How can I generate a monthly income from my individual brokerage account?
I have an individual brokerage account through Vanguard with $10,000 in the account. Is there any way that I can take part of that amount and use it to generate a monthly income for living expenses?
Invest some or all of the money into dividend yielding ETF's and make sure the account is not configured for Dividend Reinvest. The higher the yield the higher the risk. Take a look at some REIT ETF's, Some MLP ETF's, preferred shares ETF's. Good yields there.
Of course you can invest for income. You can buy 2-year Treasuries and earn 1.8% -- in which case you can withdraw $15 per month for living expenses. You can buy a long term corporate bond fund and earn 4% -- in which case you can withdraw $33 per month for living expenses. You can go all-in and buy a more risky mortgage REIT and earn 11% -- in which case you can use $91 per month for living expenses.
See the problem? $10,000 is not enough to make a difference. You are much better off living a less-profligate lifestyle. Make a game of it. Live frugally. Give up a few indulgences and put the savings into your account. "Pay yourself" every month along with the rent, utilities, etc. Be disciplined. Set a goal of having $20,000 in that account by the end of next year. And $500,000 by the time you retire.
It's possible to make a monthly income if you start day trading or swing trading that money. There aren't any other options available. You can purchase dividend-paying stocks, but I doubt that you would make enough money to pay your living expenses.
If you decide to begin day trading, be sure to do your homework and don't be afraid to leverage technology.
Hi, great question.
There are a number of ways to generate income from a brokerage account. They include:
- investing in stocks, bonds, or funds that pay regular dividends and/or interest
- conservative derivative strategies
- stock-yield enhancement programs
In all cases, the most important thing to focus on is selecting investments that are consistent with your tolerance for risk. You should also be aware of fees and commissions. Vanguards' commissions are relatively high as compared to other firms. High fees and/or commissions can significantly reduce your overall return. In addition, be aware of margin trading. Securities traded on margin not only increase your overall exposure to risk, but the brokerage firm will charge you an monthly margin rate.
If you have any questions, feel free to contact me personally. Thanks