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

This is how you can make $1,000 a month in passive income.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Generating income is getting tougher these days, so reaching $1,000 a month of passive income could be a difficult task.

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

A simple solution to make more money would be to get a second job. But when you're paid by the hour it's hard to make a lot of money without working a lot of extra hours at somewhere like Woolworths Group Ltd (ASX: WOW), Coles Group Limited (ASX: COL) and Wesfarmers Ltd (ASX: WES).

Another way to boost your income could be to start a blog about a topic that you have a lot of interest or knowledge in. Writing a blog can be an excellent way of improving your written communication skills. Blogs can generate an income if you attract a decently-sized audience.

Some bloggers promote referral programs of various products or services where they earn a commission if a user signs up to that service or buys the product. There are some people that earn tens of thousands of dollars a month from these programs. Some examples of these referral programs are Amazon books and Uber.

Online video making, such as YouTube, is also a way to generate a good income if you build up a big enough following.

But, by far, I think the best way to build a passive income is owning assets that pay cashflow. An income of $1,000 a month isn't easy to make, but it's certainly possible.

You have to bring an attitude of saving money and spending less than you earn. Doing that will enable you to invest some money into the share market and it will compound over time.

For example, if you just 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 ASX shares like Naos Emerging Opportunities Company Ltd (ASX: NCC) and WAM Research Limited (ASX: WAX).

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), BetaShares Australia 200 ETF (ASX: A200) and Australian United Investment Company Ltd (ASX: AUI) when you include the franking credits.

Foolish takeaway

I can't wait for my portfolio to earn an average of $1,000 of month of passive income.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended 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.

More on Personal Finance

A man walks up three brick pillars to a dollar sign.
Personal Finance

How to replace your wage with passive income in 3 steps

It’s a straightforward process to replace a salary with dividends.

Read more »

Cubes with tax written on them on top of Australian dollar notes.
Tax

How much tax do your ASX shares pay? Why it might matter

Taxes. One of the two unavoidables in life.

Read more »

a small girl empties a piggy bank of coins onto a table while her mother looks on in the background.
Personal Finance

Relying on bank term deposits to build wealth? You need to read this

Looking to grow your net worth? Term deposits may not be the best choice.

Read more »

Elderly couple look sideways at each other in mild disagreement
Retirement

How would the proposed unrealised gains tax impact your superannuation?

If passed, the impacts could be profound for those with higher-end super balances.

Read more »

a mature but cool older woman holds a watering can and tends to a healthy green plant growing up the wall in her house.
Personal Finance

$50,000 in an offset? The hidden cost of not investing in ASX shares

Saving 7.5% using an offset is not the same as earning 7.5% on shares.

Read more »

A young woman with a ponytail stands at the crossroads, trying to choose between one way or the other.
Personal Finance

Dividends or capital gains from ASX shares: Which are better?

Should investors be more interested in one type of return over another?

Read more »

parents putting money in piggy bank for kids future
Retirement

Delayed retirement and other costs of being the Bank of Mum and Dad

A survey shows delayed retirement and lost opportunities to travel are among the costs.

Read more »

A guy wearing glasses tries to show off his muscles.
Personal Finance

5 ways ASX shares investors define financial success

What does financial success mean to you?

Read more »