Are you looking for ways to create enough monthly income to live off of?
The traditional model of going to school to learn a trade and finding one solid company to work at for 40+ years and retire with a pension have gone the way of the dodo bird.
Investors not have a plethora of different options and barriers to these products are being reduced. A common theme among investors is to create enough monthly income to live comfortably.
Monthly dividends are a great way to make that goal a reality. There are so many different ways to create these monthly payments but I will briefly discuss a few of the ways I am most familiar with.
Mutual funds are securities like stocks, bonds, or other instruments. These are bought when many different investors pool their money together and a professional invests those funds across different assets in an attempt to make income for the investors.
Mutual funds are used to build a portfolio which are designed to match the objectives of the fund. Since each investor owns a small portion of the fund, they gain and lose money proportionally to their investment.
Finally there are mutual funds designed for all types of investors and their desired risk tolerance as well as investors with short, medium, or long time horizons. Mutual funds might be comprised of stocks and bonds where a fund heavy on stocks will have more risk and reward than one that is heavy on bonds.
Beyond mutual funds, investors can invest buy purchasing dividend paying stocks. It is possible to create enough monthly income to live off of just from dividend stocks, but it would likely take a massive investment to use this one method alone. Generally larger companies return a portion of profits to the owners (stock holders) in the form of dividends. Many companies pay quarterly dividends along with some public utilities.
One advantage to dividend stocks is that investors can enjoy regular dividend payments and see the value of shares increase. A couple things to consider is that a company may cut or suspend dividend payments at anytime and since they are generally paid quarterly you may have to find different stocks that pay during different months in order to create enough monthly income to live off of.
Certificates of deposit
Letting your money sit in the bank is a very safe investment, the problem is that the current rates are very low. There is a strategy called laddering CDs. This is basically buying CDs every month so they all have different maturity dates and the gains from each CD can be realized every month. Again, the problem is that many CDs available today do not even keep up with inflation not to mention it would take a significant amount in each CD to create enough monthly income to live off of. Click here to see current CD rates.
Residential Real Estate
One of my favorite ways to to create enough monthly income to live off of is by investing in real estate. Real estate investing is not something you can just jump into. That is not saying it is difficult but there are a few things to learn about first. Often times people will focus on all the hard work or cost that goes into real estate investing there are ways to alleviate the hassles of owning real estate. Cardone Capital, Fundrise, and a few others. These crowdfunding real estate platforms allow you to invest in real estate and earn cash flow while never having to answer a text message about a broken water heater, or fix a toilet.
With real estate another thing to remember is to diversify your portfolio. If you have all your money tied up in one single family home and it sits vacant you will not receive any income until you can get it rented again. Therefore investing in a multifamily or apartment complex may provide more stability if you are relying on this monthly rental income to live off of.
Two more great reasons to invest in real estate are the appreciation you can enjoy when it comes time to sell and the depreciation you can use as a tax benefit. Over time your homes value should increase and year after year this can add up to a substantial amount. Likewise maintenance, management, and depreciation can all be written off when tax time comes.
Commercial Real Estate
Commercial real estate is a great way to create enough monthly income to live off of. Again there is a learning curve to investing in commercial real estate but there are also opportunities to invest passively. Many of the options available are still only available to accredited investors though.
Just like residential real estate there are several different niches available to invest in and it is always a great idea to diversify your portfolio. One example is student housing, one of my investments into student housing has seen a bit of volatility and uncertainty. Another niche that is on the verge of becoming available is investing into fast food restaurant franchises. This is usually for accredited investors only but a new platform called fundingfuel.com is bringing this opportunity to every investor.
If you are looking for ways to create enough monthly income to live off of then you may want to investigate some of these methods. Whatever you do, always remember that diversifying your portfolio is a great way to protect your wealth and reap the benefits of multiple asset classes while reducing your risk.
Do not be afraid to think outside the box and try investing in agriculture with a company like Harvest Returns. This also takes time, there are not legitimate get rich overnight opportunities. The key is to start building your portfolio today. do not delay since time is one of the requirements for these investments to grow.
What are your favorite ways to build up enough monthly income to live off of? Are they any that we missed? Please leave a comment and let us know.