How Can I Make $500 Passive Income Every Single Month? (2024)

Mark Henricks

·5 min read

How Can I Make $500 Passive Income Every Single Month? (1)

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:

If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

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

How Can I Make $500 Passive Income Every Single Month? (2)

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

How Can I Make $500 Passive Income Every Single Month? (3)

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.

Tips for Investing

  • 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.

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The post How to Make $500 a Month in Passive Income appeared first on SmartAsset Blog.

How Can I Make $500 Passive Income Every Single Month? (2024)

FAQs

How Can I Make $500 Passive Income Every Single Month? ›

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.

How can I make $1000 a month passively? ›

Investing in high-yielding dividend stocks can be a reliable means of earning a stable passive income. One has to invest around $180,000 in monthly-paying dividend stocks, which offer dividend yields of over 6.7%, to earn a monthly income of $1,000.

How much money do I need to invest to make $500 a month? ›

Some experts recommend withdrawing 4% each year from your retirement accounts. 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.

How to make $500 dollars a month in dividends? ›

How To Make $500 a Month in Dividends
  1. Choose a desired dividend yield target.
  2. Determine the amount of investment required.
  3. Select dividend stocks to fill out your portfolio.
  4. Invest in your dividend income portfolio regularly.
  5. Reinvest all dividends received.
Jun 5, 2023

How to invest $500 dollars for quick return? ›

How to invest $500 to begin building wealth
  1. 7 best ways to invest $500. It's never too early to start investing for your financial future. ...
  2. Invest with a robo-advisor. ...
  3. Contribute to a 401(k) or IRA. ...
  4. DIY with commission-free ETFs. ...
  5. Buy fractional shares of stocks. ...
  6. Buy bonds. ...
  7. Invest In real estate. ...
  8. Pay off debts.

How much is $500 a month invested for 10 years? ›

Here's how a $500 monthly investment could turn into $1 million
Years InvestedBalance At the End of the Period
10$102,422
20$379,684
30$1,130,244
40$3,162,040
Dec 17, 2023

How much do I need to invest to get $2000 a month? ›

Earning $2,000 in monthly passive income sounds unbelievable but is achievable through dividend investing. 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.

What if you invest $100 a week? ›

Investing a measly $100 per week can turn into a nest egg topping $1.1M by retirement — but you need to start at age 25. Here are 5 easy 'catch-up' tactics for older Americans. The earlier you start saving for retirement, the better your chances of building a comfortable nest egg.

How to turn 500 into passive income? ›

Here are five ways you can get started building passive income with $500 or less.
  1. Sell digital products online. One way to generate passive income online is to sell digital products. ...
  2. Buy stocks. ...
  3. Real estate investing through crowdfunding. ...
  4. Vending machines. ...
  5. Open a high-yield savings account.
Oct 10, 2023

How much is $500 a month passive income? ›

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 much to invest to get $4,000 a month in dividends? ›

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. Below, I'll reveal how to start building a portfolio that could get you an even bigger income stream than this today.

How can I double $500 dollars? ›

The classic approach of doubling your money by investing in a diversified portfolio of stocks and bonds is probably the one that applies to most investors. Investing to double your money can be done safely over several years, but for those who are impatient, there's more of a risk of losing most or all of their money.

What is the best investment for $500? ›

Below are five ways to invest $500—and potentially turn it into much more.
  1. Certificate of Deposit (CD) CDs are considered low-risk investments. ...
  2. 401(k) A 401(k) is a common employee benefit. ...
  3. IRA. ...
  4. Stocks. ...
  5. Cryptocurrency.
Nov 22, 2023

How many years it will take you to double your money if you invest $500 at an interest rate of 8% per year? ›

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.

How to realistically make $1,000 a month? ›

Here's How to Make an Extra $1,000 a Month
  1. Start Freelance Writing. ...
  2. Begin Blogging. ...
  3. Practice Graphic Design. ...
  4. Assist with Bookkeeping. ...
  5. Become a Virtual Assistant. ...
  6. Sell Something on Etsy. ...
  7. Manage Social Media Accounts. ...
  8. Complete Online Surveys.
Feb 26, 2024

How much do I need to invest to make $1,000 a month? ›

Reinvest Your Payments

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. And that's okay.

Is it possible to make $1000 in a month? ›

Absolutely, but it takes a bit of work beforehand to set things in motion. By developing online assets, investments and interest payments, you can put your dollars to work so they provide gains while you sleep. Here are the details and the best ways to put $1,000 of passive income into your pocket every month.

What earns the most passive income? ›

17 passive income ideas
  • Dividend stocks.
  • Dividend index funds or ETFs.
  • Bonds and bond funds.
  • Real estate investment trusts (REITS)
  • Money market funds.
  • High-yield savings accounts.
  • CDs.
  • Buy a rental property.
Mar 22, 2024

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