SmartAsset: 8 best investments to generate monthly income
Bills for utilities, mortgages, auto loans and similar expenses usually arrive monthly, while many investments generate income only quarterly, annually or even less often. However, there are a number of assets that pay income on a monthly basis. Options include savings accounts, certificates of deposit, annuities, bonds, dividend stocks, rental real estate and more. Here are eight of the best investment options for monthly income.
A financial advisor can help you build a portfolio of income-generating investments.
Monthly Income Investing
Investments that pay income monthly are not as easy to find as you might expect, given that living expenses often must be paid on a monthly basis. Quarterly, annual and even longer payback schemes are more the norm in the investment world.
And that’s with many investments offering no income at all beyond the promise of eventual profit thanks to price appreciation. Purchasing a typical share on the stock market, for instance, generally won’t yield a penny until and unless you are someday able to sell it for more than you paid.
The Eight Best Options
SmartAsset: 8 best investments to generate monthly income
Monthly income-paying investments do exist, however. And they offer a variety of characteristics to give nearly any profile for safety, security and yield. You can likely find something to fit your needs from this list of the best monthly income investments:
If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.
Savings Accounts
A savings account at a bank or credit union pays interest on deposits every month. Savings accounts are safe, reliable, highly liquid and easy to open, with small or no minimum initial investment requirement. Savings accounts usually don’t pay enough interest to keep you ahead of inflation, however, although the highest-paying savings accounts come close.
Certificates of Deposit (CD)
A certificate of deposit (CD) is as safe and simple to open as a savings account but not nearly as liquid, since you have to commit funds for a period between 28 days and 10 years. In return, you earn more interest, but, again, even the best-paying CDs aren’t likely to beat inflation.
Dividend-Paying Stocks
Owning stock of public companies that share profits with shareholders as dividends offers regular income plus the potential for price appreciation. Dividends are generally paid annually or quarterly but some companies pay them monthly. Dividend exchange-traded funds (EFTs) can be purchased like individual stocks, offer good diversification and provide more options about how often you’ll receive income.
Bonds
The bond market is where corporations and governments go to borrow money and when you buy corporate and government bonds you are acting as their lender. Bonds pay interest rates that vary widely depending on the financial strength of the issuer, the length of the bond and other factors but can be significantly higher than bank deposit accounts. Most bonds pay interest annually, semiannually or at the end of their term, but some pay interest monthly.
Annuities
An annuity is a contract with an insurance company that promises to pay you monthly benefits in exchange for an up-front purchase amount. Annuity benefits may extend for periods from a few years to the life of the purchaser and may be guaranteed by the insurance company. Annuities are generally reliable sources of monthly income, but they are complex investments and also come with sizable fees.
Rental Real Estate
Buying rental real estate can give investors tax benefits and potential appreciation. And because rent is usually paid monthly, income on a monthly basis. Rental property is also highly illiquid and requires significant initial investment while managing it calls for more time, expense and expertise than many people can bring to it.
Real Estate Investment Trusts (REITs)
Publicly traded real estate investment trusts (REITs) own income-producing real estate or mortgages and must distribute 90% of taxable profits as shareholder dividends, some of which may be paid monthly.
It’s much easier to buy and own REIT shares than to purchase and manage individual properties yourself. REITs also provide risk-reducing diversification but are vulnerable to real estate cycles and interest rates.
Business Ownership
Starting, buying or investing in a small business can provide reliable monthly income in the form of dividends paid to the owner or, if you are actively involved, a salary. Business ownership offers potential for income and price appreciation that rivals almost any other investment. However, investments in the business are generally highly illiquid, carry considerable risk, and may call for substantial expertise, effort and patience.
Bottom Line
SmartAsset: 8 best investments to generate monthly income
You can generate monthly income from a wide variety of investments, ranging from ultra-safe but low-yielding savings accounts to the exceptional risk and potential high payouts available to small business owners. A sensible strategy would likely involve dividing your money and putting it in several of these types of investments, selecting asset classes and individual assets on the basis of your needs for income, convenience safety and liquidity.
Tips on Retirement
Consider working with a financial advisor to develop, implement and fine-tune a financial plan for your retirement goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area. And you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Are you saving enough for retirement? SmartAsset’s free retirement calculator can help you determine exactly how much you need to save to retire.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
