Making Monthly Income From Dividend Stocks, Capital Gains, Interest Or Real Estate
Do you wonder how much money you need to invest to make $1,000 monthly? If yes, you have come to the right place.
Because today, I will estimate for you how much investment is required to make $1,000 a month. Also, I will discuss investment alternatives to make your $1,000 dream a reality.
Investment Required To Make $1,000 In Monthly Income
To make a $1,000 a month figure on needing $300,000. To calculate this value, multiply $1,000 by 12 months in the year and divide the result by 4%. However, the exact investment required will vary for every investor. Therefore, your precise amount will depend on your specific investments and your return on those investments. Thus, the money required will range from $240,000 to $400,000.
Related reading: 3 Steps for Calculating Your Investment Income
Possible Investments For Making $1,000 A Month
Next, I will highlight several investment alternatives for making $1,000 a month. Before concluding, I will offer several tips to keep in mind. By me doing so, you will better understand the answer to today’s question:
How Much Do I Need To Invest To Make $1,000 A Month?
Disclosure: At no cost to you, I may get commissions for purchases made through links in this post.
Investment #1: Dividend Stocks
First, dividend stocks are my preferred method of making $1,000 a month from investments. Furthermore, building a dividend stock portfolio providing a dividend yield of 4% is easy.
I’m a lifelong dividend investor. So consider me biased or think of me as highly experienced. It’s up to you.
In either case, buy dividend-paying stocks from different industries or consider a diversified dividend exchange-traded fund (ETF). Target an overall dividend yield of 3% to 5% from your stocks.
A higher dividend yield means less investment is required. For example, if your dividend portfolio yields 5%, your required investment decreases to $240,000.
However, here is a word of caution. Don’t chase stocks with high dividend yields because their shares are frequently more risky.
Question: What is a significant advantage of investing in dividend stocks to earn $1,000 monthly?
Answer: You do not have to sell your dividend-paying shares to generate income. The dividends provide the monthly $1,000 you desire. Thus, dividend income allows you to keep your investments intact long-term.
Do you want to learn more about dividend investing? First, you can check out more informative articles here on my site.
However, I also highly recommend this dividend investing course from Simply Investing:
Investment #2: Growth Stocks
Rather than dividend stocks, you can choose growth stocks as an alternative. By doing so, you seek rising share prices that create capital gains.
Yes, some of the growth stocks pay small dividends. But, at the same time, others pay no dividends at all.
For example, let’s say you invest in the Vanguard Growth ETF (VUG). This fund holds a diverse mix of large U.S. company growth stocks. These companies seek to increase their future profits rapidly.
On the one hand, the fund has a minimal dividend yield. Thus it would take somewhere between $1.5 million and $2 million invested to make $1,000 monthly in dividend income from VUG.
On the other hand, the fund has returned almost 10% per year since its inception in 2004. So, does this mean you only need to invest $120,000 to make $1,000 each month?
Unfortunately, the answer to this question is no.
Because of stock market volatility, you will risk running out of money during a prolonged bear market in stocks. Yes, stocks go down and sometimes by a lot for long periods.
However, history suggests taking 4% out by selling shares and expecting your investment to provide $1,000 monthly for many years is possible. That means we are back to the required investment of $300,000.
Most importantly, be sure to buy and sell your stocks for free. For this, I use the powerful app from Webull.
Investment #3: Bonds And Cash
Next, for the risk-averse investor, consider fixed-income investments such as bonds and cash. Thus, seek to put your assets in bonds, certificates of deposits, and money market funds.
Carefully selected bonds and cash investments often yield between 3% and 5%. However, unlike stocks, these investments pay investors interest rather than dividends.
Thus, returning us to the original range of investment I indicated at the beginning of this article -more precisely, money between $240,000 and $400,000.
Investment #4: Real Estate Rentals
Another investment option is to make $1,000 monthly from real estate investments.
For full disclosure, I’m not a real estate investor aside from owning shares of real estate investment trusts. However, here I suggest owning physical property for the rent generation capability.
The upside to real estate rentals is that you can use a mortgage loan to finance your investment. This alternative means you can earn $1,000 a month without much money out of your pocket required.
On the other hand, taking out a loan means paying it back with interest. Also, rental properties come with many operating expenses to locate renters and maintain the property. Thus, the math is more complex.
Most beginning real estate investors seek to create a small positive monthly cash flow from their investment. In the best case, the rent pays for the loan and operating expenses with a bit of monthly money left over for the property investor’s use.
In addition, the property owner benefits from the long-term rise in real estate values. Finally, after paying off the loan, the property becomes an excellent cash generator contributing to the $1,000 monthly income from investments goal.
How Much To Invest To Make $1,000 A Month: Tips To Remember
Next, as I promised in the article introduction, here are some tips to keep in mind as you put in place your investments to generate $1,000 every month.
Don’t Forget About Diversifying Your Investments
No rule says you must choose just one of the four investment options to build an income portfolio. Instead, look to diversify among a mix of income-generating investments, including:
- Dividend-paying stocks
- Growth stocks
- Real estate
Thus, diversify and allocate your assets to these asset classes wisely.
Furthermore, I recommend using Empower to manage your total financial picture. Empower is an excellent tool for pulling your expenses, budget, and investment all together in one place online.
You can learn more about Empower here.
Considering Income Taxes
Finally, remember income taxes.
Everyone’s tax situation is unique. And each investment option has different tax characteristics.
Thus, consult with a tax expert to optimize your income tax liability.
Doing so will speed your progress to making $1,000 a month off your investments. Most importantly, after paying your income taxes.
Related reading: How much income can you make with $500K?
Okay. That’s it for today.
Please allow me to wrap up with some concluding comments.
How Much Money Do You Need To Invest To Make $1,000 A Month?
You will need approximately $300,000 to make $1,000 monthly from your investments. Plus, a healthy dose of patience and discipline to achieve your goal. Of course, the exact amount will depend on the specific assets you choose. Also, the investment return you earn.
Are you hungry for more knowledge about investing? If yes, check out the following:
Most importantly, all the best to you and your money.
Finally, before you go, save the image below to your Pinterest board so you can return here later.
Author Bio, Disclosure, & Disclaimer: Please join me (Tom) as I try to achieve my goals, find my next place to live, and make the most of my money. However, I am not a licensed investment adviser, financial counselor, real estate agent, or tax professional. Instead, I’m a 50-something-year-old, early retired CPA, finance professional, and business school teacher with 40+ years of DIY dividend investing experience. I’m here only to share my thoughts about essential topics for success. As a result, nothing published on this site should be considered individual investment, financial, tax, or real estate advice. This site’s only purpose is general information & entertainment. Thus, neither I nor Dividends Diversify can be held liable for losses suffered by any party because of the information published on this website. Finally, all written content is the property of Dividends Diversify LLC. Unauthorized publication elsewhere is strictly prohibited.