Generating monthly income is a great way to finance your retirement or just a way to help supplement your monthly living expenses. But, what types of investments can put money in your pocket every month? Here are a few ideas.
Up until recently, parking cash in a savings account or a money market account would yield you nearly nothing in return. But, with the Fed aggressively raising rates over the past year these accounts are now an attractive option.
Account yields can vary, but normally you will be best served by parking your money with an online bank. You can check for the best rates here.
Certificates of Deposit
Certificates of Deposit, or CDs can give you even more yield if you don’t mind tying up your money for a period of time. Check for the best rates here.
Often people will build a CD Ladder to ensure steady and consistent income.
Dividend Yielding Stocks
Dividend yielding stocks can be a great source of income that can potentially pay more than a savings account or CD can. You will have to be okay with risk however, so proceed with caution.
Many stocks pay their dividend quarterly, but many also pay monthly. A lot of investors will structure their portfolio so that they receive payments each month from one of more of the stocks that they own.
In addition to the dividend payments you may also benefit from the price appreciation of the underlying stock.
Companies and government bodies issue bonds when they want to raise capital. You can buy these bonds and receive payments from them. Most bonds pay semi-annually or annually, but some pay monthly.
Certain bonds offer some tax advantages as well, so your returns will be greater when investing in these. For a more in-depth explanation of bonds and how they work click here.
An annuity is an insurance contract issued and distributed by a financial institution with the intention of paying out invested funds in a fixed income stream at some point in the future. Annuities are often used in retirement since they pay steady and predictable income to the recipient. Usually, people invest a lump sum of money in exchange for a monthly payment for X amount of time.
Beware that your money will be illiquid once invested, and you will be subject to a penalty if you withdraw the money early. There are nearly an endless amount of annuities all with their own structures, rules, and terms, so be sure to speak to a professional if you are thinking of investing in one.
If you want to be a landlord, then it can be rewarding if done correctly. Real estate can offer high monthly cashflows if property is bought correctly. It also offers many tax advantages that aren’t offered with other investment vehicles.
Real estate isn’t for everyone, and investors can quickly become overwhelmed and overleveraged, so do your research before diving in. I’d recommend checking out a community like BiggerPockets if you’d like to start learning about real estate.
Generating monthly income in retirement can offer you predictability and stability. There are countless ways to generate income in retirement and otherwise. The proceedings were just a few ideas. How are you generating monthly income?
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Writer and Investor. Based in the Pittsburgh, PA area, Brian Lesko holds full-time employment as a Warehouse Manager for an electronics firm. Brian enjoys wealth building, investing, gardening and the great outdoors. Brian holds a B.A. in Environmental Studies from the University of Pittsburgh and an MBA from Robert Morris University. He writes at Ten Factorial Rocks.
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