Having investments that pay monthly is a dream that many investors in America strive to achieve.
Whether it is dividend stocks, corporate bonds, or monthly interest payments, any source of extra money through passive monthly income is welcome in such a difficult economic climate.
This is one way that some of the richest individual investors on the planet approach wealth management.
By making money work for them through cleverly set-up investments that pay monthly, they free up a lot of working hours to do the things they love best.
However, most people do not realize that this way of living is not all that difficult to adopt. Not all investments that pay monthly require you to be a millionaire just to take part.
There are a lot of great investment options out there that you can look into even if you are earning an average salary.
Many people, for example, have started with very little and have gone on to become wealthy real estate investors!
Keeping your money in a savings account without finding ways to make it pay monthly income towards your retirement will not end well for you in today’s economy.
You have to do a lot more with the little monthly income you have. In this article, we will discuss a few great investments for a monthly income that you can consider to help you set the foundations of a secure financial life.
Just like knowing how to drive, pay bills, and use a computer are some of the essential life skills we all have to learn, understanding the different terms used in investing is also very important.
Things like Interest, income, investments, and wealth management need to be as familiar to you as accessing social media platforms.
If you do not want to end up as one of the millions who will suffer in the coming years due to the bleak economic projections currently being predicted, these investment terms need to be a part of every financial decision you make.
Besides knowing the definition of these terms, which you can easily do with a little research, you have to understand how they will impact your personal finance and affect the goals you have for your future.
You Need a Passive Income Investment! Here Is Why
If you thought your primary monthly income was enough to cover all your needs, you need to think again. Making ends meet should not be the only thing you manage month after month.
Having a passive income to supplement your regular salary is not a luxury but a necessity! Here are seven reasons why you should be working towards having a steady income on the side:
Make Early Retirement a Possibility!
Who has never dreamt of retiring at 40 and going off to see the world and do all the other things you have been putting off because of work?
Retiring much earlier than you anticipated is a real possibility as long as you have a proper retirement income to support you.
A well-managed investment can generate monthly income that is more than enough to cover all your monthly expenses. This means going to work will become an option rather than a necessity.
Have you ever heard of the Financial Independence Retire Early (FIRE) movement? It is based on the belief that with the right choices, you can retire at any age and still enjoy your life to the fullest.
Enjoy a Comfortable Retirement
Retirement isn’t all that great if you still have to worry about how you are going to pay the bills.
These days, even professionals who have had great jobs all their lives are finding it difficult to live comfortably on their retirement packages due to the rampant inflation rate.
If all your retirement funds are kept in some form of retirement savings account, you will be at the mercy of the economy.
A passive income will give you a lot more financial freedom and allow you to enjoy your twilight years.
Less Dependence on Monthly Income
Even before reaching the age of retirement, a lot of people are already struggling to make ends meet and cover all their monthly expenses with just their regular monthly income.
If you are depending on your salary just to survive, what will you do if your family faces a medical emergency or similar kinds of financial challenges?
A passive income will allow you to be less dependent on your regular salary and give you the choice of setting up an emergency fund in case something unexpected happens.
Ditch Your High-pressure Job!
If you have to force yourself to go to work each day because it is the only means of survival that you have, you are not the only one. Most people would rather quit their day job if they had any other option.
What if I told you that can become a reality sooner than you think? All you need to do is find a way to earn passive income, for example, by becoming a real estate investor.
You may be surprised that the money you generate from your rental properties is a lot more than your current monthly income!
Live Wherever You Want!
Sadly, some of the most beautiful, safe, convenient, and comfortable places to live in the world are beyond the financial reach of most people.
If your annual yield from your regular job is not enough to cover the rentals for even a month in the Hamptons, you are not alone.
However, that does not have to be the case forever! You can start investing in real estate or any other asset classes that will bring you extra investment income and before you know it, living anywhere you want will become a possibility.
Build Wealth Quickly
“It takes money to make money” is the wisdom known by investors from all over the world. You can start with a single investment and use the monthly passive income you get from there to invest in another asset class.
The combined monthly investment income from both investments will allow you to grow a diversified portfolio much faster, which means your wealth with continue to grow exponentially.
In just a few years, you could have more than enough to retire early with all the comforts that you could have ever dreamed of.
Passive Investments Are Stress-free
Some volatile investments pay well but also cause investors a lot of stress, while most passive income investments are generally stress-free.
If you do not want the pressure of having to keep your ear on the ground listening to the constant rumbles from our unstable global economy, you can go for the so-called “set-and-forget” investments.
Putting your money into things like fine art can generate income at a much faster rate than, for example, investing in the S&P 500. More and more investors are beginning to realize the value of alternative investments for monthly income and you can join in for a stress-free way of building wealth.
12 Ways To Generate Monthly Income Stream Through Passive Investments
If you are looking for the best investment advice on how to produce monthly income, you have come to the right place! Here are 12 proven investments for monthly income for you to consider:
1.Dividend-paying Stocks and Funds
What can be simpler than finding a company that you like and that seems promising, buying a few shares early, and sitting back while you receive passive income in the form of dividend-paying stocks?
As long as the company is doing well, you can expect to enjoy quarterly dividends from your dividend stocks indefinitely!
The amount of dividends you can expect from your stock differs depending on the risk you are taking. The safest stock options may pay as little as 1% quarterly dividends, while for a bit more risk you can enjoy 5% or more in dividend-paying stocks.
If you want added investment protection while earning dividend income, some ETFs allow you to invest in a wide range of dividend stocks from different companies to diversify your portfolio.
ProShares S&P 500 Dividend Aristocrats ETF, SPDR S&P Global Dividend ETF, and SPDR S&P Dividend ETF are just a few of the many examples of high-dividend paying stocks that you can invest in at very low risk.
When we are talking of bonds from an investment point of view, we mean either government bonds or corporate bonds.
The best way to describe a bond is that it is a loan that you, the investor, grant to the company or government body, the borrower. This loan can be sold off at any time to another investor should you wish to do so.
During the time the borrower is using your loan, you can enjoy the interest payments until the day you decide to cash out on the bond.
Due to the generally low-interest rates associated with present-day economies, bonds are no longer as popular among investors as they used to be.
However, for those looking for risk-free investments that pay income monthly, bonds are considered quite safe because of the additional protection offered to investors in case a borrower defaults on the loan.
Let us look closer at the two types of bonds you can choose:
This is a debt security issued by the federal government or local municipalities to support various obligations that need to be fulfilled. When you buy government bonds or municipal bonds you can enjoy benefits on federal taxes.
When bonds are issued by a company and sold to investors, they are referred to as corporate bonds. The company uses the loan for the capital it requires while you enjoy interest payments that can be either fixed or variable payments.
3. Real Estate Investment Trusts (REITs)
Many companies finance or operate income-producing real estate properties. These companies allow real estate investors to invest in property management accounts through issuing real estate investment trusts (REITs).
There are two kinds of REITs you can choose when you want to invest in real estate, namely Public REITs or Private REITs. The following is a quick look at these two real estate investments:
Public real estate investment trusts can be traded on the open market in the same way as stocks. This means Public REITs are the most liquid form of real estate investments but, unfortunately, also the most volatile.
90% of the profits made by Public REITs are paid out to real estate investors in the form of dividends. While this ensures that Public REITs pay out high yields, it is difficult for the investor to grow their portfolios.
If you are looking to diversify your portfolio, Public REITs are not a good option because they are too susceptible to the stock market swings, meaning whatever happens to your stock investments that pay dividends, will also happen to your Public REITs.
With Private REITs, however, the story is much different. These real estate investments are privately owned funds that are mainly focused on commercial real estate investments.
Private REITs do not offer a lot of liquidity and as such are classified as long-term investments and not a good option if you are looking for a monthly income. Selling your shares sooner than a few years will usually result in a stiff penalty.
If waiting years before you see a return on investment doesn’t bother you, Private REITs are a very good option.
4. High-yield Savings Accounts
A high-yield savings account is a savings account that usually pays out more than 20 times the payout of a standard savings account. If you are looking for a short-term investment that pays every month and you have a high-risk tolerance, a high-yield savings account is a great option.
However, for longer investment periods, high-yield savings accounts are not the wisest option because they can be affected by a high rate of inflation.
With such an account, you also have ready access to your money whenever you need it, just as you would with regular savings accounts.
One of the disadvantages besides the high risk of losing all your money is that some financial institutions charge very high fees to high-yield savings account investors.
5. Rental Properties
One of the most obvious ways of getting a monthly income through passive investments is by renting out a piece of real estate property.
When you put up your property for rent, you will no longer need to sell any of your assets because you will have a guaranteed cash flow every month.
There is also no need to worry about inflations because rentals go up at the same rate according to other rental properties in the same area.
While you can choose to manage the rental properties on your own, if you want to experience the freedom that comes with passive investments, you can hire the services of a qualified property manager who will take care of all the issues related to your property, such as maintenance, repairs, and rental collections.
If the thought of renting out the property full-time does not appeal to you, you can opt for part-time rentals using platforms such as Airbnb. This way, your rental properties will always be available to you on short notice if you require them.
6. Crowdfunded Real Estate Loans
There is a wide range of real estate crowdfunding websites that are available if you are looking for an alternative way to invest in real estate.
Crowdfunded real estate investing means borrowing money from public investors to finance the purchase of a piece of real estate. This is a popular choice among house flippers who aim to buy a house, quickly do some renovations then put it back on the market for a price.
The loans that are received from crowdfunded real estate websites are usually short-term, only lasting around 6-12 months. This means there is no need to go over many repayments of having loan repayments hanging over you.
If you choose to invest on crowdfunding platforms, there are many options to choose from, but like all investments, there is a certain level of risk that you will need to contend with if, for example, the borrower defaults.
7. Business Income
Opening a business has long been used as a great way to earn passive income. If you have a good mind for business along with a feasible idea, this can turn out to be a very profitable option.
However, like all businesses, there are a lot of risks associated with this method, especially if you go in blindly without doing proper research.
Many businesses fail within the first five years due to a variety of reasons, such as poor planning, under-investment, and a highly competitive business environment.
8. Private Notes
If you are familiar with crowdfunding then you will quickly understand what private notes are. Instead of using a platform to meet real estate investors looking for a loan, with a private note you will be in direct contact with the company or borrower.
The obvious downside of this is that without the backing of a real estate investing platform, you have very few options if the borrowers default on the loan.
This means private notes are only recommended in situations whereby you trust the borrowers to pay you back the money, but even then, the default risk is often too high for most investors.
However, on the other hand, you have a lot more control regarding the terms of the investment agreement, meaning you can structure the deal in a way that is beneficial to you.
Also, there are no middlemen or platform fees to deal with when it is just you and the borrower conducting a private transaction.
9. Income-producing Machines
Income-producing machines, such as vending and washing machines are very popular means of generating a passive income.
As long as you choose to sell an in-demand product or service through your machines, and make the right choice in terms of location, you can set yourself up to receive a very high income every month.
If you opt for this method, you will have to bring your A-game in terms of negotiating because it is not easy to convince property owners to allow you to use their building for your machines.
There are also issues of licensing and health codes that you will need to deal with before you can freely operate your machines, but after that is done, you will have a very lucrative investment on your hands.
Annuities offer a simple way for you to guarantee that you receive regular payments from your investment from the day the annuity kicks in until you die.
You can even choose immediate annuities that will start paying out as soon as you sign the contract or retirement annuities that will pay you monthly income after you retire.
However, you need to do a lot of research or talk to a financial advisor before you consider investing in an annuity as there are a lot of complex factors that you may need to consider.
11. Residual Sales Income
Residual sales income means that instead of only getting a one-time commission for making a sale or bringing in a client, you will continue to get a commission for as long as that client is conducting business with the company.
This means if you work hard and bring in a lot of clients early on, you can potentially retire early and live off the commission that comes as long as the clients do not jump ship.
12. Royalty Income
Royalties are a great way to insure that you keep getting the benefits of owning an important product or service.
Consider a case whereby someone writes a popular song. They can sell off their right to the song for a lump sum or they can decide to receive royalties each time the song is used in the future.
Some royalties have been paying off for decades after the owner has passed away, meaning this is a great way to invest in the future of your children.
How To Choose the Best Investments That Pay Monthly
Looking at all these government bonds, dividend-paying stocks, high-yield savings accounts, and real estate investment trusts can be enough to leave your head spinning.
Which are the best investments for monthly income? This is the question that most investors have to face before taking the first step toward financial independence.
If you are not sure whether to choose money market funds or turn to the stock market for dividend stocks that pay monthly income, here are three easy ways to help you decide:
Knowledge is one of the strongest weapons you can wield when making financial decisions.
Knowing how stock market asset classes pay dividends and how much risk you are exposed to through high-yield savings accounts can help you make the right choice.
These days, all the information you can ever need regarding investment accounts that pay monthly income is available online.
All you need to do is know where to find it and then dedicate some time to doing proper research and conducting due diligence before you try to earn passive income.
Consider Your Goals, Age, and Interests
What do you hope to achieve from your dividend income or money market account? How many years do you have left until retirement? Do you have any interest income in commercial real estate, treasury bonds, or Exchange traded funds ETFs?
Once you have the answers to these important questions you will be able to identify the best investment options for your needs.
One of the most crucial distinctions you have to make is between short-term and longer-term investments. Knowing when you may expect to see a return on investment will help you plan accordingly.
In general, if you want investments that pay monthly income, you will have to look at short-term investments such as rental income, mutual funds, etc.
Speak to a Financial Advisor
Last but not least, you have to seek advice from professional advisors, such as fund managers, stock brokers, and other accredited investors. There are many factors that influence investments, such as the inflation rate and interest rate.
Only with proper investment advice can you navigate your way to a better future through making sound decisions. When choosing the right financial advisors, consider those with a good track record handling the type of investments you are interested in.
Make Investments for Monthly Income a 2023 Priority!
These 12 investments that pay monthly income are just a tip of the iceberg considering the vast number of investments out there. You can invest in almost anything these days and walk away with great returns.
Regardless of which investment portfolio you are leaning towards, the most important thing is to act and start investing now! Time is quickly running out because each day we see more and more bad news regarding the state of the economy.
The sooner you stop relying on your regular income and start thinking of real estate, mutual funds, dividend stocks, and other assets that pay dividends and monthly income, the better your financial future will look!