nToday’s top high-yield savings accounts<\/a><\/strong> offer over 2% APY with no minimum balance requirements. This provides a steady low-risk income stream from cash reserves. Compared to regular savings accounts earning 0.06%, high-yield accounts can generate substantially more income.<\/p>\n
        <\/span>Certificates of Deposit (CDs)<\/strong><\/span><\/h3>\n
        CDs act like term-based savings accounts, locking away funds for 6 months to 5 years at fixed interest rates. The best CD rates today exceed 3% APY. Over a 5-year term, a $10,000 CD could generate over $1,500 in passive income. The rate is set when the CD is opened, guaranteeing returns irrespective of rate shifts.<\/p>\n
        <\/span>Investing in Real Estate<\/strong><\/span><\/h3>\nBoth direct real estate investing and indirect options like REITs<\/a><\/strong> can provide strong cash flows. REITs make it easy to gain diversified real estate exposure without becoming a landlord. Many REITs pay above-average dividends, offering another means of portfolio income generation.<\/p>\n
        <\/span>Classic Asset Allocation Models<\/span><\/h2>\n
        $\"Asset$
        Asset Allocation Models for Passive Income Portfolios<\/p><\/div>\n
        Academic research and financial advisors have developed standard asset allocation models that recommend optimal portfolio mixes based on an investor\u2019s goals and risk tolerance:<\/p>