Depending on the option you chose, you’ll need at least $100,000. You can create a portfolio of around $400,000 in different stocks; purchase an online business for 3 times their annual earnings, or buy a rental property.
Earning an additional $1,000 each month can change your lifestyle. It might not look as much at first, but having your bills covered each month frees up enough cash to save up for a more significant investment or another dream you’ve had at the back of your mind for a while. A $1,000 monthly income from investments is a big bite for those new to the investment world, but it’s more manageable than you’d imagine.
Almost every person you know has invested some money in a way. Some manage to live off of their investment revenue, and you can be one of them too. Staring with a modest return of $1,000 per month opens you to reinvesting and growing your passive income.
So how can you earn $1,000 while you sleep?
Dividend investing is a tale as old as time – you purchase stock, and the company pays you a portion of their profit each year.
It’s a type of conservative investing that typically doesn’t involve high yield, which means it doesn’t come with high risk either.
What does this mean for you? Well, you’d have to invest a more significant amount of money in stocks to get a $1000 per month dividend. Let’s look at some examples.
What Are Dividends?
Dividends are portions of the profit a company pays to its shareholders, annually or periodically.
A stock that produces around 4% dividend is considered good; 7% is very well but needs to be looked at closely. On the other hand, stocks that pay 10% are risky.
A too-high dividend yield can show that the payout is unsustainable or that investors are selling the stock, driving down its share price, and raising the dividend yield as a consequence.
How Much Does Dividend Investing Cost?
As a rule of thumb, you need a portfolio of at least 30 stocks in 10 different sectors.
If each stock generates you around $400 a year, you will reach the $12,000 a year mark with no trouble. This means each stock shouldn’t be more than 3.33% of your portfolio.
How much money do you need to invest to reach this sum? Dividend investing is not cheap. You’d have to wave goodbye (for a while at least) to approximately $400,000.
A $1,000 a month after tax means you’d have to earn at least $1,176 – depending on the tax bracket you fall into.
There are newer companies that pay a significant dividend and dividend aristocrats that have been operating for over 25 years and increased their dividend each year. Here are some of the S&P 500 dividend aristocrats in 2021.
|Company||Dividend Yield||Years Dividend Grown|
|Exxon Mobil Corp||6.1%||38|
These are some of the high-dividend stocks currently that aren’t part of the aristocrats but are worth looking into. We’ve listed their dividend payout periodically, not yearly.
|Altria Group Inc.||$0.86||7.21%|
Buying rental property is another investing method that can generate a $1,000 a month return. Again, the rate of return depends on your area, the rental demand, vacancy rate, etc.
The expected rate of return of rental properties for 2021 is expected to be 10% of the property’s value. However, the rental property does come with maintenance costs, so the average return is actually 8%.
Keeping this in mind, to achieve a $1,000 monthly earning, you’d need to invest around $150,000. How we came to this number?
Making $1,000 a month equals to 12,000 a year. Investing $150,000 with a 8% annual return comes to exactly $12,000.
Investing in rental property comes with added benefits. Not only you’d have a steady stream of income each month, but your property can go up in value.
Optionally you can buy a property with a mortgage, paying only a downpayment. This will result in less profit for the first years, as you’d need to cover the mortgage, but it’s an option worth considering if you don’t have the initial $150,000.
Best Places To Buy Rental Property
Where you’d decide to invest is up to you – whether you’d like the property to be close to your home or want to put dibs on the up-and-coming towns.
In addition, you can also look internationally – holiday rentals can make a generous income that will exceed the $1,000 per month mark. Here are the best cities for rental property investment and their annual growth.
|City||Average Home Price||Average Monthly Rent|
|Atlanta, Georgia||$200,000 – $247,000||$1,450 – $1,573|
|Baltimore, Maryland||$160,000 – $301,000||$1,500 – $1,655|
|Birmingham, Alabama||$119,600 – $177,900||$1,100 – $1,145|
|Chicago, Illinois||$130,000 – $248,400||$1,600 – $1,783|
|Cleveland, Ohio||$120,000 – $161,415||$1,103 – $1,150|
An Online Business
Buying an online business is a low effort investment that can generate fast-growing income.
For every $5 spent shopping in the USA, $4 is spent in person, and $1 is spent online. This explains the potential an online business has to generate profit and grow. However, you do have to learn some skills and have time on your hands to manage the business effectively.
You can buy online stores for 2.5 to 3 times their annual income. So choosing a starting business will cost you less, and you can still skyrocket its profit in the future.
How much will purchasing an online store cost you? If the business has $1,000 monthly earnings, that’s $12,000 a year. Multiplying the annual income by three, you have $36,000. That’s the price you’ll pay to purchase it and will eventually get it back in the next three years.
Online stores have a slower return on investment but have higher value growth. With rental properties, you’d get $1,000 a month faster, but you need to invest a more significant sum.
Real estate rises in value around 3.5% a year, while online businesses can grow much more and faster.
If you have the time, skills, and passion for developing the business further, you can capitalize on its growth by selling it in the future and reinvesting in something else.
How To Invest In An Online Business
The fastest and safest way to buy an online business is through mediating platforms. With their help, you can make a better decision and avoid scams.
Flippa is one of the most popular platforms where over 5000 new businesses are added each day. They provide statistics and other verified analytics saving you lots of time.
FlippaFinder is another feature that can help you search for a business against your specified criteria. However, beware that due to the number of businesses added each day, there can be some low-quality offers too. For a more filtered-out list, you can look into Empire Flippers, which also assists in price negotiation.
If you’d like a Shopify store go to Shopify Exchange and look for a business you’d like. You have to learn how to manage dropshipping and pay for website maintenance if you’re not doing it yourself.
If you decide to go solo, analyze the business’s online traffic and profile link with tools like SEMrush and Ahrefs.
When Will You Become A Millionaire If You Save $1,000 Per Month?
It will take you around 24 years to become a millionaire if you save and invest $1,000 each month. If you’re starting from scratch today and invest with a 4% rate of return, you can become a millionaire in 37 years. A 10% rate of return will take you 22 years.
How Much Should I Invest For $1,000 A Month In Dividends?
To generate a $1,000 a month dividend payoff, you need to invest at least $300,000. But if you decide to go with a dividend snowball”, you can start with as much as $10,000.
Within three years, with consistent investment and dividend reinvestment, you can build a good portfolio that yields $1,000 a month in dividends. You need to diversify it in different sectors, look for around 4%-7% dividend yield and have patience.
Are Dividends A Good Source Of Income?
Dividends are a great passive income that can fund your future retirement with good planning. Reinvesting the dividend into buying new stock and broadening your portfolio is a great idea, but you must be careful not to fall for high-yield dividends. Every stock that provides over 4% dividend is considered risky.
Smart investing can change your quality of life now and in the future. Choosing a reliable way is more important than generating a high income right away.
There are many other ways you can make $1,000 a month from investments, like peer-to-peer lending, cryptocurrency trading, index funds, etc. However, it’s important to acknowledge that nothing is 100% certain to provide you with $1,000 a month.
Some months might be way over the mark, while others can be slow. Dividends are mostly reliable, as well as rental properties. But a $1,000 a month return on investment is totally doable and will grow as long as you put in some thought and work over time.
Do you have your mind set on a way of investment to earn $1,000 a month? Share your favorite investing method.
Also, if you’re thinking of the next step forward, take a look at what it takes to earn $3,000 a month from your investments.