8 Ways To Earn $1,000 Per Month by Moving Your Money Into These Types of Accounts
Written by
Jamela Adam
Edited by
Rebekah Evans
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If your money is just sitting in your checking account, collecting dust, you’re potentially losing thousands of dollars each year. With interest rates on the rise, you could earn $1,000 a month (or more) just by parking your cash in the right accounts.
Here are several types of accounts to move your money into if you want to earn a four-figure passive income each month.
High-Yield Savings Accounts
As the name suggests, a high-yield savings account is a type of savings account that pays you a much higher interest rate than a traditional savings account. Some of the best high-yield savings accounts today offer rates of 4% to 5% APY, whereas traditional banks typically offer APYs of less than 1%.
To earn $1,000 per month solely from an HYSA, you’d need a pretty big balance of $240,000 to $300,000, assuming a 5% interest rate. But even if you don’t have that much saved up, parking your cash in a HYSA is a solid and secure way to grow your net worth while keeping it liquid.
Certificates of Deposit
Certificates of deposit or CDs, are a type of savings vehicle that offers you guaranteed returns if you lock in your money for a set term — typically anywhere from six months to five years. If you put $250,000 into a 5% APY CD, you could generate a bit over $1,041 per month. That said, most people don’t have that much cash to lock away in a CD. Still, putting a portion of your money into CDs could provide a reliable income stream with higher returns than regular savings.
Money Market Accounts (MMAs)
A money market account is essentially a mixture of savings and checking accounts. You can think of it like a savings account that also has debit card and check-writing privileges. Most MMAs have higher interest rates than traditional savings accounts, with some offering around 4% to 5% APY, similar to HYSAs. To generate $1,000 per month, you’ll need a balance of around $250,000 at a 5% APY.
Dividend-Paying Stocks
Dividend stocks are shares of companies that pay investors a portion of the company’s earnings, often on a quarterly basis. Let’s say you invest in dividend-paying blue-chip stocks with an average yield of 4% to 6%. You’d need anywhere from $200,000 to $300,000 invested to earn over one grand a month. If you want to diversify your portfolio and still receive consistent payouts, look into high-yield dividend ETFs.
Real Estate Investment Trusts (REITs)
Real estate investment trusts (REITs) are companies that own or finance income-producing real estate like shopping centers and office buildings. By pooling funds from individual investors, REITs can use those funds to build a portfolio of real estate investments. And by law, REITs are required to distribute at least 90% of their taxable income to shareholders. This allows investors to earn passive income from real estate without owning property. Many REITs yield 5% to 8% each year, which means you’ll need somewhere between $150,000 and $250,000 invested to reach $1,000 per month.
Bonds and Bond Funds
Putting your money in government and corporate bonds is a solid way to earn a steady and low-risk income. Bond yields are currently sitting at around 4% to 6%, which means a $200,000 to $250,000 investment could generate around $1,000 per month. Bond ETFs and mutual funds also offer a hands-off way to diversify bond investments and create a predictable income stream.
Peer-to-Peer (P2P) Lending Accounts
P2P lending allows you to borrow or lend money directly from another individual, cutting out the traditional bank as the middleman. As the “lender,” you can earn interest with average returns between 6% and 10%. This means an investment of $120,000 to $200,000 could generate $1,000 per month in passive income.
But remember, P2P lending is pretty risky since you typically won’t get reimbursed by the Federal Deposit Insurance Corporation when P2P platforms fail. So, perform your due diligence before jumping in.
Annuities
Annuities are contracts between you and an insurance company where you pay them, either in a lump sum or through multiple payments and in return, you receive guaranteed fixed payments over time — typically for life.
For example, a $200,000 investment in a fixed annuity with a 6% payout rate could provide a steady $1,000 per month for life.
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