How much money do I need to invest to make $1000 a month?
Investment Needed to Make $1,000 a Month
The amount of money you need to invest to earn $1,000 a month ($12,000 per year) depends on your expected annual rate of return. Here are some common scenarios:
Common Investment Returns
- High-yield savings accounts/CDs (2–4% annually):
Required investment: $300,000–$600,000 - Dividend stocks/REITs (4–6% annually):
Required investment: $200,000–$300,000 - Broad stock market index funds (6–8% annually):
Required investment: $150,000–$200,000
Calculation Formula
Use this formula to calculate the required investment:
- Annual income desired = Monthly income × 12
$1,000 × 12 = $12,000 - Investment needed = Annual income desired ÷ Expected annual return (%)
Example for a 5% return: $12,000 ÷ 0.05 = $240,000
Important Considerations
- Higher returns often come with higher risk.
- Returns are not guaranteed and may fluctuate.
- Taxes and fees can reduce your actual income.
- Diversification can help manage risk.
Consult a financial advisor to tailor a plan based on your risk tolerance, time horizon, and investment goals.