Does Investing in Stocks Provide a Monthly Income?
With bills due every month, many people find that traditional stock investments, with quarterly or annual dividend payments, do not suit their needs for regular income from their investments. The knowledgeable investor can structure his investments to provide this necessary income by investing in mutual funds that pay out monthly or using other effective methods.
Other People Are Reading
-
Managed Payout Funds
-
Managed payout funds are mutual funds that invest in stocks and provide steady monthly income for retirees and others. These funds offer professional management and do not require active management or extensive research and decision-making by the investor. People can put managed payout funds on autopilot and let them generate monthly income. A disadvantage is that the monthly payments may decrease during times when the stock market is declining, providing insufficient income to pay for living expenses.
Requesting Monthly Payouts
-
While many common stocks pay dividends quarterly or annually, stock market mutual funds may offer more flexibility with dividend payouts and other gains. You can request that the fund manager distribute returns to you monthly to produce regular income. Some managers may be more willing to do this, particularly if you have a large amount invested with the fund.
-
Principal Withdrawal
-
You can receive monthly income by withdrawing a portion of the principal each month. This is an option even if a fund manager will not disburse earnings to you monthly. You can set a withdrawal rate that provides you with sufficient income for living expenses. The fund manager subtracts this money from the principal and sends you a check each month. When the fund normally pays its dividends and other returns, the money is redeposited into the account. If the fund is dropping in value, this may deplete the principal faster, while during times of growth, the fund may increase in value more quickly than you are withdrawing the income.
Annuities
-
Annuities are another form of investment providing a guaranteed monthly income. An annuity is purchased with a lump sum of money and provides periodic payouts throughout the rest of your life. The disadvantage of annuities over stock investments to pay monthly income is that money from the annuity cannot be withdrawn in a lump sum to cover emergency expenses, such as medical bills. Also, while an income-providing stock investment may be left to your heirs when you die, the annuity cannot.
-
