A lot of beginner investors aren’t happy with the idea of putting money away and seeing returns after 5 years or getting paid twice per year. They are often looking for quick solutions, ones where they will put money away and earn interest or dividends on a monthly basis. These are some of the investments that pay monthly income in South Africa.
Investments that pay monthly income
A lot of traditional investment assets don’t pay on a monthly basis, the most you get is getting paid 4 times (quarterly) in a year. The idea of receiving a cheque every month from your investments is not that realistic when you use traditional investment assets.
Government and corporate bonds pay out twice in a year, mutual funds may pay 4 times in a year at most. A smart investor may be able to divide the income that he/she receives quarterly and allocate it for each month of the year.
Example, let’s say you invest R5million in the RSA Retail Savings Bond at an interest rate of 7%. This bond pays out twice per year or every six months. You will get R350 000 every six months and R700 000 per year. If you want to create a monthly income then you can divide this money by 12 months after receiving it and only spend a certain amount at each month.
This will require a lot of discipline on your side, but traditional investment assets don’t offer a way for investors to make monthly income. This method is used by a lot of retirees, bonds create a fixed reliable income that you get semi-annually. Unlike dividends that fluctuate, bond income is fixed and doesn’t fluctuate, making it easier to plan your finances.
Less passive investment assets
These assets are less passive in nature, you don’t just put your money in and start receiving income. They require a lot of hard work upfront but can be a powerful source of monthly income.
Real Estate
Investing in real estate requires a significant capital investment from your side. However, once it’s set and done; you will be able to earn monthly passive income without much effort.
There are different types of real estate, especially for the South African market. Building rooms to let in the township is still real estate and provides investors with a monthly income.
Real estate forms a huge chunk of the portfolio of a lot of experienced investors. This is because real estate is very stable and produces monthly income, which is very predictable. Company stocks might perform badly on the JSE, even in the midst of pandemics, tenants still have to pay their monthly rental fees.
Blogging
This is very unconventional and it requires a lot of experience with SEO. Blogging can be a powerful source of monthly passive income; a well-developed blog will pay you money for 3 – 7 years long after you have stopped posting content.
A lot of people have made more money with blogging than their daily jobs. You might be able to earn around R80 000 a month with just under 200 written articles. I have listed this as an investment because you don’t have to write any of these articles by yourself.
There are plenty of SEO freelance writers that develop content for blogs and websites. Really cheap ones charge anywhere from R50 per post, while expensive ones charge around R800 per post on average. You can invest R30 000 in 200 high-quality articles, you will likely recover all of your money within 12 months and earn more money for the next 5 years. The great thing is that the blog can be active for over 20 years, all you have to do is keep renewing and updating the content.
eBooks
eBooks can be a very powerful source of passive monthly income. All you have to do is write a book, publish it and market it. Like the options above, writing an eBook requires a lot of commitment. The income that you get from an eBook is not as predictable as one that you get from real estate or a blog but you will be able to earn monthly income.
Conclusion
These are some of the investments that pay monthly in South Africa. Do you have any thoughts or questions? Comment below.
Mthobisi Masondo
What is the minimum of the most investment?