How should a 21 year old plan for long term investment?

You answered the question yourself already.

For context I’m also currently 21 (22 this year) but I started investing since I was 19.

To map this out it is very simple. Assume 4% dividend yield, you basically need a investment portfolio of $900k which will give you $36,000 a year in dividends which translates to 3k/month.

So from now till you are 40, you have a time horizon of 19 years.

If you want to get to 900k, you need to maintain a annualised return of 19% (for the entire 19 years) and contribute (500-600/month) or $7000/year to reach your goal.

Does it sound tough? Yes it does. If you simply buy ETFs, it will probably be hard to attain 19% over a long time period (avg stock market over long run is 7%-10%)

So unless you can outperform the market consistently year in year out and that’s assuming there’s no market crashes which is basically impossible because market crashes once or twice every 10 years. (Stats)

To be more realistic, you should narrow down to a 10 years horizon first to see if you are on track and then map towards your final goal.

If ultimately you want a passive income of 3k-4K, you really need to pick the right stocks or ETFs consistently and get to the terminal value (900k or more) ASAP.

A more realistic target is to set your target retirement age to 50 so you got more buffer and make the goal more realistic. (19% annualised returns over 19 years is no easy feat which only top 5% of investors are able to attain over the long run)

If you need any help do let me know!

Cheers

You can hit $3-4k/month in passive income, if you're a high income earner.

Assuming dividend yield is 5% p.a. and we take the midpoint at $3,500, you will need $700,000 by 40.

You can do this in two ways:
1) Be a high income earner with your full-time job
2) Grow your capital first not with dividend stocks, but with growth stocks

Honestly, for 21 y.o., you should start off with #2 first, since #1 is build over time and experience. It can help you grow your capital to a substantial amount.

I recommend reading Capital Compounder eBook by Robin R. Sperziale at https://capitalcompounders.com/. It's free. Although he's from Canada, there're meaningful learnings which you can apply.