The best way to produce montly income with 100k?

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Mbrown
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The best way to produce montly income with 100k?

Post by Mbrown »

Since the purchase of this 100k is to produce monthly income. The risk can't be really high, but what are some of the options to invest 100k and produce monthly income?


How much income should I expect monthly from that certain investment? Please guide me
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JMacDonald
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Post by JMacDonald »

Hi,
I don't know the "best" way to produce income, but you might consider this fund: https://personal.vanguard.com/us/funds/ ... IntExt=INT
Best Wishes, | Joe
sport
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Post by sport »

Most banks and S&Ls offer Certificates of Deposit that have a monthly payment option. This is extremely safe as long as the bank is FDIC insured. There are also similar accounts at insured credit unions. At 4.5% interest you would receive about $375 per month.

Best wishes,
Jeff
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Dale_G
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Post by Dale_G »

The Target Retirement Income fund Joe suggested will return about $4,080 per year or about $340/month. The fund holds about 71% bonds and cash - and 29% equities. It has the potential for some growth and a small amount of inflation protection.

Another alternative is Vanguard's Total Bond Market if you are strictly interested in income. This fund will return approximately $4,530 per year or about $377 per month. This fund is a pure bond fund, so you should not expect any growth in principal.

Cd's are also a possibility. Some short term Cd's are available at 4.75% or slightly better, but withdrawals are subject to penalties.

The market is the market. There are no higher returns available without increasing the risk.

Dale
Volatility is my friend
sport
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Post by sport »

Dale_G wrote: Cd's are also a possibility. Some short term Cd's are available at 4.75% or slightly better, but withdrawals are subject to penalties.
What Dale states is correct. However, it should be made clear that there are generally no penalties for taking interest from a bank CD. The penalties only apply if you withdraw principle prior to maturity.

Jeff
savermike
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annuity OK?

Post by savermike »

If it's OK to not ever see the principal again, you could look into an inflation (CPI-U) indexed Single-Premium Immediate Annuity (SPIA). There are a handful of sources for them, including Vanguard:

https://personal.vanguard.com/us/accoun ... ontent.jsp

Into the instant quote feature I plugged in $100,000 for a 60 year old (arbitrary) male, and got $437/mo for life, increasing with inflation.

The risk involved is the solvency of the insurer.

Annuities are complex; your milage would certainly vary.

Mike
dbs119
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income

Post by dbs119 »

I would suggest buying stocks in the dividend aristocrats or high-yield dividend aristocrats. They are yielding 3.5-4% right now, but since they are well established companies with stable earnings, they tend to increase their dividends year after year, so as the years progress your yield on cost would increase significantly.
georgepds
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Post by georgepds »

Perhaps an annuity, that is what they are designed for.
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BigD53
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Post by BigD53 »

"This 100k is to produce monthly income. The risk can't be really high."


Target Retirement Income pays the dividends quarterly, not monthly. So that fund may not work for you.

You might consider these short-term bond funds that pay dividends monthly:
- Short-Term Bond Index Fund
- Short-Term Investment Grade Bond Fund

Excellent performance history for these two funds, with very little volatility.
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ken250
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Post by ken250 »

Mbrown,

I think Wellesley Income (VWINX) might be a fund to look at.

This fund should have high odds of producing 4%/year, so...

100,000 x .04 / 12 = 4,000 / 12 = $333.33/month.

This is the easy part though, what you really want is for that monthly income to increase over time to keep up with inflation...VWINX has excellent chances of keeping up with reasonable inflation levels. I can post a detailed calculation on this, if you wish.

VWINX is a conservative investment, there are more agressive investments that will deliver higher monthly income but will be taking on more risk.
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Adrian Nenu
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Post by Adrian Nenu »

75% - Short Term Bond Index or Intermediate Muni (depending on tax bracket)
25% - TSM + FTSE All World except US (50/50)

Adrian
anenu@tampabay.rr.com
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