How much should I invest to get $1,000 monthly?
Calculate the Investment Needed: To earn $1,000 per month, or $12,000 per year, at a 3% yield, you'd need to invest a total of about $400,000. Calculation: $12,000 / 0.03 = $400,000.
The truth is that most investors won't have the money to generate $1,000 per month in dividends; not at first, anyway. Even if you find a market-beating series of investments that average 3% annual yield, you would still need $400,000 in up-front capital to hit your targets.
If you want to bring home an average of $100 per month ($1,200/year) in super safe dividend income, simply invest $13,800 (split equally, three ways) into the following ultra-high-yield stocks, which sport an average yield of 8.71%!
To generate $5,000 per month in dividends, you would need a portfolio value of approximately $1 million invested in stocks with an average dividend yield of 5%. For example, Johnson & Johnson stock currently yields 2.7% annually.
| Portfolio Dividend Yield | Dividend Payments With $100K |
|---|---|
| 1% | $1,000 |
| 2% | $2,000 |
| 3% | $3,000 |
| 4% | $4,000 |
However, the investment amount required to produce the desired income is considerable. To make $2,000 in dividend income, the investment amount and rate of return must be $400,000 and 6%, respectively. If the rate is lower, say 4%, the upfront investment is $600,000.
To generate $500 a month, you might need to build your investments to $150,000. Taking out 4% each year would amount to $6,000, which comes to $500 a month.
| Years Invested | Balance At the End of the Period |
|---|---|
| 10 | $102,422 |
| 20 | $379,684 |
| 30 | $1,130,244 |
| 40 | $3,162,040 |
Contributing $50 a month to an investment account can help create impressive savings, even at a moderate 5% annual growth. It's a common myth that you need a few thousand dollars to begin investing.
5) Watch Your Money Grow
Investing $100 per month, with an average return rate of 10%, will yield $200,000 after 30 years. Due to compound interest, your investment will yield $535,000 after 40 years. These numbers can grow exponentially with an extra $100.
How much to make $4,000 a month in dividends?
Too many people are paid a lot of money to tell investors that yields like that are impossible. But the truth is you can get a 9.5% yield today--and even more. But even at 9.5%, we're talking about a middle-class income of $4,000 per month on an investment of just a touch over $500K.
Shares of public companies that split profits with shareholders by paying cash dividends yield between 2% and 6% a year. With that in mind, putting $250,000 into low-yielding dividend stocks or $83,333 into high-yielding shares will get your $500 a month.
It really depends on what stocks you own and what sort of lifestyle you want. Most stocks only pay maybe 1% or 2% in dividends each year. At 2%, you are going to make about $20,000 on a $1 million investment. That would be difficult to live on comfortably.
A well-constructed dividend portfolio could potentially yield anywhere from 2% to 8% per year. This means, to earn $3,000 monthly from dividend stocks, the required initial investment could range from $450,000 to $1.8 million, depending on the yield. Furthermore, potential capital gains can add to your total returns.
Dividends can be classified either as ordinary or qualified. Whereas ordinary dividends are taxable as ordinary income, qualified dividends that meet certain requirements are taxed at lower capital gain rates.
| Stock | Market capitalization | Dividend yield |
|---|---|---|
| Dynex Capital Inc. (DX) | $726 million | 12.2% |
| Horizon Technology Finance Corp. (HRZN) | $454 million | 9.7% |
| Permian Basin Royalty Trust (PBT) | $660 million | 4.2% |
| Pennant Park Floating Rate Capital Ltd. (PFLT) | $713 million | 10% |
As you saw, investing once a month gets you all the goodies. Plus, most people have a monthly income cycle, so monthly SIPs perfectly gel with that frequency. So, by all means, you can go for monthly SIPs, as the above data shows that daily or weekly SIPs don't enhance your returns significantly.
Living on $2,000 per month is doable, but you won't be able to live just anywhere. This is important because at the time of writing the average Social Security benefit paid is $1,701 per month.
| Investment Return | Future Value of 500 in 10 Years |
|---|---|
| 5.75% | 875 |
| 6% | 895 |
| 6.25% | 917 |
| 6.5% | 939 |
The average worker starts saving for retirement at age 31, according to a survey from the Nationwide Retirement Institute. If you began investing $600 per month in S&P 500 index funds at age 31 while earning a 10% annual rate of return, you'd have just over $1 million saved by age 60.
How much will $500 grow in 20 years?
| Investment Return | Future Value of 500 in 20 Years |
|---|---|
| 4.75% | 1,265 |
| 5% | 1,327 |
| 5.25% | 1,391 |
| 5.5% | 1,459 |
For example, if an investment scheme promises an 8% annual compounded rate of return, it will take approximately nine years (72 / 8 = 9) to double the invested money.
Thus, it will take approximately 8.17 years.
Saving a million dollars in five years requires an aggressive savings plan. Suppose you're starting from scratch and have no savings. You'd need to invest around $13,000 per month to save a million dollars in five years, assuming a 7% annual rate of return and 3% inflation rate.
$100 per week adds up to $15,600 in three years
That means that, after a full year of saving, $100 per week adds up to $5,200. There is no sensible stock that will get you to $1,500 per year with $5,200 invested — that's a 28% yield! — but there are stocks that could get you there after three years of saving.
