I've been reading MMM now and really enjoy it. I had a question though, a few times he's mentioned investing in index funds and being paid dividends that basically create a source of passive income. Just wanted to clarify, this differs from a 401k or other "retirement" savings, right? I'm trying to wrap my head around this by mentally mapping out where one of my paychecks would go.
tl;dr my company does 401k matching of 50 cents on the dollar up to 2% of my salary, and I'm currently putting the 2% into a few low cost index funds. I realize though that I can't touch the money until I'm 60 (and I dont think these funds have dividends anyway). Am I correct in assuming I should be taking real money from my paycheck and investing THAT into funds that yield dividends?
It sounds so silly when I write it out, but maybe I'm just seeking a visual.
So lets say I net $4000 per month. 2% already went into my 401k and I can't touch that. With the $4000 I pay my monthly bills - let's assume I have $0 consumer debt and no mortgage, so my monthly expenses are $1000 (bills, food, gas, etc). Am I correct in assuming I would take the $3000 remaining and investing it into a fund like VTSMX or others that pay dividends?
Thanks everyone for the help