How Much to Invest for $2,000 in Monthly Passive Income (2024)

Christopher Liew, CFA

·3 min read

How Much to Invest for $2,000 in Monthly Passive Income (1)

Written by Christopher Liew, CFA at The Motley Fool Canada

People invest for capital appreciation and to build retirement wealth, although others want to generate regular passive income streams. Earning $2,000 in monthly passive income sounds unbelievable but is achievable through dividend investing. However, the investment amount required to produce the desired income is considerable.

To make $2,000 in dividend income, the investment amount and rate of return must be $400,000 and 6%, respectively. If the rate is lower, say 4%, the upfront investment is $600,000.

High-yield TransAlta Renewables (TSX:RNW) pays monthly dividends on the TSX. Given the stock price ($11) and yield (8.19%), you only need to buy $293,040 worth of shares to arrive at $2,000 per month. Assuming your available funds is $41,350, and the stock price and yield remain constant, it will take 24 years to hit the objective.

Green investment

TransAlta Renewables generates contracted cash flows from long-term power purchase agreements. The $3 billion company has owned assets in Canada (wind, hydro, and gas) and economic interests in Australia (gas) and the United States (wind and solar).

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In Canada, TransAlta Renewables is one of the largest wind power generators. The aggregate or combined gross installed capacity (owned assets and economic interests) is 2,993 MW. In 2022, revenue increased 19.1% to $560 million, although net earnings fell 47.1% year over year to $74 million.

Wind power is TransAlta’s largest renewable fleet, although volume is strongest in the first and fourth quarters. In the second and third quarters, hydro delivers a higher volume. Fortunately, net earnings in Q1 2023 rose 9.7% to $45 million versus Q1 2022, notwithstanding the underperformance of the Canadian wind fleet due to lower-than-normal wind conditions.

Its President, Todd Stack, said, “We remain on track to meet our 2023 guidance largely due to the performance of our diversified operating portfolio.” The Adjusted EBITDA target this year is between $495 million and $535 million compared to $487 million, while free cash flow could reach a high of $380 million versus $347 million last year.

Clean energy expansion

TransAlta plans to expand its existing assets to realize incremental growth in a competitive environment. The early-stage development projects in the three countries would add 685 MW after completion from 2025 to 2028.

Despite the effect of seasonal variations on business results, long-term contracts with strong counterparties should provide stable cash flow and consistent shareholder returns. Thus far, since the IPO, TransAlta has never missed paying a monthly dividend since September 13, 2013.

TransAlta believes that 2020 is a decade of massive clean energy expansion. The company is ready to invest in clean energy solutions and excited about its role in the transition.

Spread the risks

TransAlta Renewables attracts income investors because of its juicy dividends and consistent dividend history. However, building a dividend income portfolio instead of a single-stock investment is safer. You spread the risks through diversification or investing in a mix of companies.

Dividend investing ensures protection against price declines or fluctuations. Also, the power of compounding is at play when you reinvest the dividends. You can start small and add more shares as you go along. Money growth is slow, but you’d accomplish your objective of earning $2,000 in monthly passive income over time.

The post How Much to Invest for $2,000 in Monthly Passive Income appeared first on The Motley Fool Canada.

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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

2023

How Much to Invest for $2,000 in Monthly Passive Income (2024)

FAQs

How much do I need to invest to make $2000 a month? ›

Earning $2,000 in monthly passive income sounds unbelievable but is achievable through dividend investing. However, the investment amount required to produce the desired income is considerable. To make $2,000 in dividend income, the investment amount and rate of return must be $400,000 and 6%, respectively.

How to make 2k a month passive income? ›

  1. 14 Proven Ways to Make $2,000-$3,000 Per Month in Passive Income. ...
  2. Build a High-Earning Blog. ...
  3. Self-Publish Books on Amazon Kindle. ...
  4. Invest in a High Cash Flow Duplex House. ...
  5. Fund Real Estate Projects with Crowdfunding. ...
  6. Invest in Triple Net Lease Properties. ...
  7. Launch Multiple Affiliate Websites.
Jan 2, 2024

How much do you need to invest for passive income? ›

Living off passive income alone is feasible, but the amount needed depends on your lifestyle and expenses. Generally, financial advisors suggest having enough invested to generate 25 to 30 times your annual living expenses.

How to make $2,500 a month in passive income? ›

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.

How much do I need to invest to make $1,000 a month? ›

Reinvest Your Payments

The truth is that most investors won't have the money to generate $1,000 per month in dividends; not at first, anyway. Even if you find a market-beating series of investments that average 3% annual yield, you would still need $400,000 in up-front capital to hit your targets. And that's okay.

Is $2000 a month good for a single person? ›

Living on $2,000 per month is doable, but you won't be able to live just anywhere. This is important because at the time of writing the average Social Security benefit paid is $1,701 per month.

How to make $3,000 a month passive? ›

  1. 16 Proven Ways to Make $3,000-$4,000 Per Month in Passive Income. ...
  2. Own Rental Property Empires. ...
  3. Invest in Dividend Stocks & Funds. ...
  4. Launch a Supplement Brand. ...
  5. Syndicate Real Estate Projects. ...
  6. Launch a Membership Community. ...
  7. Build an Ecommerce Store. ...
  8. Invest in High Cash Flow Multifamily Properties.
Jan 2, 2024

What is the best investment to get monthly income? ›

You can likely find something to fit your needs from this list of the best monthly income investments:
  • Savings Accounts. ...
  • Certificates of Deposit (CD) ...
  • Dividend-Paying Stocks. ...
  • Bonds. ...
  • Annuities. ...
  • Rental Real Estate. ...
  • Real Estate Investment Trusts (REITs) ...
  • Business Ownership.
Mar 1, 2024

How much passive income do you need to live comfortably? ›

Dollar amount of enough

There is no hard and fast dollar amount that defines “enough”, but most people agree that you need to make at least $1,000 per month consistently in order to live a comfortable life with no worries. This is an incredible way to gauge how much money you are bringing in!

How much money do you need in the bank to live off interest? ›

Many investors target $1,000,000 as the magic number for retirement. Here's how the numbers break down. Earning 2% on a savings account, you could receive $20,000 in interest each year. Conservative stocks paying 4% generate $40,000, while higher-risk stocks averaging 10% generate $100,000 in interest.

How to make $2,000 a month easy? ›

Many of these can eventually turn into your full-time gig, but you can work on them on the side initially.
  1. Freelancing. ...
  2. Online Tutoring. ...
  3. Virtual Assistant. ...
  4. Blogging and Affiliate Marketing. ...
  5. Delivery Driving and Rideshares. ...
  6. Dog Walking and Sitting. ...
  7. Rent Out Your Place. ...
  8. Photography.
Apr 28, 2023

How can I make $4 000 a month passive income? ›

Top 5 Unique Ways To Get Passive Income — Earn $4,000 Per Month
  1. Peer-to-Peer Lending. ...
  2. Rental Properties. ...
  3. Dividend Investing. ...
  4. Create an Online Course. ...
  5. Build a Niche Website. ...
  6. Peer-to-Peer Lending. ...
  7. Rental Properties. ...
  8. Dividend Investing.
May 19, 2023

How much will I have if I invest $500 a month for 10 years? ›

What happens when you invest $500 a month
Rate of return10 years30 years
4%$72,000$336,500
6%$79,000$474,300
8%$86,900$679,700
10%$95,600$987,000
Nov 15, 2023

How much will I make if I invest $100 a month? ›

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.

How much money do I need to invest to make $4 000 a month? ›

Too many people are paid a lot of money to tell investors that yields like that are impossible. But the truth is you can get a 9.5% yield today--and even more. But even at 9.5%, we're talking about a middle-class income of $4,000 per month on an investment of just a touch over $500K.

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