Where to Invest for Monthly Income

If there is one thing some types of savers want from their investments, it’s a reliable and frequent income.

Although there are those who can wait out their returns in order to seek the highest rewards, some older investors may not fall into that category, and may want to improve their income during their retirement.

This is not an impossible ask.

Although there are many who might suggest otherwise, it’s perfectly reasonable and doable to look for assets that essentially ‘pay a wage’.

If you’re wondering what these elusive investment instruments are and where you can find them, here is a brief rundown of the top three…

1. Monthly income funds

If you want a tailor-made investment plan, funds are often a good place to start your search, and this applies to a monthly income as much as any other requirement.

There are actually plenty of them out there, and although not all of them will make you instantly rich, many will return you a healthy monthly amount in exchange for your investment.

The important part is that the fund manager can ensure you 12 equal payments throughout the year.

Although the professionals warn that this luxury often has to be bought at the expense of capital growth, monthly income funds can still be a good option for those who have a clear and specific idea of what they want from their investment.

Here are some monthly income funds which are in Hargreaves Lansdown’s Wealth 150+:

  • Fidelity MoneyBuilder Income (Monthly Income, Interest Payments)
  • Artemis Strategic Bond (Monthly Income, Interest Payments)
  • Morgan Stanley Sterling Corporate Bond (Monthly Income, Interest Payments)

The value of these investments can go down as well as up. You can usually choose to either receive the income or let it accumulate (invest back into the fund) and benefit from compound interest.

2. A tailor-made portfolio

As valued as monthly income paying funds are, they are not your only means of achieving such an end.

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You could also choose to build your own tailor-made portfolio, by purchasing half a dozen investment trusts or bonds, all of which pay their dividends or interest at different times of the year.

Although this means doing all of the hard work yourself, it is not impossible to make a success of such a strategy, especially if you hone in on the funds with the longest track records for growing their dividends year on year.

Choose well, and you could build a strong monthly income portfolio without having to sacrifice capital growth for stability.

3. Working with cash

The downside to the two strategies outlined above is that they put your capital at risk, and this is not something every investor will be comfortable with.

This leaves cash as your only viable alternative, and luckily, there are plenty of monthly interest paying accounts for cash deposits too, so long as you know to look out for them.

It is wise to shop around fro the best account rates, and switch where necessary, in order to maximise the typically minimal returns you can expect on your cash with these accounts.

Some accounts you would sacrifice performance for flexibility, such as how accessible your money is, or the time it is locked away.

With most savings accounts in the UK your deposit will be protected by the Financial Services Protection Scheme (FSCS) up to £85,000.

One thing to remember is that you may be liable to capital gains tax with these methods, so make sure you understand your current tax situation, and how much you can earn with your personal savings allowance.

What method will you choose to use? Do it well and an additional monthly income could soon be yours for the taking.

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Last updated: August 8th, 2017

Courtney Lucas

When not feeding her 3 cats, Courtney writes about a variety of subjects, but mainly business and tech. She is interested in Fintech and the latest news regarding interest rates.

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