More Ways Than One To Make $10,000 A Month Off Your Investments
Are you asking yourself, “How much money must I invest to make $10,000 a month?” If yes, you have arrived in the right place.
Because today, I will estimate the investment required to get $10,000 monthly. Also, I will discuss alternative investment approaches to make your $10,000 investment income dream a reality.
First, let’s hit the question head-on.
What Is The Investment Required To Make $10,000 In Monthly Income?
To make $10,000 monthly from your investments, figure on needing somewhere between $2,000,000 and $4,000,000. To calculate your value, multiply $10,000 by 12 months in the year and divide the result by your portfolio’s investment yield. The investment required varies for every investor, depending on the mix of assets held in their portfolio.
Next, let’s unpack and explore the answer to the question. Then you will better understand how much you should invest to make $10,000 a month.
Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.
Why Is There A Large Range Of Investment Values When Seeking to Make $10,000 Monthly?
The investment required depends on your portfolio’s average yield.
Portfolio yield is the annual income your investment assets produce divided by the total value of those same assets. Your yield will depend on the types and mix of assets you own and will change as asset prices fluctuate.
Portfolio yield varies significantly from investor to investor because the different types of investment assets and the ways to mix them in your portfolio are virtually endless.
However, income investors face tradeoffs. Higher-yielding investments reduce the investment required. But they are typically more risky.
In a moment, I will present two income investment portfolio examples to give you ideas for making $10,000 monthly.
But first, please allow me to pose two more questions.
Who Are The Most Likely People to Make $10,000 A Month Off Their Investments?
The most likely type of person to make $10,000 in monthly investment income is wealthy and rare. For example, Yahoo Finance reports less than 2% of the United States population has a net worth of $2,000,000 or more.
But this article isn’t about the U.S. population. This article is about you. So, here’s the critical question.
Can YOU Make $10,000 A Month Off Your Investments?
Yes, you can. However, the statistics show it won’t be easy. Doing so will put you in rare company.
However, I’m a big believer in setting challenging goals. You may fall short and only make $1,000 monthly off your investments. But that is still a significant accomplishment bringing me to an important point.
Investing for monthly income is a journey, not a destination. Get started and think long-term. You might be surprised by what you can accomplish.
Okay. That’s enough questions for now. Next, I will discuss possible investment strategies for making $10,000 monthly.
I present two broad options to illustrate the answer to today’s question:
How Much Should You Invest to Get $10,000 Monthly?
The options are intended to get your thought processes rolling about how you can build your investments to make $10,000 per month.
Everyone’s situation differs, so you must choose the right approach for your finances and risk tolerance. Thus, do your research and make your own decisions. After all, it’s your money!
Invest $2,000,000 To Make $10,000 Monthly
(Example Portfolio #1 – Cash and Bonds)
To make $10,000 monthly, invest half of your money in a high-yield money-market account, paying 5%. Put the other half in a high-yield corporate bond fund paying 7%. This combination provides a portfolio yield of 6%.
$10,000 a month (times) 12 months (equals) $120,000
$120,000 (divided by) 6% (equals) $2,000,000
This portfolio’s focus is income generation. It may be best for shorter time horizons, later in retirement, because of the potential for falling interest rates or rising inflation. Furthermore, this approach only works when interest rates are relatively high.
Making $10,000 A Month With A Simple 2-Fund Investment Income Portfolio – Pros and Cons
Advantages:
- Simple to do
- Easy to manage
- Highly liquid
- Stable monthly income
- Limited volatility
Disadvantages:
- Interest rates may fall, decreasing income
- High-yield bonds have a risk of loss
- No growth component
- Inflation may erode purchasing power
Related reading: How to build a better income portfolio
Okay. Let’s look at another example.
Invest $3,000,000 to $4,000,000 To Make $10,000 Monthly
Alternatively, you can buy and hold a well-diversified portfolio of income investments yielding between 3 and 4%.
Example Portfolio #2 – Diverse Mix Of Income Investments
To do so, choose your asset allocation. Here is one possibility:
- Cash and equivalents – 10%
- Government bonds – 10%
- Corporate bonds – 10%
- Preferred stocks – 10%
- High dividend yield stocks – 10%
- Dividend growth stocks – 40%
- Growth stocks with no dividends – 5%
- Real estate – 5%
Making $10,000 A Month With A Diversified Investment Income Portfolio – Pros and Cons
The objectives of this portfolio are income and, to a lesser extent, growth.
Advantages:
- Diversification
- Steady income
- Growth potential
- Endless asset allocation possibilities
- Can harvest capital gains
One possible disadvantage of this type of income portfolio is the time required to build, manage, monitor, and maintain it. On the other hand, you can create an income portfolio like this with six or seven properly-selected exchange-traded index funds paying dividends. Remember to rebalance them back to the target asset allocation at least once a year.
I recommend this approach. Doing so is what I’ve done with my money, using a heavy allocation to dividend growth stocks. I’ve been managing a portfolio similar to this for over 20 years on my journey to financial freedom that continues to this day.
I hold a mix of index funds and individual stocks. Furthermore, dividend stocks are usually a large component when building investment income. So, are you interested in learning about dividend investing to increase your income?
First, you can explore more informative articles here on my site. However, I also highly recommend this excellent online dividend investing course from Simply Investing:
Financial Freedom Investing Course
Next, please allow me to answer a couple of frequently asked questions. Then, I will wrap up.
What About Investing For Growth And Relying On Capital Gains?
Investors can invest for growth and rely on harvesting capital gains for monthly income. But setting a specific dollar investment required for making $10,000 per month is challenging.
For example, a diversified group of growth stocks can easily appreciate by 10% annually on average over the long run. Does that mean it only takes an investment of $1,200,000 to make $10,000 monthly with growth stocks?
$10,000 a month (times) 12 months (equals) $120,000
$120,000 (divided by) 10% (equals) $1,200,000
It’s possible. But my answer is no because doing so would be very risky.
Let’s say the stock market falls by 50% and stays down for over a year. At that point selling stock to generate $10,000 a month of income would be a bad idea. You risk selling at low prices and rapidly depleting your portfolio.
How Does Income Tax Impact Making $10,000 A Month Off Investments?
Whether you earn $10,000 a month from dividends and interest or make $10,000 by selling appreciated shares of stocks, most investors, including you, will owe income taxes just like most workers who earn a paycheck owe income taxes.
Everyone’s tax situation is different. So, I can’t estimate what your tax bill will be. Talk to your tax advisor to get a reasonable estimate and plan accordingly.
Okay. Please allow me to wrap up with some parting thoughts.
What Is The Investment Required To Make $10,000 Monthly?
The money you must invest to get $10,000 monthly depends on your investment portfolio’s yield. Here is the required investment over a relevant range of possible portfolio yields.
| Portfolio Yield | Investment Required in $ |
| 1% | 12,000,000 |
| 2% | 6,000,000 |
| 3% | 4,000,000 |
| 4% | 3,000,000 |
| 5% | 2,400,000 |
| 6% | 2,000,000 |
| 7% | 1,714,286 |
| 8% | 1,500,000 |
| 9% | 1,333,333 |
| 10% | 1,200,000 |
Furthermore, your portfolio’s yield will depend on the types of investments you choose to buy and hold and your portfolio’s allocation to those investments.
All for now. Good luck with your investments.
Before you go, check out my Investment Article Archives to jump-start your finances.
Author Bio: Tom Scott founded the consulting and coaching firm Dividends Diversify, LLC. He leverages his expertise and decades of experience in goal setting, relocation assistance, and investing for long-term wealth to help clients reach their full potential.