Former corporate consultant Tanya Adamski turned to investing full-time after her contract work dried up during the pandemic. Six years later, the 52-year-old says rental income and dividends allow her to live “very comfortably” without returning to corporate work. Her experience, however, highlights why replacing a salary with investment income requires substantial capital, discipline and careful planning.
Replacing your salary
Adamski built her portfolio gradually while earning well as a consultant, investing in property, shares and other assets before investment income became her livelihood. Today, 30% of her non-super portfolio is in property and another 30% in ASX shares, with the remainder spread across ETFs, international stocks, crypto, gold and term deposits.
Scott Phillips, chief investment officer at Motley Fool Australia, says people generally have two options. Investors can build a large portfolio that produces dividends and capital growth, or attempt to generate an income through active trading.
The second route carries much greater risk because traders give up a reliable salary while depending on unpredictable market returns. Phillips warns that income can vary dramatically from month to month, making cash-flow management essential.
Capital over targets
For people seeking financial freedom, the bigger lesson is that there is no universal portfolio figure that makes quitting work safe. Selfwealth by Syfe investment strategy director Rob Wilson says the amount required depends heavily on spending and how much investors need to withdraw.
Building enough passive income to gradually reduce reliance on employment may therefore be more realistic than immediately becoming a full-time trader. Phillips recommends saving and investing consistently until portfolio income can replace some or all employment income.
That flexibility could mean retiring early, taking a sabbatical or simply moving to a four-day working week. Adamski’s experience also shows the process is far from effortless, with years of learning, mistakes and disciplined investing behind the financial freedom she now enjoys.
