3% is fairly conservative: According to the calculator here: http://www.moneychimp.com/features/market_cagr.htm http://www.moneychimp.com/features/market_cagr.

3% is fairly conservative: According to the calculator here: http://www.moneychimp.com/features/market_cagr.htm http://www.moneychimp.com/features/market_cagr.htm ...over the last 40 years an S&P 500 index fund had annualized returns of 10% before inflation adjustment, 5.5% adjusted for inflation. That's, like, twice as good as my guess! And no need to invest in real estate for that: That's a Vanguard index fund. Of course, over the last ten years the equivalent annualized return is only 1.5%, which goes to show you that (a) depressed global economies are no fun and (b) there is some rationale behind my choosing to use a more conservative number. As for "how does one manage to save 50k per year?", the sad answer is that I don't, and most of us probably don't. But many tech workers could, in theory. The median income in San Francisco is "only" $42k: http://blog.sfgate.com/ontheblock/2011/03/07/bay-area-tops-state-again-in-median-income/ http://blog.sfgate.com/ontheblock/2011/03/07/bay-area-tops-s... More than half the people in SF are staying alive somehow on less than $50k per year. Figure out how to live like them and it might not be hard to save $50k per year... if you have a Bay Area developer's salary. Which, obviously, is not the case for everyone. Also, making an additional $50k per year is a reachable goal, relative to most get-rich-quick schemes. It's $4200 per month. The OP is halfway there, with one $2k/mo product.