Stocks are widely viewed as a lucrative investment, but estimates of how much it’s possible to make from investing in the stock market vary.
How much money you can make from stocks in a month will ultimately depend on which companies you buy shares in and which investing strategies you use to boost your monthly income.
In this guide, we’ll be explaining how to ensure that your investments bring you a monthly income and estimating how much you can expect to make from stocks on a monthly basis.
Is It Possible To Make Money From Stocks Monthly?
The good news, if you were worried about whether or not investing is a viable way to make a monthly income, is that it’s totally possible.
If you implement the correct strategies, you can see your bank balance growing thanks to your stock investments on a monthly basis.
Even better, the monthly income you can make from stocks will be passive, meaning that you don’t have to go out and do extra work in order to earn it.
However, bear in mind that you will probably need to plan your investment strategy carefully if you want to make a steady income from stocks (see also ‘What Are Income Stocks?‘).
While many first-time investors expect to be able to rely on the traditional ‘buy and hold’ method of investment, this doesn’t work for everyone, so you’ll need to do your research, starting with the information in this article.
How To Make A Monthly Income From Stocks
If you’re not sure where to start with your stock investment strategy, don’t worry. We’ve compiled some tips to help you make as much money as possible per month by investing in stocks.
Look For A Strong Dividend History
The vast majority of stock experts, including ourselves, would recommend prioritizing stocks that allow shareholders to receive dividends.
Dividends are the easiest way to ensure that you make regular income from your investments.
When a company makes a profit from the common stocks in its portfolio, stockholders are paid in accordance with that profit.
On the other hand, preferred stocks sometimes offer a fixed dividend that doesn’t rely on the amount of profit made. That’s why stocks with a good history of dividends are referred to as ‘income stocks’.
If you don’t know where to start looking for strong dividend histories, consider REITs. REITs are Real Estate Investment Trusts and while they don’t offer many opportunities for investment growth, they are liquid compared to other forms of investment and pay out dividends regularly due to their investments in real estate, which generates significant income.
Consider Covered Calls
You may not have heard of the covered call method of investing in the stock market, but if you’re new to investing and want to make a monthly income, you should definitely look into it.
Covered calls involve some nuances that we don’t have time to explore fully in this article, but basically, this method is a low-risk, short-term strategy for making a monthly income.
It involves selling call options while owning an equal amount of the stock. This means that if the stock goes down, or even if it remains flat, you’ll make money on that investment.
Admittedly, this method is not as reliable as receiving dividends regularly, but it’s an effective short-term strategy nonetheless.
Don’t Rely On Day Trading
We always caution against relying on day trading if you want to make a consistent monthly income, particularly if you don’t have a lot of time on your hands or are new to investing.
First of all, day trading does not generate passive income. It requires consistent effort, focus, and research, and if you’re not 100% confident in what you’re doing, it’s easy to lose a lot of money.
How Much Monthly Income Can You Make from Stocks?
As we mentioned earlier, it’s difficult to give a simple answer to this question because the exact amount of money you’ll make per month from investing in stocks will depend on your strategy.
However, we do know that on average, stocks pay shareholders dividends of between 2% and 5% relative to the stock’s value.
So, let’s say you bought $10,000 of stocks and the company pays dividends of 5%. That would mean that you would earn $500 on a quarterly basis, which works out as a monthly income of $166.67.
Considering that 5% is the higher end of what most stocks pay shareholders in dividends, you can see that even significant investments of several thousand dollars do not necessarily yield massive incomes.
If you wanted to make, say $1000 per month just from investing in stocks, you’d need to increase your initial investment by quite a lot.
Using the same dividend rate as above, you would need to buy stocks for $120,000 at 5% to make this kind of monthly income.
Now, obviously, most people don’t have $120,000 to invest in the stock market, so if you want to make a sizeable monthly income without so much financial risk, you can try looking for the (relatively rare) stocks that pay higher than 5% dividends and allow you to earn more money on a smaller investment.
It’s important to do thorough research on any company that claims to pay its shareholders more than 5% in dividends, and remember that even fixed dividends may decrease due to economic downturn.
It’s possible to make a decent monthly income from investing in stocks if you prioritize companies with good dividend histories and use short-term methods such as covered calls.
The amount of money you can make per month depends on what dividend rates your chosen companies offer and how much you’re willing to invest.
If you invest $10,000 initially and you’ve chosen a company that pays 5% dividends, you will make $166.67 per month.
Investing more money on companies with higher dividend payouts will yield the most income per month.