Where to invest money to get monthly income (2024)

The old adage of spending money to make money applies if you’re getting started when it comes to creating a passive income. You may find that at the start of this journey you are spending a little more time and money upfront to get the stream flowing.

How much you can spare financially – and also in terms of time – will have an impact on which direction you choose when it comes to generating passive monthly income. Here are five places where you could invest your money to get a monthly income:

1. Stocks

Playing the stock market can either feel incredibly exciting or completely overwhelming. Whichever way you look at it, stocks can be one of the best monthly income investments you can make.

By investing in stocks, you become a shareholder of a company and are entitled to dividend payments (if they pay dividends). There’s a lot of ground to cover on the stock market and if you think it could be a passive income option that works for you, start with our guide to investing in the stock market.

Some of the golden rules for investing in stocks for monthly income can mean only investing in companies that have a track record of providing a good return, and checking to see if dividends from the company have been growing over time. Here are some pros and cons of investing in the stock market as a path to generating a monthly income:

Pros of investing in stocks

  • Can be a reliable income stream
  • Provides some insulation from the stock market
  • It can be a long term way to generate income

Cons of investing in stocks

  • Share prices can drop
  • Tax rates on dividend stock can rise
  • There’s less appreciation than with growth stocks

2. Bonds

Bonds can be a safer investment than stocks. This makes them a lower risk investment – but like all investments, there is a modicum of risk to take into consideration.

Simply put, a bond is a kind of loan, and you are the lender. Instead of loaning money from a bank, a company (or the government) will loan from investors who buy its bonds in return for capital.

The company or government then pays interest back regularly until your bond matures. Here are a few pros and cons to know about bonds so you can decide if they could work as a way to earn a monthly income:

Pros of investing in bonds

  • You can receive income through interest payments
  • If you keep your bond until it matures, you get all your investment back
  • You could even profit from your bond if you sell it at a higher rate than you purchased it for

Cons of investing in bonds

  • Bonds don’t tend to earn you as much money as stocks
  • Your bond yields can fall
  • Companies can default

3. ETFs

Exchange-traded funds (ETFs) are another option to consider when it comes to the best monthly income investments. ETFs combine the benefits of stocks, bonds and mutual funds, but offer you a way to invest in a wider range and incur lower expense ratios. They can also be bought or sold at any time of the day.

Pros of investing in ETFs

  • Easy to diversify a portfolio
  • Helps to mitigate risk of investment
  • Lower expense ratios

Cons of investing in ETFs

  • Risks associated to fluctuation
  • Value may not represent true movement of the index
  • Some knowledge is needed

4. Buy-to-let

Investing in property is considered one of the best ways to secure a passive monthly income stream.

Of course, this method does take quite a chunk of upfront financial investment and time, but you do get the added bonus of having an asset at the end of the day.

When you buy to let, you are specifically purchasing a property to be rented out. You can also use the rent you get to pay down your mortgage. While it may sound like a win-win solution, there have been changes in the taxes associated with buy-to-let properties which should be taken into consideration when deciding if it’s the right choice for you.

Pros of investing in property

  • Can provide a steady monthly income stream
  • Rent price can fluctuate with inflation, meaning no diminishing returns
  • Considered to be a safer form of investing

Cons of investing in property

  • Can affect your taxes as landlords are liable for income tax, stamp duty and capital gains tax
  • You will be responsible for the property financially if repairs and emergencies arise
  • Tenants can be stressful!

5. Savings Accounts

While it may not sound as exciting as playing the stock market or buying a property, a high yield savings account is actually one of the most stress-free options for generating a monthly income.

You don’t come up against any potential losses, your money stays safe and you don’t need to make any major investments to get to this point. You can open a savings account with a competitive rate of interest, and simply leave your money stashed in the account to grow. Over time, any interest earned will all add up to passive monthly income.

Pros of investing in a savings account

  • A risk-free option for generating interest
  • A reliable way of getting your money working
  • You still have access to your money

Cons of investing in a savings account

  • May have to deposit a lot of cash to see a good return
  • Takes time and patience
  • Can be a set back if you need to withdraw

One of the best savings accounts for earning a competitive interest rate are fixed rate bonds. While you won’t earn a monthly income, you’ll get your return when your bond matures. That depends on the length of your term, which is typically between six months and five years. Your savings will be safe and growing, but you won’t have access so this is something you need to consider.

Pros of investing in fixed rate bonds

  • No risk, as you get all your money back plus interest at the end of the term
  • You’ll know exactly how much interest you’ll earn
  • You can choose which length of time works for you

Cons of investing in fixed rate bonds

  • You won’t be able to access your funds during the term
  • Interest rates are locked (which can be a pro or a con)
  • Rates may not be as favourable as other forms of investment, such as stocks

Creating passive income that works for you means knowing your financial goals. How much time and investment you have at the beginning of the journey will determine which methods work best for you. If you want a low risk set up, investing in savings accounts can be a more secure solution.

Where to invest money to get monthly income (2024)

FAQs

What is the best investment for a monthly income? ›

You can likely find something to fit your needs from this list of the best monthly income investments:
  • Savings Accounts. ...
  • Certificates of Deposit (CD) ...
  • Dividend-Paying Stocks. ...
  • Bonds. ...
  • Annuities. ...
  • Rental Real Estate. ...
  • Real Estate Investment Trusts (REITs) ...
  • Business Ownership.
Mar 1, 2024

How much money do I need to invest to make $1000 a month? ›

The truth is that most investors won't have the money to generate $1,000 per month in dividends; not at first, anyway. Even if you find a market-beating series of investments that average 3% annual yield, you would still need $400,000 in up-front capital to hit your targets.

How can I make $10000 a month in passive income? ›

private job at electronic
  1. The Top 11 Ways to Earn $10,000 in Passive Income Each Month : Make Money Online. ...
  2. Dropshipping: The Gateway to E-Commerce. ...
  3. Using Endorsements to Earn Through Affiliate Marketing. ...
  4. Etsy Print on Demand: Innovation Meets Business. ...
  5. Real estate crowdfunding. ...
  6. Creating and selling digital products.
Feb 10, 2024

How much money do I need to invest to make $3000 a month? ›

Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.

How much will I make if I invest $100 a month? ›

Investing $100 per month, with an average return rate of 10%, will yield $200,000 after 30 years. Due to compound interest, your investment will yield $535,000 after 40 years. These numbers can grow exponentially with an extra $100. If you make a monthly investment of $200, your 30-year yield will be close to $400,000.

Can I invest money and get monthly income? ›

Invest a single amount of at least R15 000 and get a regular income. If your salary just isn't cutting it, consider investing in a Metropolitan Income Plan. Simply take extra cash from your bonus, inheritance, the sale of your car (anything really) and invest in a plan that gives you a regular income.

How to make $2,500 a month in passive income? ›

With the right strategies, you can create multiple streams of passive income that can add up to a nice amount each month.
  1. Idea 1: Invest in Dividend Stocks. ...
  2. Idea 2: Invest in Real Estate. ...
  3. Idea 3: Rent Out a Property. ...
  4. Idea 4: Invest in Peer to Peer Lending. ...
  5. Idea 5: Build an Online Business. ...
  6. Idea 6: Create an Online Course.
Jul 25, 2023

How much do I need to invest to make $2000 a month? ›

Earning $2,000 in monthly passive income sounds unbelievable but is achievable through dividend investing. However, the investment amount required to produce the desired income is considerable. To make $2,000 in dividend income, the investment amount and rate of return must be $400,000 and 6%, respectively.

How to make $500 a month in dividends? ›

Dividend-paying Stocks

Shares of public companies that split profits with shareholders by paying cash dividends yield between 2% and 6% a year. With that in mind, putting $250,000 into low-yielding dividend stocks or $83,333 into high-yielding shares will get your $500 a month.

Can I live off interest on a million dollars? ›

Historically, the stock market has an average annual rate of return between 10–12%. So if your $1 million is invested in good growth stock mutual funds, that means you could potentially live off of $100,000 to $120,000 each year without ever touching your one-million-dollar goose. But let's be even more conservative.

Can you make a living off stocks? ›

Key Takeaways

Trading is often viewed as a high barrier-to-entry profession, but as long as you have both ambition and patience, you can trade for a living (even with little to no money). Trading can become a full-time career opportunity, a part-time opportunity, or just a way to generate supplemental income.

How long to become a millionaire investing $1,000 a month? ›

If you invest $1,000 per month, you'll have $1 million in 25.5 years.
Monthly contributionTime to reach $1 million with an 8% annual return
$50033.3 years
$1,00025.5 years
$2,50016.3 years
$5,00010.6 years
1 more row
Nov 20, 2023

Which investment gives highest return monthly? ›

Best Monthly Income Plans You Should Consider
  • Senior Citizen Saving Scheme.
  • Post Office Monthly Income Scheme.
  • Long-Term Government Bonds.
  • Corporate Deposits.
  • Monthly Income Plans.
  • Pradhan Mantri Vaya Vandana Yojana.
  • Life Insurance Plus Saving.
  • Systematic Withdrawal Plans.
Apr 2, 2024

How to make $1,000 dollars passive income a month? ›

Passive Income: 7 Ways To Make an Extra $1,000 a Month
  1. Buy US Treasuries. ...
  2. Rent Out Your Car. ...
  3. Rental Real Estate. ...
  4. Publish an E-Book. ...
  5. Become an Affiliate. ...
  6. Sell an Online Course. ...
  7. Bottom Line.
Mar 29, 2023

How much money do I need to invest to make $500 a month? ›

Some experts recommend withdrawing 4% each year from your retirement accounts. To generate $500 a month, you might need to build your investments to $150,000. Taking out 4% each year would amount to $6,000, which comes to $500 a month.

How to invest $10,000 dollars for quick return? ›

Best ways to invest $10,000: 10 proven strategies
  1. Pay off high-interest debt. ...
  2. Build an emergency fund. ...
  3. Build a CD ladder. ...
  4. Get your 401(k) match. ...
  5. Max out your IRA. ...
  6. Contribute to your HSA. ...
  7. Invest through a self-directed brokerage account. ...
  8. Open a high-yield savings account.
Mar 14, 2024

References

Top Articles
Latest Posts
Recommended Articles
Article information

Author: Prof. Nancy Dach

Last Updated:

Views: 5259

Rating: 4.7 / 5 (57 voted)

Reviews: 80% of readers found this page helpful

Author information

Name: Prof. Nancy Dach

Birthday: 1993-08-23

Address: 569 Waelchi Ports, South Blainebury, LA 11589

Phone: +9958996486049

Job: Sales Manager

Hobby: Web surfing, Scuba diving, Mountaineering, Writing, Sailing, Dance, Blacksmithing

Introduction: My name is Prof. Nancy Dach, I am a lively, joyous, courageous, lovely, tender, charming, open person who loves writing and wants to share my knowledge and understanding with you.