You might be wondering: what’s the best investment to get monthly income? Learn more about it here!
Before the COVID-19 crisis, about 80 percent of American workers were living paycheck to paycheck. As the coronavirus pandemic rages on, this number is certainly higher. In fact, millions of Americans have been left jobless.
Relying on a paycheck for your income is never a good idea. If you lose your job unexpectedly, you will likely be unable to take care of your bills.
This is why investing your money in income-generating assets is a pretty decent idea.
The only problem? Finding the best investment.
If you’ve got some money to invest but can’t seem to settle on the right investment for your needs, help is on the way! Continue reading for a detailed list of some of the best investments you can make.
The Stock Market
Most people think you need to have a boatload of cash to invest in the US stock market. Nothing could be further from the truth.
Sure, diving into the stock market with sizeable capital is a good thing – recommendable even. You can buy more stocks while keeping your risks low. However, you can start investing in the stock market with as little as 100 bucks or less.
Just consider the case of Warren Buffet, one of the richest men of our time. He started investing in stocks when he was just 11 years old, buying six shares in an oil services company, Cities Service, at $38 per share.
Skeptics might say that $38 back then isn’t the same as today’s $38; correct, but the truth of the matter is with $100, you can buy a share in any of America’s publicly-traded companies, as long as the cost of one share in the company you’d like to invest in is less than $100.
That being said, you aren’t going to earn a tangible income if you’re jumping into the stock market with a couple of hundred bucks. You do need a sizeable amount of capital – something respectable, like $1,000.
You can then invest the money in companies with good growth potential.
Bear in mind that the stock market is a patient man’s game. You aren’t going to make any money if you buy shares today and liquidate them tomorrow. You have to wait.
Case in point.
Folks who invested $1,000 in Amazon 10 years ago and held their investment now have over $13,000!
Once your investment grows substantially, you can then start marking monthly liquidations. Or, if you invest in a dividend-paying stock, expect to start getting returns sooner.
What comes to your mind when you think of investing in real estate?
If you’re anything like most people, you get mental images of apartment blocks, single-family homes, gated communities…. basically, buildings and other physical properties.
Well, there’s no denying that these investments have excellent returns. However, they are also capital intensive.
If you’ve got the money to build physical real estate and sell or rent out, perfect. But if your investment budget is limited, you’ve got to focus elsewhere. This, though, doesn’t mean you can’t invest in real estate.
What you need to do is put your money in Real Estate Investment Trusts (REITs).
A REIT is like a holding company for real estate properties. It buys land and develops mega properties such as office blocks, city skyscrapers, malls, gated communities, and more. To raise the money they need to make such large-scale investments, REITs accept investment from outside investors.
As such, when you want to invest in real estate but you’re on a shoestring budget, don’t worry yourself with the big stuff. Invest in a REIT and wait for your income in the form of dividends.
Here’s an illustration.
You invest $10,000 in a REIT (buying 1,000 shares, at $10 each).
At the end of every quarter (or any other time depending on your REITs dividend policies), your REIT pays out dividends at $1 per share. You own 1,000 shares, so you will earn $1,000 per quarter. Annually this pans out to $4,000.
So, if you break into down into a monthly income, you’ll be making about $333. Not a shabby amount when you’re not putting in any hard work.
Certificate of Deposit
If investing in the stock market or real estate isn’t your cup of coffee, perhaps you will love a certificate deposit. This is especially suitable for people who would love to make a risk-free investment.
Certificates of deposit are typically offered by banks.
When you want to invest in a CD, you give your bank a certain amount of money, which is locked in an account for a certain period of time, usually 1 year. In return, your money earns interest at maturity.
For instance, let’s say you invest $10,000 in a CD. Your bank pays a fixed interest rate of 10 percent per annum. This means you’ll earn a $1,000 interest at the end of 12 months.
Broken down to a monthly income, you’ll be making about $83.
Does it match your expectations? Probably not, but you can use the money to offset your utility bills.
The reason CDs don’t have high returns is because they’re low-risk. Unlike investing in the stock market where you can lose your capital if you invest in depreciating shares, CDs offer a guaranteed income. Whether the bank offering the CD makes losses or not, you’ll still get your interest payment, as well as your capital.
Bonds work just like certificates of deposit, only that they’re issued differently.
When a government authority or large corporation wants to raise money, it can issue bonds. Whoever buys the bond will earn an interest, pegged at a certain percentage.
For example, if you buy a 1-year, $10,000 bond issued by the federal government, you will get your money back after 1 year, along with the interest.
When you utilize the right assets, such as bonds, shares, and REITs, you can rest easy knowing your money is working for you.
Make the Best Investment
Investing is an ideal way to grow your wealth and secure financial freedom. However, you need to make the best investments for you to get tangible returns. If you invest without doing proper market research and analysis, you might as well be washing your money down the drain.
With this guide, you’re now in a better position to make informed investment decisions. All the best and keep reading our blog for more tips on investing your money.