If I am willing to move to a lower cost area and live modestly, is there any way to generate a modest income off of 300k? I have no debt, have no family, I am single, and have no financial obligations. I have grown tired of the big city rat race with high income but also high taxes, high rent and expenses, and with home prices at stratospheric levels, no reason to buy. Thanks for any advice you can offer.

key requirement from comments:

Is there any way to get it to yield 20k annually for example -- aka enough to live in a lower cost of living country.

  • 1
    What do you mean by "generate a modest income"?
    – Michael
    Commented Sep 27, 2017 at 22:00
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    @tnk479 That's more than 6 percent yield. That would be very difficult to do without taking substantial risk.
    – zeta-band
    Commented Sep 27, 2017 at 22:11
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    The problem with relying on a relatively high average rate of return that you withdraw to live on is that a single down year can be devastating.
    – Hart CO
    Commented Sep 27, 2017 at 22:16
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    Consider buying property with land where you could grow food and engage in some low-maintenance farming (e.g. keeping chickens). Commented Sep 28, 2017 at 11:13
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    Instead of going fully extreme and moving countries with no plans for income, consider cutting back your income by working somewhere with fewer hours / less stress, and living frugally. If you can hold on to your $300k for investments, and make the same $20k by working even a low-stress minimum wage job, you will be much better provided for when you retire in full. Commented Sep 28, 2017 at 13:06

6 Answers 6


So my read on the question is "How do I invest 300k such that it earns me a 'living wage' without the ongoing grind inherent in most formal employment?" Reading the other answers to date it looks like most of them are thinking in terms of investment accounts and trying to live off of the earnings from such. I wanted to throw out a couple of alternative choices that may be worth considering...

The first is real-estate investing. $300k should allow you to pick up 2 or 3 single family dwellings with little or no mortgage. Turning them into rentals placed with a good property management company should easily pay their expenses and provide a consistent income with minimal effort/attention from you. Similar story with buying into multifamily housing or commercial real-estate. Your key concern here is picking the right market in which to buy and finding a reputable manager to handle the day to day issues on your behalf. Note that you are not overly concerned with the potential resale value of the property(s), but the probable rental income they can generate, these are separate concerns that may not align with each other.

Second is buying/founding a business that has a general manager other than yourself. Franchise ownership may be a potential option for you under the circumstances. The key concern here is picking the business, location, and manager that make you comfortable in terms of the risk involved. You need the place to make enough money to pay for itself and the salary of everyone working there, with enough left over for you to live on. Sounds easy enough, but not so much in practice. Generally you can expect at least a few years of being hands on and watching things very closely to make sure it is going the way you want it to. Finding a mentor who has done this type of transition before to walk you through it would be strongly advised. So would preparing yourself for a failure or two before you work out the exact combination of factors that work for you.

  • Yes, this is exactly what I am getting at with my question. I really appreciate all the above thoughtful answers about endowments and so forth, but, this more directly answers my question.
    – tnk479
    Commented Sep 29, 2017 at 16:05
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    So your plan is effectively to buy/start a business and hire someone else to run it? I highly doubt you're going to get a very good return off of $300k that way.
    – D Stanley
    Commented Sep 29, 2017 at 16:34

The title of your question is quite different then the content. The term "Rat Race" was coined in the 70's and refers to the endless cycle of working hard to consume more. Fortunately it is very easy not to participate in the cycle and probably will lead to more happiness. Just because one "works" does not mean they are participating in the "rat race", and I would recommend the following:

  • Find work that you enjoy
  • Remove things from your life that you do not enjoy
  • Follow the three legs to financial success: spend, give, and save/invest.

When I think of "rat race" I picture a a bumper-to-bumper freeway of people struggling to get to work. For others it might be different, but that kind of rat race is easily avoided by the multitude of remote work opportunities. Some jobs allow you to work anywhere in the world.

Avoiding the rugged consumerism also helps avoid the feelings of being a rat on the wheel. Sure one can like nice things, but do we have to have everything that Madison Ave is trying to sell us? No. Pick some nice things and pay cash.

Debt, especially consumer debt, causes a person (in effect) to work for a bank. Avoiding debt will remove those feelings.

Saving and investing also helps avoid those feelings. There is profound satisfaction in watching ones account balances grow. Once you see that your investment earnings can outpace your expenses, and then your salary you really feel like you are getting ahead.

Above all else giving is a paramount and often overlooked part of a person's financial life. It causes one to be humble and recognize that most people, in this world, are less fortunate that us. It avoids runaway provide that justifies purchases that we cannot afford.

So yea you can avoid the "Rat Race" and still work.

  • 1
    +1, I agree with everything you said, but I don't think it necessarily applies to the OP. OP has managed to save $300k (presumably outside of his retirement accounts) and says that he has "no debt" and "no financial obligations."
    – Ben Miller
    Commented Sep 28, 2017 at 13:26
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    I admit that it is a bit weird that someone earned enough to save 300K and not learned about these things. However, perhaps subsequent readers can gain some value.
    – Pete B.
    Commented Sep 28, 2017 at 13:45
  • This is good advise, but I think it doesn't really answer the question that was asked.
    – Philipp
    Commented Oct 2, 2017 at 11:08
  • @Philipp specifically you are correct I did not answer the question. However, I feel that I addressed the implication that if one works then they are engaged in a "Rat Race". My answer was to address that fallacy and I feel that it is useful.
    – Pete B.
    Commented Oct 27, 2017 at 14:09

An endowment is a large chunk of capital (i.e. money) held by a university or other nonprofit. It is meant to hold its value forever against inflation, and invested to generate income: from interest, dividends and appreciation.

They seem like a contradiction: closely scrutinized by Boards of Directors, managed to a high and accountable standard, closely regulated -- and yet, invested aggressively for growth: ignoring short-term volatility to get the highest growth long-term. The law, UPMIFA (P for Prudent), requires growth investment, and says taking up to 7% of current value per year is prudent, even in down times when total value is shrinking. On average, this lets the endowment grow with inflation.

7% is the high end of "prudent". An endowment is watched, and the taken income is adjusted to keep the endowment healthy. 5% is very safe, assuming the endowment must pace inflation until the heat death of the universe. If you plan to die someday, drawing an extra 1-2% is appropriate.

There you go. Invest like a university endowment, and count on up to 7% per year of income. That's $21,000 a year. There'll be taxes, but the long-term capital gain rate at $21,000/year is pretty low. That's pretty tight, but possible if your idea of entertaining is Netflix.

It would work very effectively for #VanLife, or the British version, living on a Narrowboat.

  • 1
    But, I suppose, that such endowments might grow in value, but also may be completely illiquid? That is, of course, not an option. Can one still realize this and reliably liquidate 20k per year? Commented Sep 28, 2017 at 14:14
  • Well, an actual endowment is illiquid for other reasons, UPMIfA law doesn't allow the capital to be spent. That doesn"t apply to you. Endowment style investing can be done with mostly assets that are liquid, i.e. Sellable during market hours. Commented Sep 28, 2017 at 18:50

Even with a good investment strategy, you cannot expect more than 8-10% per year in average. Reducing this by a 3% inflation ratio leaves you with 5 - 7%, which means 15k$ - 21k$.

Consider seriously if you could live from that amount as annual income, longterm. If you think so, there is a second hurdle - the words in average. A good year could increase your capital a bit, but a bad year can devastate it, and you would not have the time to wait for the good years to average it out.

For example, if your second year gives you a 10% loss, and you still draw 15k$ (and inflation eats another 3%), you have only 247k$ left effectively, and future years will have to go with 12k$ - 17k$. Imagine a second bad year.

As a consequence, you either need to be prepared to go back to work in that situation (tough after being without job for years), or you can live on less to begin with: if you can make it on 10k$ to begin with (and do, even in good years), you have a pretty good chance to get through your life with it.

Note that 'make it with x' always includes taxes, health care, etc. - nothing is free.

I think it's possible, as people live on 10k$ a year. But you need to be sure you can trust yourself to stay within the limit and not give in and spent more - not easy for many people.


the short answer: yes. The long answer depends on what you mean by modest living. As others have noted, living off a $300k principle involves risks, but the entire future has risk. By "getting out of the rat race" I hope you don't mean become a slug on the couch.

Peruse mr. Money Mustache at https://www.mrmoneymustache.com/. One can live very frugally yet very well in some parts of the US.

  • Please try to answer the question properly in your answer itself. Your answer depends heavily on its link to mrmoneymustache. When that website ever goes offline, your answer would be quite useless for future visitors.
    – Philipp
    Commented Oct 2, 2017 at 11:09
  • good point; non-exhaustive examples of living frugally in the U.S include: own, don't lease, automobiles at least 4 years old, eat out sparingly, carry no debt (by itself a sign that you can't afford what you've incurred debt for), remain healthy (to limit long term health problems), conduct home/auto repairs yourself (youtube videos), max out retirement accounts to minimize taxable income, buy used stuff (car, computer, phone, etc.) instead of the latest and greatest
    – rocketman
    Commented Oct 2, 2017 at 22:13

Consider buying a legal "mother daughter" property, rent out the top part, and live in the "mother" component.

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