Where to invest money to get monthly income?

Where can you invest to get monthly income?

The best places to invest in monthly income include:

  • Covered Call ETFs
  • Dividend stocks
  • Business Development Companies
  • Real Estate Rentals
  • Real Estate Investment Trusts
  • Passive Income Websites
  • Software as a Service (SaaS)
  • Vending Machines
  • AirBnB hosting
  • Royalties

Imagine, getting a monthly paycheck for simply being an owner in a good business. You get paid and you don’t have to show up to work.

There are plenty of ways to make money on a monthly basis!

Luckily for you, I’ll show you if you can get monthly income by investing. I’ll show you some of the best places to get monthly income and what the best place to invest is. You’ll be well on your way to making income without having to work for it.

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Can I get monthly income by investing?

It is possible to earn monthly income by investing in income producing assets which pay on a monthly basis. These assets range in price, yield, risk, and level of effort you need to exert to maintain. Typically, income investing starts off small, but grows into a larger income stream the more you contribute and reinvest your income.

Monthly income investments aren’t always the best investment available. For example, you could invest in growth stocks which typically have higher overall returns.

However, getting monthly income payments has its own benefits. You can use your monthly income in retirement and seeing monthly income payments is very motivating.

There are many different assets which pay monthly income. As an investor, you’ll need to evaluate each investment to see what makes sense for you to invest in. 

For example, a rental property can provide monthly income, but it costs a lot to invest in. Rental properties can be very hands on, which means they aren’t always considered passive income. Alternatively, you could invest in Real Estate Investment Trusts (REITs) for monthly income which requires no upkeep on your part.

Most income investors start small and build up to a substantial income portfolio. You might have only $100 per month to invest. However, your portfolio should grow with consistent effort and so should your income.

Where to invest to get monthly income

You can invest in different assets to get monthly income. Monthly income assets include Covered Call ETFs, Real Estate rentals or investment trusts, dividend stocks, websites, SaaS, vending machines, AirBnB, and Royalties.

Covered call ETFs

Covered call ETFs are exchange traded funds where the fund manager sells options against the fund. The options generate income, which is then distributed to shareholders in the form of dividends. Covered call ETFs are typically seen as an income ETF, meaning you’ll have higher yields with less capital appreciation.

Examples of covered call ETFs include:

  • QYLD
  • RYLD
  • XYLD

These three covered call ETFs pay monthly incomes with dividend yields ranging from 8% to 12%. Therefore, a $10,000 investment would generate about $1,000 per year ($83 per month), assuming 10% yield.

However, some people want monthly income from covered call ETFs and capital appreciation. Some funds do exist where 50% of the fund is in growth and the other 50% have options sold against the fund.

Examples of 50/50 covered call ETFs include:

  • QYLG
  • RYLG

These funds experience both growth and dividend payments. As you can imagine, the yield is cut in half because only half the fund has options sold against it. Therefore, you can expect yields between 4% to 6%.

Business Development companies

Business development companies (BDCs) are an investment in a company that invests in companies. Companies that are too large for traditional bank financing, but too small for listing on major stock exchanges get their funding from BDCs.

One example of a monthly paying BDC is Main Street Capital (MAIN). Main Street Capital has had a strong performance, currently paying a dividend yield around 5-6%. Therefore, a $10k investment would pay you around $500 and $600 per year in dividends.

Other BDCs exist and pay on a Quarterly basis. Examples include:

  • Ares Capital Corporation (ARCC)
  • Newtek Business Services (NEWT)

Real Estate Rentals

Purchasing rental property is another good way to build wealth and collect monthly income. However, you have to be careful when purchasing real estate with a loan. However, real estate lets you collect monthly income and take advantage of appreciation.

For example, you could find a home for $150k that rents out for $900 per month. You pay 20% down to avoid PMI, meaning your initial investment is $30k. You now collect $10,800 per year which is enough to cover your mortgage and have a little left over.

Dividend stocks

Dividend stocks are companies that pay shareholders a dividend for being an investor. You can find companies paying up to a 10% yield, but high yield doesn’t always mean a better investment. At the end of the day, you want to invest in quality companies for the long-term.

There are typically three ways you can invest in dividend paying companies. You can invest in dividend growth stocks, high dividend yield, or exchange traded funds that pay dividends.

Dividend growth stocks are companies that pay a dividend, but experience share price appreciation. These companies are growing, but pay a small dividend to investors. Typically, dividend growth stocks pay under 3% dividend yield.

Monthly dividend growth stocks include:

  • Global Water Resources, Inc (GWRS)

High dividend yield companies pay a higher yield, which means the share price doesn’t appreciate much. Typically, these pay dividend yields over 4%.

You’ll also be able to find different exchange traded funds, which are a collection of stocks under one fund. These ETFs have fees called an expense ratio, but they are diversified and pay income. 

Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts are exactly like dividend stocks, but the underlying asset is companies investing in real estate. Examples of companies who pay a monthly basis include:

  • Realty Income (O)
  • Gladstone Land Corporation (LAND)
  • STAG Industrial (STAG)
  • Agree Realty Corporation (ADC)
  • AGNC Investment Corp (AGNC)
  • ARMOUR residential REIT (ARR)
  • Dynex Capital Inc (DX)
  • Ellington Residential Mortgage REIT (EARN)
  • EPR Properties (EPR)
  • Gladstone Commercial Corporation (GOOD)
  • LTC Properties (LTC)
  • Maxus Realty Trust, Inc (MRTI)
  • Orchid Island Capital, Inc (ORC)
  • SLG Green Realty Corp (SLG)
  • Whitestone REIT (WSR)

Passive income websites

You can buy or build passive income websites. Websites earn money through display ads, selling products, and affiliate marketing. The more traffic your website receives, the more money you can earn.

Most passive income websites utilize Search Engine Optimization to get monthly recurring traffic. You write content that ranks on the front page of Google. The more content you have ranking, the more visitors you could get to your site.

For example, a blog can typically earn $1k for every 30,000 pageviews. Should you get your blog to 100k pageviews, you would be earning about $3,300 passively.

You should always build your first website to understand how things work. Once you’ve built one passive income stream you can focus on buying other people’s websites. You can buy profitable websites using the following sites:

  • Empire Flippers
  • Flippa

Websites will sell anywhere between 30-50 times their monthly income. Therefore, in order for you to buy a website earning $3k per month you would need an investment of $90k to $150k.

Software as a Service (SaaS)

Software as a service (Saas) is another option for buying monthly income. SaaS is very profitable if you have a good business model. You hire a developer to create online software that people or businesses can use.

For example, you could hire a developer to create a website and software. The software scans the internet to find the lowest price of an item around. You market this software to online resellers, who buy products and resell them for profit elsewhere.

Your product helps these resellers earn more money. You are able to charge $100 per month for a subscription to your software. Therefore, you would only have to get 100 users to make $10,000 per month in subscription income.

Vending machines

You can easily buy vending machines on Vending.com or purchase them used on Craigslist. Each vending machine will typically generate between $50 and $150 in profit, depending on location. You would then have to restock the vending machines once every one to two weeks.

AirBnB hosting

AirBnB hosting is like rental property ownership, but potentially more profitable. Instead of charging monthly rent, you charge for people to stay in your home. AirBnB hosting is more work, but you can get more monthly income.

For example, the average rent for my home town is just over $1,000. However, AirBnB estimates that my home would rent out for $1,900. Therefore, I would make an extra $900 per month by hosting on AirBnB.

Royalties

Another option is to buy royalties, which gives you the right for ongoing use of the asset. You can receive monthly payments just for owning a royaltee. Royalties can be purchased on exchanges like royaltyexchange.com.

Which investment is best for monthly income?

The best monthly income investment is in an asset which you enjoy and can invest in consistently. Always invest in an asset you understand.

For example, you may not want to invest in real estate. Some people find it too overwhelming and don’t want to be called when something breaks. You might enjoy REIT investing more, because it’s real estate based with monthly income without the hassle of tenants.

Summary: Where to invest money to get monthly income

As you can see, there are plenty of places to invest money to get monthly income. Start off small, investing what you can and eventually you’ll build a large passive income snowball. Each investment has its own yield, risk, and effort you need to put into the investment.

The best places to invest in monthly income include:

  • Covered Call ETFs
  • Dividend stocks
  • Business Development Companies
  • Real Estate Rentals
  • Real Estate Investment Trusts
  • Passive Income Websites
  • Software as a Service (SaaS)
  • Vending Machines
  • AirBnB hosting
  • Royalties

Invest in what you understand and enjoy. Don’t invest solely based on yield alone. Rather, invest in good quality businesses.