It has been awhile since I last wrote, but I’m back. Today’s post is going to cover where to invest money to get monthly income. If you find this reading helpful in any way then consider sending it to a friend that could also benefit.
Investing in Dividend Stocks For Monthly Income
The first option that we are going to look at is putting your money into dividend stocks. When you purchase shares from a company, some will pay you a monthly, quarterly, or annually dividend for holding stock with them. Depending on the price of the stock and how well they’re doing will help determine how much is paid to investors.
Now the next question you need to ask yourself is how much do you want to make? The reason being is because you are going to need to invest a good amount of money if you’re thinking about possibly making $1,000-$10,000 a month.
For realistic purposes, we’ll analyze how to make $1,000 a month from dividends.
The data I gathered is from mystockmarketbasics.com
To make $1,000 a month from Disney, you’ll need about 6,700 shares ($122 per share). That is going to cost you around $818,606.
Side note: all these photos were taking on 10/03/2020
The #2 stock is Apple. You are going to need about 3,850 priced at $112. The total investment will be around $433,433. Even though that is still a lot of money for the average investors, the big players are getting a sale.
The #3 stock to look at is 3M. You’re going to need about 2,104 shares priced at $160 to make $1,000 a month. The total investment is going to come out to $337,499.
The #4 stock is AT&T. For you to make $1,000 a mont in dividends from this stock then it will equal 5,836 shares. The total investment will be around $167,493
All the 4 stocks that I have listed above will pay you $1,000 a month for holding shares with them. I should also mention that Dividend payments are not always guaranteed but the stocks that I have talked about above have been consistent with it.
You are going to have to work your way up to this high goal due to the amount of money needed to make $1,000. But don’t get discouraged because invest little by little will help you reach it. It all depends on how you want to invest to hit your goal.
Now I am not saying that you should go right ahead an invest over a $100,000 just to get paid $1,000 monthly. The best way to go about diversifying is splitting it between dividends, ETFs, and index funds. If you do invest all your money into dividend stocks then the income earned should be reinvested. The whole point is to have the power of compound interest on your side.
Investing In Real Estate For Monthly Income
Now I am still learning about Real Estate investing and me giving advice would not be helpful. So below is a Reddit comment in which someone explains just how to go about starting and buying property.
Finding foreclosures, short sales, and other REO properties is easy. Find a good real estate agent in your area, and ask them to send you a daily email with all of the new listings for your area. If you devote a few minutes each morning reading the new listings you can get a feel pretty fast for what the market is doing in different neighborhoods. One piece of advice: I recommend going with a real estate agent who is not from one of the major Realty agencies. It’s easy to get a realtor’s license and ReMax, Keller Williams, etc., will literally give anyone a desk (because they don’t have to pay them unless they make a sale). If you walk into one of those businesses you run the risk of signing on with an agent who actually knows less than you, or worse, is actively trying to cheat you out of your money. A smaller brokerage is much more likely to have knowledgeable experts who can give you good advice.
When it comes to actually buying rental property, the process is pretty easy. The first question you should ask yourself if, do you like the neighborhood? Talk to the neighbors, and ask yourself if you want to have a long term investment in the area. Does the house look like it’s in good shape, or does it look like it’s falling down? It doesn’t take an expert’s eye to see these things. As a general rule, if you could see yourself living comfortably in the house, then it’s probably a good rental. If you can’t, then it’s probably not. If you’re unsure, hire an inspector to point out anything you might have missed. There are some tricks that green investors might miss, for example, knowing how to spot an out of date electrical panel or being able to identify water damage.
When it comes to the paperwork of buying a home, you’ll want to have a good title agent. In this case, going with a chain title agency can actually be beneficial, and I’ve had a lot of good experiences with Stewart and Alamo. Find a title agent with a law degree from a reputable school and someone who has been doing it for a long time. They can give you some advice and direction, so you’re not walking into the buying process blind. They can also help you avoid getting entangled in any of the much involved with a forclosure/short sale.
Don’t buy from the courthouse steps. There are very few deals down there, and the new guys get eaten alive by the pros.
Don’t buy from a wholeseller. Most of them are sharks who will lie through their teeth to you and just want your money.
Don’t sign on with a hard money lender. Their rates are ridiculous and they all just want to cheat you out of your money.
And finally, know how to make money on your deal. Building equity is fine and dandy, but the reason you should be doing this is for the extra $300 or so in your pocket every month (which is what you can realistically expect to earn in profit from a good single family house in my area, Fort Worth). First, calculate what your monthly mortgage payment will be. There are a lot of calculators out there, but I recommend knowing the formula yourself. That formula is: M=[i(1=i/12)n]/[(1+i/12)n-1], where M is your monthly payment, P is the principle on the loan, i is the interest rate expressed as a decimal fraction (example, 3.5% should be expressed as .035), and n is the number of payments (ex., 360 for a 30 year note, 180 for a 15). Add to this number your monthly taxes (you or your realtor can find this easy enough, property taxes are public information), and your monthly insurance payment. Then, adjust for vacancy time (2 or 3 months out of 12 is typical, depending on the neighborhood) to come up with your final monthly investment. The rent you will charge should be sufficiently higher than this to warrant the time and money you will be spending. Ask your realtor to pull rental comps for similar houses in your neighborhood to know beforehand whether the property will support that rent.
Of course, if you go to all this trouble before making an offer on a home, you’re going to lose the offer to someone else. Instead, get preaproved with a lender and put an offer on a house with an option clause in it. This generally should give you 1 or 2 weeks of exclusive time on it to decide whether you want to go ahead with the deal or not, and complete your due diligence. The cost for picking up an option is typically $100, $200 if the agent is being difficult. Always order your own appraisal in addition to the bank’s appraisal (appraisers work for the client, and if the bank orders the appraisal they will only inform the bank, even though you’re the one paying for it), and talk to them about what you want. An appraisal typically costs around $400 and they will give you an unbiased opinion of what the house is actually worth and what you can reasonably expect in rent.
Hope that helps. As I said at the beginning, now is a good time to buy a few rental properties and they are a great way to build wealth in and of themselves, but there are ways you can get burned and you’re doing the right thing by seeking out advice beforehand. Continue to learn by talking to experts who work in the field — weekend seminars and networking events don’t count, they’re typically filled with green folks like you and the sharks prey on the week. Realtors, banks, title agents, appraisers, and inspectors are all good sources of info, as are actual investors, if you can find any willing to talk.
tldnr buying rental properties is a good way to build wealth but it’s not the fool proof, get rich quick scheme many sell it as. There are a lot of sharks out there who just want to take your money and who prey on the week. Use common sense and good judgement in where you’re getting your advice, and always do your due diligence, as outlined above.https://www.reddit.com/r/RealEstate/comments/1kgjbo/real_estate_investment_101_where_do_i_start/
I hope that this blog post has give you some insight on how to go about making monthly income by investing. I feel that Real Estate and Dividend investing is two really good options that will be really beneficial to you long term. Whatever way you go, I wish you the best of luck and always stay motivated to the end goal. You can do it! You have the internet at your disposal to help with research.
Thanks for supporting The Finance Starter and I am aiming to writing an article every other day. Stay tune for more from me!