You can produce $500 a month in passive income through savings accounts, certificates of deposit, stocks, bonds, funds and other investment vehicles. Each offers varying rates of return, degrees of safety, convenience, and liquidity. And each requires a significant initial investment to produce the required amount of passive income.
A financial advisor will be able to help with your investment decisions.
How to Make $500 a Month in Passive Income
Passive income generally refers to money you receive automatically without having to do anything such as work for wages. The most common way to generate passive income is through purchasing investments that pay you interest or dividends.
Producing passive income in this way calls for putting in money rather than putting in the effort. However, once you have invested the money, you can cash checks or receive deposits to your bank account without any intervention on your part.
And there are many investments you can make to produce $500 monthly in passive income. Here are some of the most accessible and reliable:
Savings Account
A bank or credit union savings account is as passive, safe and convenient as you can get. Thetop-paying savings accounts yield around 4.5% annually. At that rate, depositing approximately $133,333 will give you $500 monthly.
Certificates of Deposit
Certificates of deposit(CDs) are relatively safe, somewhat better-paying and a little less convenient than savings accounts. The best one-year bank certificates of deposit yield about 5% annually. So if you buy a $120,000 12-month CD, you’ll get about $500 in passive income each and every month.
Bonds
Corporate bonds are riskier than bank deposits. But AAA-rated bonds are generally considered safe and historically yield a little over 4%. If you buy $125,000 worth of AA-rated bonds, you can expect to receive the equivalent of $500 a month. That usually comes in quarterly, semi-annual or annual payments.
Dividend-paying Stocks
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. Although, most dividends are paid quarterly, semi-annually or annually.
Diversified Securities Portfolio
A diversified securities portfolioof 60% stocks and 40% bonds has returned about 6.1% annually on average for the last decade, according to Vanguard. If future performance matches past performance, which is not guaranteed, $100,000 invested in a well-chosen 60/40 portfolio could grow by about $6,000 a year. The return includes dividends as well as price appreciation, so you may have to sell some of your investments to get $500 a month.
Exchange-Traded Funds
Low in cost and easy to buy, passively managed exchange-traded funds (ETFs) produce returns that vary according to whether they track stock, bond or other indexes. To cite one example, Vanguard’s High Dividend Yield ETF yields approximately 3%. You’d need to invest approximately $167,000 to get $500 a month in passive income from that ETF.
Real Estate
Purchasing shares of a Real Estate Investment Trust (REIT) is one popular way to get passive income from real estate. Publicly traded REITS pay dividends at an average rate of about 3%. So you’d need $167,000 to produce $500 in monthly passive income this way.
Other income opportunities that are somewhat less passive can also provide regular monthly income with varying amounts of effort. Drop shipping, for example, is a business model that involves setting up an online store and taking orders for products that pass directly to a supplier, who fulfills them without you having to do a thing except accept payment.
Direct investments in real estate, such as purchasing rental properties, can produce income that the internal revenue service (IRS) views as passive income, entitling it to more favorable tax treatment than earned income from working. However, managing residential real estate can involve considerable effort and attention on your part unless you pay a management company to take care of leasing, repairs and other tasks.
Bottom Line
To generate $500 a month in passive income you may need to invest between $83,333 and $250,000, depending on the asset and investment type you select. In addition to yield, you’ll want to consider safety, liquidity and convenience when selecting the investments you’ll employ to provide monthly passive income. However, once you’ve made the decision and put down your money, you can expect to receive regular payments without much, if any, additional future effort.
- Financial advisors help investors analyze various investment options and can help create a plan of action to meet their goals. Before investing in any passive income investments, consider talking with an advisor to understand how it fits within your portfolio.Finding a qualified financial advisor doesn’t have to be hard.SmartAsset’s free toolmatchesyou 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.
- When investing your money, it is important to diversify your assets among many different types of stocks and bonds. This helps you gain exposure to multiple sectors of the market and benefit from their growth. Ourasset allocation calculatorhelps you select a profile that’s right for you based on your answers to simple questions.
Photo credit: ©iStock.com/Erdark, ©iStock.com/bymuratdeniz, ©iStock.com/fizkes
Mark Henricks Mark Henricks has reported on personal finance, investing, retirement, entrepreneurship and other topics for more than 30 years. His freelance byline has appeared on CNBC.com and in The Wall Street Journal, The New York Times, The Washington Post, Kiplinger’s Personal Finance and other leading publications. Mark has written books including, “Not Just A Living: The Complete Guide to Creating a Business That Gives You A Life.” His favorite reporting is the kind that helps ordinary people increase their personal wealth and life satisfaction. A graduate of the University of Texas journalism program, he lives in Austin, Texas. In his spare time he enjoys reading, volunteering, performing in an acoustic music duo, whitewater kayaking, wilderness backpacking and competing in triathlons.
FAQs
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.
How to passively make $2,000 a month? ›
- Become a Blogger and earn with affiliate marketing. ...
- Offer Proofreading Services as a side hustle from home. ...
- Complete paid online surveys for money. ...
- Create Graphic Designs from Home as a Freelancer. ...
- Earn money by testing apps and websites. ...
- Transcribe videos, phone calls, and other recordings from home.
How to make $500 a month in dividends? ›
How To Make $500 a Month in Dividends
- Choose a desired dividend yield target.
- Determine the amount of investment required.
- Select dividend stocks to fill out your portfolio.
- Invest in your dividend income portfolio regularly.
- Reinvest all dividends received.
How to turn $100,000 into passive income? ›
Here are some of the top ways to earn $100,000 per year in passive income, according to financial experts, investors and business owners.
- Start a Niche Blog. ...
- Create a Course. ...
- Invest in CDs. ...
- Buy Stocks. ...
- Consider Bonds. ...
- Purchase Real Estate.
How to passively make $500 a month? ›
To generate $500 a month in passive income you may need to invest between $83,333 and $250,000, depending on the asset and investment type you select. In addition to yield, you'll want to consider safety, liquidity and convenience when selecting the investments you'll employ to provide monthly passive income.
How to make an extra $500 a month passively? ›
101 Ways to Make an Extra $500 a Month With a Full Time Job
- Make an Extra $500 a Month At Your Current Job. Volunteer for Overtime. ...
- Cash in On Your Skills or Hobbies. Launch a Blog. ...
- Offline Hustling. Babysit. ...
- Hustle Online. Freelance. ...
- Renting Out Items You Already Own. Host a Foreign Exchange Student. ...
- Sell Stuff.
How to make $5,000 a month in passive income? ›
Building passive income takes time and effort, and it's important to remain patient and persistent.
- Invest in Dividend-Paying Stocks:
- Rental Properties:
- Peer-to-Peer Lending:
- Create and Sell Digital Products:
- Invest in Real Estate Investment Trusts (REITs):
- High-Yield Savings Accounts and Certificates of Deposit (CDs):
How to make 50k a month in passive income? ›
5 Ways To Make $50,000 a Year in Passive Income
- Buy a Rental Property Online. ...
- Launch Your Own Mini-Fleet of Rental Cars. ...
- Stake Cryptocurrency. ...
- Buy a Blog. ...
- Buy Into a 'Goldilocks' Dividend Stock Fund.
How much will I have if I invest $500 a month for 20 years? ›
Length of Investment
For example, an investor who holds their portfolio for 10 years will put $60,000 into it (10 years of investing x 12 months per year x $500 per month), while an investor who holds the same portfolio for 20 years will contribute $120,000 worth of capital.
Does S&P 500 pay dividends every month? ›
But it's important to note that the S&P 500 index itself does not pay dividends—the companies in the index do. An investor has to buy shares of the companies themselves or of index funds in order to receive dividends. “The S&P itself does not pay a dividend,” explains Titan investment manager Christopher Seifel.
Comparison Results
Name | Price | Price Change |
---|
MO Altria Group | $45.53 | $0.31 (0.69%) After 0.02% |
T AT&T | $15.93 | $0.02 (-0.13%) After 0% |
XRX Xerox | $15.24 | $0.15 (0.99%) After 0% |
IBM International Business Machines | $136.42 | $1.12 (0.83%) After 0.04% |
5 more rows
How to invest $100 000 to make $1 million? ›
Invest $400 per month for 20 years
If you're earning a 10% average annual return and investing $400 per month, you'd be able to go from $100,000 to $1 million in savings in just over 20 years. Again, if your actual average returns are higher or lower than 10% per year, that will affect your timeline.
How to turn $10,000 into $100,000 fast? ›
Here are the most effective ways to earn money and turn that 10K into 100K before you know it.
- Real estate investing. ...
- Product and website flipping. ...
- Invest in index funds. ...
- Invest in mutual funds or EFTs. ...
- Invest in dividend stocks. ...
- Peer-to-peer lending (P2P) ...
- Invest in cryptocurrencies. ...
- Buy an established business.
How can I make $200 a day passive income? ›
Here are some of the most popular ways how to make $200 a day and see quick money in your bank account:
- Blogging. There are many ways to make money online, but blogging is one of the most straightforward. ...
- Flea Market Flipping. ...
- Freelance Writing. ...
- Bookkeeping. ...
- Dog Walking & Pet Sitting. ...
- Investing. ...
- Deliver Food. ...
- Create Videos.
What is the cheapest way to make passive income? ›
23 passive income ideas for building wealth
- Create a course. ...
- Write an e-book. ...
- Flip retail products. ...
- Sell photography online. ...
- Dividend stocks. ...
- Rent out a parking space. ...
- Sponsored posts on social media.
What is a good side hustle for passive income? ›
30 Easiest Passive Income Ideas
- Start a dropshipping store.
- Create a print-on-demand store.
- Sell digital products.
- Teach online courses.
- Become a blogger.
- Sell handmade goods.
- Run an affiliate marketing business.
- Sell stock photos online.
How to make $1,000 a month side hustle? ›
Here's How To Make an Extra $1,000 a Month
- Start Freelance Writing. ...
- Begin Blogging. ...
- Practice Graphic Design. ...
- Assist with Bookkeeping. ...
- Become a Virtual Assistant. ...
- Sell Something on Etsy. ...
- Manage Social Media Accounts. ...
- Complete Online Surveys.
How much is 5K a month hourly? ›
$5,000 a month is how much an hour? If you make $5,000 a month, your hourly salary would be $28.85.
How can I make $1000 a day passive income? ›
How To Make $1,000 A Day
- Make Money Blogging. Out of all the ways to make $1,000 a day, making money with a blog has to be my favorite. ...
- Start An Ecommerce Business. ...
- Start A Service-Based Business. ...
- Day-Trading Stocks. ...
- Retail Arbitrage. ...
- Passive Income Rentals. ...
- Use Geo-Arbitrage. ...
- Crypto Trading.
How can I make $3000 a month from home? ›
Here are my favorite in-demand side hustles — some can earn you up to $3,000 a month — and where to find them:
- Selling stock photos. ...
- Transcribing audio. ...
- Renting out your car. ...
- House-sitting, babysitting or pet-sitting. ...
- Product testing and research studies. ...
- Mystery shopping. ...
- Selling unwanted stuff. ...
- Junk hauling.
$50,000 per year is approximately $24.04 per hour, but it's not as simple as it may seem to convert annual salary to hourly pay. Information is accurate as of Feb. 15, 2023.
How to turn $10,000 into passive income? ›
If you have $10,000, here are eight common passive investments to consider.
- A financial advisor can help you create a financial plan for your passive investments. ...
- Dividend stocks. ...
- Real estate. ...
- Dividend ETFs and index funds. ...
- Bonds and bond funds. ...
- Peer to peer lending. ...
- High-yield savings accounts. ...
- Annuities.
How to make $10,000 a month in passive income? ›
Here are 11 ways to make 10k a month.
- Start Dropshipping with Shopify. ...
- Offer Freelance Writing Services. ...
- Start a Bookkeeping Business. ...
- Open a Custom Pins Shop Online. ...
- Start Affiliate Marketing with Clickbank. ...
- Start a Blog. ...
- Sell T-Shirts through Tee Spring. ...
- Start a Web Development Business.
How much is $10,000 invested in Apple 20 years ago? ›
As a result, $10,000 in AAPL stock purchased 20 years ago would be worth about $7.51 million today, assuming reinvested dividends.
How much will $200 K be worth in 10 years? ›
After 10 years: $96,049.
How much to invest monthly to reach $1 million in 10 years? ›
In order to hit your goal of $1 million in 10 years, SmartAsset's savings calculator estimates that you would need to save around $7,900 per month. This is if you're just putting your money into a high-yield savings account with an average annual percentage yield (APY) of 1.10%.
What ETF pays the highest monthly dividend? ›
7 of the Best High-Dividend ETFs
ETF | Dividend Yield |
---|
Vanguard High Yield Dividend ETF (VYM) | 3.1% |
Vanguard International High Dividend Yield ETF (VYMI) | 4.4% |
Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) | 4.1% |
Franklin International Low Volatility High Dividend Index ETF (LVHI) | 7.3% |
3 more rowsMay 23, 2023
How often does Apple pay dividends? ›
Dividend Summary
The next Apple Inc dividend is expected to go ex in 2 months and to be paid in 2 months. The previous Apple Inc dividend was 24c and it went ex 1 month ago and it was paid 25 days ago. There are typically 4 dividends per year (excluding specials), and the dividend cover is approximately 3.5.
Do you pay taxes on dividends? ›
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.
Can you become a millionaire from dividend stocks? ›
Can an investor really get rich from dividends? The short answer is “yes”. With a high savings rate, robust investment returns, and a long enough time horizon, this will lead to surprising wealth in the long run. For many investors who are just starting out, this may seem like an unrealistic pipe dream.
10 Best Dividend Stocks To Buy Now
Dividend ETFs | Dividend Yield |
---|
Lockheed Martin Corporation (LMT) | 2.7% |
Merck & Company, Inc. (MRK) | 2.6% |
Air Products and Chemicals, Inc. (APD) | 2.6% |
Automatic Data Processing, Inc. (ADP) | 2.4% |
6 more rowsJun 1, 2023
What are the top 10 dividend stocks to buy? ›
10 Best Dividend Stocks Today
- Cisco CSCO.
- Comcast CMCSA.
- Medtronic MDT.
- Gilead Sciences GILD.
- Duke Energy DUK.
- Blackstone BX.
- Truist Financial TFC.
- Phillips 66 PSX.
How to turn $100 K into $1 million in 5 years? ›
Consider investing in rental properties or real estate investment trusts (REIT). The real estate market is a fertile setting for a $100k investment to yield $1 million. And it's possible for this to happen between 5 to 10 years. You can achieve this if you continue to add new properties to your portfolio.
Can I live off the interest of 100000? ›
Interest on $100,000
Even with a well-diversified portfolio and minimal living expenses, this amount is not high enough to provide for most people. Investing this amount in a low-risk investment like a savings account with a rate between 2% to 2.50% of interest each year would return $2,000 to $2,500.
Is it good to have 100k in savings? ›
But some people may be taking the idea of an emergency fund to an extreme. In fact, a good 51% of Americans say $100,000 is the savings amount needed to be financially healthy, according to the 2022 Personal Capital Wealth and Wellness Index.
How to turn $25,000 into a million? ›
Based on an investment of $25,000 today, it'd take a return of 13.08% per year to transform into $1 million in 30 years. If you require a shorter time to grow your investments, you'll need a higher return to arrive at $1 million sooner.
How to flip 50K to 100k? ›
How To Turn 50K Into 100K – The Best Methods To Double Your Money
- Start An Online Business. ...
- Invest In Real Estate. ...
- Invest In Stocks & ETFs. ...
- Invest In A Blog. ...
- Retail Arbitrage. ...
- Invest In Alternative Assets. ...
- Create A Rental Business. ...
- Invest In Small Businesses.
How to make $5,000 dollars fast legally? ›
19 Easy Ways to Make $5,000 Fast
- Rent a Home, Car, or Storage Space.
- Make Deliveries.
- Drive for Uber or Lyft.
- Sell High-Value Items.
- Invest in Stocks.
- Sell Stuff Online.
- Freelancing.
- Real Estate Investing.
How to easily make $1,000 dollars a month? ›
Here's How To Make an Extra $1,000 a Month
- Start Freelance Writing. ...
- Begin Blogging. ...
- Practice Graphic Design. ...
- Assist with Bookkeeping. ...
- Become a Virtual Assistant. ...
- Sell Something on Etsy. ...
- Manage Social Media Accounts. ...
- Complete Online Surveys.
Is it possible to live off $1000 a month? ›
Bottom Line. Living on $1,000 per month is a challenge. From the high costs of housing, transportation and food, plus trying to keep your bills to a minimum, it would be difficult for anyone living alone to make this work. But with some creativity, roommates and strategy, you might be able to pull it off.
The Best Ways To Turn $1,000 Into $10,000
- Retail Arbitrage. Have you ever bought something and then resold it for a profit? ...
- Invest In Real Estate. ...
- Invest In Stocks & ETFs. ...
- Start A Side Hustle. ...
- Start An Online Business. ...
- Invest In Small Businesses. ...
- Invest In Alternative Assets. ...
- Learn A New Skill.
How to make $2,000 a month cash? ›
How Can I Make an Extra $2,000 a Month? 8 Easy Ways
- Freelancing.
- Online Tutoring.
- Virtual Assistant.
- Blogging.
- Delivery Driving.
- Dog Walking.
- Rent Out Your Place.
- Photography.
How to make $5,000 in a month? ›
Top 10 Ways to Make 5K a Month
- Freelancing with Skills You Already Have.
- Blogging or Content Creation.
- Virtual Assistant.
- Start an Amazon FBA Business.
- Taking Pictures and Selling Stock Photos.
- Proofreading or Editing.
- Facebook Marketing.
- Self-Publishing Books on Amazon KDP.
Is $200 a week enough to live on? ›
If all known monthly bills are already paid for, you can live easily and, in my life, even with some luxuries, for $200 a week. I am assuming that you are single and do not have to provide for anyone else. I personally spend about $300 to $400 a month outside of monthly bills and rent.
What is a good income to survive? ›
The data used in the study analyzed the cost of living in each city as of 2022. For California cities like Los Angeles, Berkeley and San Diego, a single person must make more than $76,000 to “live comfortably,” the data shows.
What is a livable amount of money? ›
Overall, Americans need an average post-tax income of $68,499 to live comfortably in the U.S., according to recent data from SmartAsset.
How to flip $5,000 dollars fast? ›
19 Easy Ways to Make $5,000 Fast
- Rent a Home, Car, or Storage Space.
- Make Deliveries.
- Drive for Uber or Lyft.
- Sell High-Value Items.
- Invest in Stocks.
- Sell Stuff Online.
- Freelancing.
- Real Estate Investing.
How to flip $10 000 dollars fast? ›
The Best Ways to Invest 10K
- Real estate investing. One of the more secure options is investing in real estate. ...
- Product and website flipping. ...
- Invest in index funds. ...
- Invest in mutual funds or EFTs. ...
- Invest in dividend stocks. ...
- Peer-to-peer lending (P2P) ...
- Invest in cryptocurrencies. ...
- Buy an established business.
How to double $2000 dollars in 24 hours? ›
The Best Ways To Double Money In 24 Hours
- Flip Stuff For Profit. ...
- Start A Retail Arbitrage Business. ...
- Invest In Real Estate. ...
- Invest In Dividend Stocks & ETFs. ...
- Use Crypto Interest Accounts. ...
- Start A Side Hustle. ...
- Invest In Your 401(k) ...
- Buy And Flip Websites And Domain Names.
How can I make 50k passive income? ›
5 Ways To Make $50,000 a Year in Passive Income
- Buy a Rental Property Online. ...
- Launch Your Own Mini-Fleet of Rental Cars. ...
- Stake Cryptocurrency. ...
- Buy a Blog. ...
- Buy Into a 'Goldilocks' Dividend Stock Fund.
$5,000 a month is how much an hour? If you make $5,000 a month, your hourly salary would be $28.85.