9 Investments That Pay Monthly Income

When you think about all of the different ways you can create monthly income, you have to think beyond just the traditional job. There is no question that working is the single best way for you to generate money, but what about investments you can make that would do the same thing?

It’s an unfortunate truth that many people overlook the potential of investments to increase their monthly income. On some level, it’s understandable because there is only so much money to go around, but on the other hand, it’s important to look at how to diversify your interests.

Of course, I’m not a financial planner, so you should carefully research each of these options and talk to a financial professional, but if you were my friend, here is what I would recommend.

Savings Account

This is the most obvious monthly income generation investment that most people are familiar with. Ideally, you would opt for a high-yield savings account, which currently averages between 3.5% and 4.3% in interest, allowing for some financial gain, albeit not a substantial one. Still, the idea that you can invest money and even earn a small amount of monthly interest is better than nothing, and it’s certainly better than your money just sitting in a checking account not earning anything at all.

Real Estate

On the plus side, real estate can be a significant income generator, especially if you have more than one rental property available. The challenge is that in order to achieve a significant monthly income with real estate, you have to have enough disposable money to be able to buy a second, third, or multiple pieces of property.

However, if you do, you can not only earn money monthly from a renter, but you can also achieve long-term wealth as your property is likely to appreciate as you’re earning monthly income. Of course, there are risks with owning real estate, as you might have to deal with maintenance and wear and tear, as well as turnover, vacancy costs, and any instance where a renter refuses to pay.

Let’s assume you invest $400,000 into a home that rents for $4,000 every month. If you have expenses of $2,300 each month between mortgage, insurance, etc., you could be receiving $1,700 in monthly income, all while the property increases in value.

Annuities

For anyone looking at retirement, an annuity is a great investment that you can look at doing, though it’s recommended to talk with a financial advisor first. The positive aspect is that annuities can help provide a monthly income through regular payments that retirees can rely on, alongside any other monthly income generators, such as Social Security.

The challenge is that annuities require a certain level of understanding and research, hence the recommendation to only invest if you talk with a financial advisor first. There can also be some high fees associated with annuities, but it all depends on which one you select and what kind of terms you opt for.

Dividend Investing

Dividend investing is all the rage right now, and all you need to do is visit r/dividends on Reddit to see just how much revenue is being generated monthly by some people. This investment comes with a lot of risk, especially if you are looking at YieldMax investments like MSTY or ULTY where the payout is large but the overall growth of the investment can be small.

Still, while things are hot, investing in YieldMax dividends can be a great idea. If not, you can look at alternative investments like SPYI or QQQI, which earn a smaller dividend than YieldMax, but can also generate significant monthly income if you put a good chunk of change into your initial share purchase.

REITs

An alternative to buying individual properties is to look at investing in an REIT, or a Real Estate Investment Trust. This is basically a way to own real estate without directly owning a piece of property, and you buy it from a broker or invest directly in a company like CrowdStreet or Fundrise.

REITs typically have a higher dividend yield, so there are some advantages here to earn higher income, and you are doing so without having to worry about any landlord work. The downside is that dividends can be cut, and you are open to market volatility, which means what you earn in June can dramatically change in July.

Any money you earn is also taxed as ordinary income, so this could push you into another tax bracket.

Certificates of Deposit

A certificate of deposit, or a CD as it’s most commonly known, is a great way to deposit money in a safe investment and earn some income. The challenge is that in order to really maximize your return, you want annual payouts rather than monthly, but if you structure your investments smartly, you can do staggered 6-month CDs that end up paying out each month.

Bonds

The bond market is a good place to invest, and it’s basically just helping a government or corporation continue to operate. If you buy a bond, corporate or otherwise, you are basically a lender to the company or government, and then you receive this money back, with interest. The length of a bond can vary, but like CDs, you can structure bond payments so they are staggered and result in receiving money every month.

Business Ownership

Investing in a business can be a real coin flip as to whether you see any of your money back, but if you do, a deal can be structured so you receive monthly payments as a dividend or a check as an investor every month. Unfortunately, if you invest in a business, you might be a silent partner, so you are entirely reliant on someone else to run the company, which means if they fail, you might lose everything.

Mutual Funds

Like other investment opportunities on this list that center around the market, a mutual fund is just a pool of investments that allows you to buy a number of stocks in one portfolio and not separately. The positive is that you can earn dividends monthly, and there is a significant level of liquidity compared to other options on this list.

The downside is that you are once again beholden to market conditions, so your monthly earnings can fluctuate, sometimes significantly. In addition, your distributions count as income, so they can push you into a different tax bracket, which may or may not be a warning sign.

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