Passive income is calculated by combining all income streams: investment returns (using compound interest formula), dividend yield on portfolio value, rental income, side income, royalties, and other sources. The total is shown before and after applying your tax rate and inflation adjustment.

The FIRE (Financial Independence, Retire Early) number is based on the "25× rule" — multiply your desired annual expenses by 25. This is derived from the 4% safe withdrawal rate, which studies show can sustain a 30-year retirement with 95%+ historical success rates.

The Freedom Score (0–100) is a composite metric weighing: income coverage vs your goal (40%), portfolio-to-FIRE ratio (35%), income diversification (15%), and inflation protection (10%). A score above 75 indicates strong financial independence trajectory.

Most index funds and ETFs effectively compound daily or monthly. For dividend stocks, quarterly compounding is typical. The difference between monthly and daily compounding on long time horizons is minimal — usually less than 1% difference over 20 years. Monthly is the most common and realistic setting.

Inflation erodes purchasing power over time. With 3% annual inflation, $10,000/month today will only have the purchasing power of ~$5,537 in 20 years. PassiveIQ shows you both nominal and real (inflation-adjusted) income figures so you can plan accurately for future purchasing power.

PassiveIQ uses industry-standard compound interest formulas and widely accepted financial models. However, these are projections based on assumed rates. Real market returns vary. Always consult a certified financial planner (CFP) before making major investment decisions. This tool is for educational purposes.