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How to generate $1,000 a month in passive income

Tristan Harrison

Generating income is getting more difficult these days, so getting to $1,000 a month in passive income could be difficult.

Wage growth is happening at a slow pace, so the best thing to do might be to try to boost your income with alternative methods.

Obviously you could try to get a second job, but there’s no way you can earn a lot more money without working a lot of hours at, for example, Coles Group Limited (ASX: COL), Woolworths Group Ltd (ASX: WOW) or Wesfarmers Ltd (ASX: WES).

Other ways could be starting a blog about a subject you have an interest in. Blogs can be a great way to improve your writing skills over time as well. Blogs can generate passive income if you get an audience.

There are also things like online surveys you can do, but that’s not really passive income, but it can be done whilst you’re watching TV. ‘Referral’ programs can also be used to generate income, but that only works if you can send a lot of people to your referral system. There are some people/bloggers that earn tens of thousands of dollars every month from their referral programs to products from Amazon, Uber and many other things.

But, I think the best way to generate passive income is with assets that pay you cashflow. An income of $1,000 a month isn’t easy to make but it could be possible to do over time.

It takes an attitude of saving money, of spending less than you earn. By doing that you can put some money to work in the share market which can compound over time.

For example, if you can invest $500 a month which returns 10% a year, in 12 years you could have a portfolio worth $128,000 which would generate an annual income of over $12,000 a year if you invest in high-yield (10% or higher) ASX shares such as WAM Research Limited (ASX: WAX) and Naos Emerging Opportunities Company Ltd (ASX: NCC).

A portfolio worth $240,000 with a dividend yield of 5% would generate the desired income of $12,000. I think that yield is entirely possible if you were to just invest in the ASX market through an investment like Vanguard Australian Share ETF (ASX: VAS) when you include the franking credits.

Foolish takeaway

I’d love to get my portfolio to earning an average of $1,000 a month of passive income.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019