How To Turn $200,000 Into Monthly Income
Written by
Cindy Lamothe
Edited by
Ashleigh Ray
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Everyone’s met that one person who makes money effortlessly. They’re always generating income, and they don’t kill themselves working. The big question is: how do they do it?
According to experts, it’s all about making your money work for you. If you have a good amount of capital like $200,000 in the bank, you can turn that into monthly income. Below are some ways to help you do exactly that.
Dividend Stocks
“I have experience helping clients generate monthly income from invested capital,” said Russell Rosario, a certified public account (CPA) and the co-founder/chief financial officer of Profit Leap.
“With $200,000, I would recommend investing in dividend stocks, which can yield 3%-8% annually and generate $500-$1,600 per month.”
He said to focus on stable, well-established companies with a history of consistent dividends. Then, reinvest those dividends to increase your income over time.
“Review and rebalance periodically based on performance and risk tolerance,” added Rosario.
Nischay Rawal, also a CPA and the founder of NR CPAs & Business Advisors, equally agreed that it’s a wise strategy to invest in dividend-paying stocks.
“With $200,000, you could invest in companies like Coca-Cola and Johnson & Johnson, which yield 2%-3% annually,” said Rawal. “Reinvesting dividends over time could generate $500-$1000 per month.”
Private Lending
According to Rosario, private lending is another good option. He said, “You can earn up to 10% annually lending to individuals with good credit, generating $500-$2,000 per month.”
He added that it’s important to diversify across many short-term notes to minimize risk.
“Strictly vet borrowers and get adequate collateral for the best returns,” he advised.
Rental Real Estate
In general, experts recommend rental real estate for long-term income.
“You could purchase 2-3 units with standard mortgages and generate $3,000-$5,000 in monthly income after expenses,” said Rosario.
But to do this, he said it’s crucial to target stable tenants and maintain competitive rent.
“Handle maintenance and open communication promptly to optimize your returns,” he continued. “With discipline and diligence, $200,000 in capital can absolutely be turned into a meaningful monthly income stream through the right investment choices.”
The key, he said, is balancing risk and return to generate consistent cash flow for your financial goals.
Property manager, real estate investor and owner of Proactive Property Management, Daniel Rivera also recommended investing in rental properties.
He similarly recommended focusing on stable, long-term tenants and competitive rent rates. And echoed that “[regular] maintenance and open communication are key.”
Real Estate Investment Trusts (REITs)
For hands-off income, some experts recommend private real estate investment trusts (REITs), targeting 6%-8% returns.
According to Rawal, “This could generate $1000-$1500 per month on $200,000.”
But he also pointed out you should “[ensure] the REIT focuses on stable, income-producing properties with modest leverage.”
Agreeing with him, Rivera explained that private REITs pool funds for commercial real estate. He said, “Non-publicly traded REITs target 6%-8% annual returns or $1,000-$1,400 per month on $200,000.”
Micro-Investing Apps
Another excellent idea for making your money work for you is through micro-investing apps, which round up your everyday purchases to the nearest dollar and invests whatever’s left as spare change.
“These small bits can add up over time to become a serious portfolio,” said Adam Garcia, a chartered financial analyst (CFA) and the founder of The Stock Dork.
He said it’s an easy way to generate income and perfect for busy professionals who always seem to be on the go.
“Micro-investing is perfect if you want to get started with investing without committing large sums up front,” added Garcia. “Like seeding your financial forest.”
Private Real Estate Syndications
Garcia recommends people think outside the box of traditional real estate. He said, “Private real estate syndications pool money from various investors to purchase commercial property.”
Generally, these investments offer an income stream through rents, and possibly appreciation.
“However, beware: this type of investment requires serious due diligence,” he warned. “So, of course, engage experts in the field.”
Garcia continued, noting that private real estate syndications allow investors to access high-quality commercial properties without the headaches of direct ownership.
“You can own a piece of that trendy downtown office building,” he added.
Dividend Growth ETFs
While many experts recommend dividend stocks, Garcia suggests dividend growth ETFs.
This is an invested fund in companies that have shown continuous growth in dividends. They offer diversification with the potential for income generation and capital appreciation.
“Dividend growth ETFs combine the best of both worlds: steady income and long-term growth,” said Garcia. “It’s like having a diversified dividend portfolio in a single investment.”
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