Can you make a living off investing?
You can earn passive income through investing in certain financial assets or by starting businesses that, after an initial investment, start to generate income without regular work.
Trading is often viewed as a high barrier-to-entry profession, but as long as you have both ambition and patience, you can trade for a living (even with little to no money). Trading can become a full-time career opportunity, a part-time opportunity, or just a way to generate supplemental income.
A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.
Once you have $1 million in assets, you can look seriously at living entirely off the returns of a portfolio. After all, the S&P 500 alone averages 10% returns per year. Setting aside taxes and down-year investment portfolio management, a $1 million index fund could provide $100,000 annually.
If you can keep your money in the market for 10, 20 or even 30 years, your potential to build wealth is tremendous. Think about it this way: If you put $10,000 in the market and earn 10% per year, taking out your profits each year, you'll have a net profit of $30,000 after 30 years, or three times your money.
Investing can help you turn your money into more money, even when you start small. A $1,000 investment—whether you pay down debt, invest in a robo-advisor, or get your 401(k) match—can help lay the foundation for a prosperous financial journey.
You can pretty easily piece together a diversified portfolio of low-cost index funds or exchange-traded funds with $10,000. Index funds, a type of mutual fund, typically have an investment minimum, but $10,000 is more than enough to buy into several.
Invest in Dividend Stocks
One of the easiest passive income strategies is dividend investing. By purchasing stocks that pay regular dividends, you can earn $2,500 per month in dividend income. Here's a realistic example: Invest $300,000 into a diversified portfolio of dividend stocks.
Rate of return | 10 years | 30 years |
---|---|---|
4% | $72,000 | $336,500 |
6% | $79,000 | $474,300 |
8% | $86,900 | $679,700 |
10% | $95,600 | $987,000 |
Let's consider some examples: Investor A can only invest $1,000 every month and has nothing in savings. If he earns a 10% annual rate of return (compounded quarterly) in a portfolio created by a robo advisor, Investor A will need 22 years and seven months to become a millionaire.
Can you be a millionaire from investing?
Investing can help you become a millionaire because you can benefit from compound growth. The more you invest, the faster you can become a millionaire. The higher your returns, the faster you'll end up with a seven-figure brokerage account.
As Forbes points out, most millionaires are self-made, accumulating wealth through education, hard work and investing. According to the data-driven Visual Capitalist site, the world's wealthiest people earned their first $1 million at age 36. It took an average of eight years to reach that magical milestone.
For example, it takes $1,400 per month to reach $1 million in 20 years. However if you can find 30 years to save, it only takes $475 per month to reach the same goal. This isn't easy, but finding the extra time may be easier than finding an extra $12,000 per year.
Investing $100 per month, with an average return rate of 10%, will yield $200,000 after 30 years. Due to compound interest, your investment will yield $535,000 after 40 years. These numbers can grow exponentially with an extra $100. If you make a monthly investment of $200, your 30-year yield will be close to $400,000.
- High-yield savings accounts.
- Certificates of deposit (CDs)
- Bonds.
- Money market funds.
- Mutual funds.
- Index Funds.
- Exchange-traded funds.
- Stocks.
Alongside Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Apple Inc. (NASDAQ:AAPL), Adobe Inc. (NASDAQ:ADBE) is one of the best money making stocks to invest in. In its Q3 2023 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and Adobe Inc.
- Buy an S&P 500 index fund. ...
- Buy partial shares in 5 stocks. ...
- Put it in an IRA. ...
- Get a match in your 401(k) ...
- Have a robo-advisor invest for you. ...
- Pay down your credit card or other loan. ...
- Go super safe with a high-yield savings account. ...
- Build up a passive business.
In fact, at the end of the five years, if you invest $1,000 per month you would have $83,156.62 in your investment account, according to the SIP calculator (assuming a yearly rate of return of 11.97% and quarterly compounding).
Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.
If you invest $10,000 and make an 8% annual return, you'll have $100,627 after 30 years. By also investing $500 per month over that timeframe, your ending balance would be $780,326. Exchange-traded funds (ETFs) and mutual funds are both excellent investment options.
How to turn 10k into 100k in a year?
To potentially turn $10k into $100k, consider investments in established businesses, real estate, index funds, mutual funds, dividend stocks, or cryptocurrencies. High-risk, high-reward options like cryptocurrencies and peer-to-peer lending could accelerate returns but also carry greater risks.
Rule of thumb? Aim to have three to six months' worth of expenses set aside. To figure out how much you should have saved for emergencies, simply multiply the amount of money you spend each month on expenses by either three or six months to get your target goal amount.
- Understanding Passive Income and Its Benefits. ...
- Setting Realistic Financial Goals. ...
- Identifying Your Niche and Target Audience. ...
- Creating a Passive Income Business Model. ...
- Building a Strong Online Presence. ...
- Generating Multiple Streams of Passive Income.
- Invest in Real Estate. Rental properties generate income through tenants who pay rent each month to live in a property you own. ...
- CD Laddering. ...
- Dividend Stocks. ...
- Fixed-Income Securities. ...
- Start a Side Hustle.
Invest in Dividend Stocks
If you specifically want passive income, you might consider dividend stocks. Dividend stocks often pay quarterly, usually with a yield in the range of 2% to 5%. Stocks that pay dividends tend to be well-known, financially stable companies, so the risk is typically low compared to other stocks.
References
- https://www.investopedia.com/terms/p/portfolio-investment.asp
- https://www.nerdwallet.com/article/investing/types-of-investments
- https://www.investopedia.com/ask/answers/041415/what-are-some-common-measures-risk-used-risk-management.asp
- https://www.schwab.com/learn/story/investing-styles
- https://www.5paisa.com/stock-market-guide/generic/types-of-risk
- https://www.studysmarter.co.uk/explanations/macroeconomics/financial-sector/risk-and-return/
- https://www.forbes.com/sites/pattieehsaei/2023/10/12/you-can-afford-to-invest-start-with-just-100-per-month/
- https://medium.com/@Levente22/9-simple-tricks-to-make-an-extra-2-500-each-month-at-home-0b6e0e6392ef
- https://www.investopedia.com/articles/investing/012914/foreign-investment-routes-fdi-and-fpi.asp
- https://www.fool.com/the-ascent/buying-stocks/articles/heres-why-investors-love-the-3-fund-portfolio/
- https://www.bankrate.com/investing/best-ways-to-invest-1000/
- https://www.investopedia.com/terms/i/impact-investing.asp
- https://www.investopedia.com/terms/c/capital-investment.asp
- https://www.fidelity.com/viewpoints/personal-finance/how-to-start-investing
- https://www.investopedia.com/terms/f/financial-analysis.asp
- https://www.forbes.com/advisor/investing/best-safe-investments/
- https://smartasset.com/investing/how-to-make-100k-a-year-in-passive-income
- https://www.investopedia.com/terms/a/assetclasses.asp
- https://www.linkedin.com/pulse/4-3-2-1-approach-financial-freedom-royston-tan-%E9%99%88%E9%9F%A6%E9%BE%99-chfc-asep-ibfa-
- https://finance.yahoo.com/news/500-every-month-passive-income-130041730.html
- https://www.visualcapitalist.com/visualizing-the-investments-of-the-ultra-wealthy/
- https://devonchildcare.proceduresonline.com/p_risk_assess_plan.html
- https://www.emerald.com/insight/content/doi/10.1108/CR-03-2022-0040/full/html
- https://www.nerdwallet.com/article/investing/most-expensive-stocks
- https://www.ifec.org.hk/web/en/other-resources/hot-topics/5-investment-concepts.page
- https://www.6clicks.com/resources/answers/what-are-the-4-main-categories-of-risk
- https://finance.yahoo.com/news/passive-income-7-ways-extra-130052593.html
- https://finance.yahoo.com/news/long-took-jeff-bezos-warren-110011636.html
- https://www.bankrate.com/investing/high-risk-investments-to-avoid/
- https://www.investor.gov/introduction-investing/investing-basics/investment-products/bonds-or-fixed-income-products/bonds
- https://finance.yahoo.com/news/14-money-making-stocks-invest-134504176.html
- https://www.studysmarter.co.uk/explanations/marketing/international-marketing/direct-investment/
- https://www.investopedia.com/terms/t/two-percent-rule.asp
- https://www.investopedia.com/ask/answers/041515/which-asset-classes-are-most-risky.asp
- http://research.ccdmd.qc.ca/31-types-analysis
- https://www.investopedia.com/managing-wealth/basic-investment-objectives/
- https://appreciatewealth.com/blog/six-approaches-for-mitigating-investment-risks-in-the-stock-market
- https://smartasset.com/investing/direct-investment-vs-portfolio-investment
- https://www.investopedia.com/investing/investing-strategies/
- https://www.sarwa.co/blog/invest-1000-per-month-5-years
- https://www.investopedia.com/articles/markets/121515/8-high-risk-investments-could-double-your-money.asp
- https://money.usnews.com/investing/articles/how-to-become-a-millionaire-by-investing
- https://www.investopedia.com/financial-edge/0711/how-to-double-your-money-every-6-years.aspx
- https://www.mdpi.com/2079-8954/11/3/146
- https://www.ally.com/stories/save/savings-by-age-how-much-to-save-in-your-20s-30s-40s-and-beyond/
- https://finance.yahoo.com/news/fastest-ways-become-rich-investing-120025750.html
- https://flippa.com/blog/radical-fire-how-to-turn-10k-into-100k-12-top-ways-to-do-it/
- https://fortune.com/recommends/investing/how-much-of-your-income-should-go-toward-investing/
- https://www.linkedin.com/pulse/realistic-ways-make-extra-1000-per-month-leo-thapa-fyzkf
- https://finance.yahoo.com/news/6-smart-ways-turn-20-140040613.html
- https://tradesmartonline.in/knowledge-hub/stock-market/foreign-direct-investment-fdi-meaning-types-advantages-disadvantages/
- https://www.thetimes.co.uk/money-mentor/investing/investing-basics/invest-little-money
- https://www.investopedia.com/terms/b/balancedinvestmentstrategy.asp
- https://www.marketwatch.com/picks/this-is-warren-buffetts-first-rule-about-investing-heres-what-to-do-if-your-financial-adviser-breaks-that-rule-01635799738
- https://www.investopedia.com/ask/answers/060115/what-difference-between-foreign-portfolio-investment-and-foreign-direct-investment.asp
- https://www.fool.com/the-ascent/buying-stocks/articles/heres-what-happens-when-you-invest-500-a-month/
- https://www.investopedia.com/ask/answers/021615/what-safest-investment.asp
- https://www.fool.com/investing/how-to-invest/how-to-invest-50k/
- https://corporatefinanceinstitute.com/resources/economics/foreign-direct-investment-fdi/
- https://www.investopedia.com/articles/financial-theory/09/how-investments-make-money-income.asp
- https://www.nerdwallet.com/article/investing/best-ways-invest-10000
- https://www.investopedia.com/terms/i/investment.asp
- https://www.sciencedirect.com/topics/economics-econometrics-and-finance/investment-function
- https://www.experian.com/blogs/ask-experian/which-investment-has-highest-risk/
- https://www.moneylion.com/learn/how-to-turn-100-into-1000/
- https://www.strike.money/stock-market/indirect-investment
- https://quizlet.com/130267945/chapter-19-the-basic-tools-of-finance-flash-cards/
- https://finance.yahoo.com/news/10-return-investment-roi-141300511.html
- https://www.nerdwallet.com/article/investing/the-best-investments-right-now
- https://www.topperlearning.com/answer/what-are-the-two-components-/ks0a0ievv
- https://www.investopedia.com/terms/i/investing.asp
- https://www.fca.org.uk/investsmart/understanding-high-risk-investments
- https://time.com/personal-finance/article/ways-to-invest-1k/
- https://en.wikipedia.org/wiki/Risk_factor_(finance)
- https://www.ramseysolutions.com/retirement/daves-investing-philosophy
- https://archive.unescwa.org/investment-spending
- https://economictimes.indiatimes.com/definition/risk
- https://opentext.wsu.edu/mktg360/chapter/2-5-foreign-direct-investment/
- https://talkmarkets.com/content/how-much-money-do-i-need-to-invest-to-make-3000-a-month?post=431352
- https://finance.yahoo.com/news/save-1-million-20-years-140037827.html
- https://trade.ec.europa.eu/access-to-markets/en/content/types-investment
- https://cleartax.in/glossary/capital-investment
- https://moneywise.com/investing/whats-the-difference-between-direct-and-indirect-shares
- https://lifeinsurance.adityabirlacapital.com/articles/your-money/safe-investment-plans-with-high-returns-in-india
- https://study.com/academy/lesson/types-of-data-analysis.html
- https://www.rospa.com/rospaweb/docs/campaigns-fundraising/hse-five-steps-to-risk-assessment.pdf
- https://www.bankrate.com/investing/low-risk-investments/
- https://www.fdiintelligence.com/content/data-trends/the-worlds-top-fdi-source-countries-82850
- https://taxfoundation.org/taxedu/glossary/foreign-direct-investment-fdi/
- https://www.maxlifeinsurance.com/blog/investments/what-is-investment
- https://finance.yahoo.com/news/7-things-must-start-making-173436243.html
- https://quizlet.com/547049622/chapter-8-foreign-direct-investment-flash-cards/
- https://www.fool.com/the-ascent/buying-stocks/articles/im-65-years-old-is-it-too-late-to-invest/
- https://money.usnews.com/investing/investing-101/slideshows/how-to-invest-your-first-1-000
- https://www.investopedia.com/articles/trading/09/how-to-trade-for-a-living.asp
- https://www.fool.com/the-ascent/buying-stocks/articles/how-quickly-can-investing-make-you-a-millionaire/
- https://www.investopedia.com/articles/basics/11/3-s-simple-investing.asp
- https://www.linkedin.com/pulse/achieving-20000-monthly-passive-income-step-guide-gunjan-gangani-uuarf
- https://finance.yahoo.com/news/much-interest-earn-1-million-150000229.html
- https://www.simplilearn.com/financial-risk-and-types-rar131-article
- https://smartasset.com/investing/types-of-investment
- https://www.tataaia.com/blogs/financial-planning/what-are-the-objectives-of-investment.html
- https://open.lib.umn.edu/principleseconomics/chapter/29-2-determinants-of-investment/
- https://www.motilaloswal.com/blog-details/-what-are-advantages-and-disadvantages-of-fdi/22002
- https://byjus.com/free-ias-prep/fdi/
- https://www.investopedia.com/articles/forex/033015/10-riskiest-investments.asp
- https://www.investing.com/academy/trading/warren-buffett-investment-strategy-rules-fortune/
- https://www.forbes.com/advisor/investing/best-low-risk-investments/
- https://www.investopedia.com/ask/answers/032415/which-investments-have-highest-historical-returns.asp
- https://www.investopedia.com/terms/f/fdi.asp
- https://www.franklintempletonindia.com/investor-education/new-to-investing/article/beginners-guide-chapter4/what-types-of-investments-can-you-consider-for-your-portfolio
- https://www.investopedia.com/terms/i/investment-multiplier.asp
- https://www.voya.com/blog/7-easy-ways-to-start-investing-little-money
- https://www.ncoa.org/age-well-planner/resource/a-guide-to-types-of-investment-risk
- https://www.fool.com/the-ascent/buying-stocks/articles/this-is-how-much-money-you-can-make-by-investing-10k/
- https://saylordotorg.github.io/text_personal-finance/s21-02-real-estate-investments.html
- https://www.religareonline.com/blog/advantages-and-disadvantages-of-fdi/
- https://www.investopedia.com/ask/answers/012815/what-assets-are-most-risky-and-what-assets-are-safest.asp
- https://corporatefinanceinstitute.com/resources/equities/direct-stock-purchase-plan-dspp/
- https://ssb.texas.gov/risk-return-you-cant-have-one-without-other
- https://www.wellsfargo.com/goals-investing/saving-vs-investing/
- https://www.investopedia.com/terms/i/investment-analysis.asp