Investments That Provide Monthly Income

As retirement draws near it’s important to start thinking about how you will convert your nest egg into cash flow. After all, your retirement goal all along should have been to create a certain level of cash flow. Figuring out your “number”, or savings goal is important, but ultimately that goal was (or should have been) based on the amount of income it could generate.

Kiplinger’s had a article yesterday that outlined several ways to generate income monthly. I had never really thought about it before, but most individual bonds as well as stock and bond mutual funds make quarterly or annual distributions. I can see a need for funds that make distributions monthly, especially for people who are on a very tight budget.

The article lists several types of investments worth consideration that make monthly distributions, including bond funds, REITS, high dividend stock funds, and energy trusts. I haven’t reviewed any of the suggestions in detail, but as always I would personally prefer index-type funds (like the Vanguard Total Bond Market Index that’s mentioned) and/or funds with low fee structures.

You also need to plan your investments based on your current income situation. If you’re in a high income bracket due to regular income from a j-o-b or perhaps a pension, then you may be better off looking for funds or investments with more capital gains growth and less income generation.

For more tips on generating income from a portfolio, please check out Early Retirement Extreme’s excellent article on the topic here.

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