Updated 18.03.2022

Investments that Pay Monthly Income in South Africa

Investing is rewarding. This is especially true if you do it the right way. However, you first have to find the right investment. To do this, you need to define the parameters of your ideal investment. For instance, your ideal investment could be one that earns you monthly income, or one that is not labour intensive. Once you have an idea of the type of investment you would like to pursue, you should proceed to assess its suitability in the prevailing market condition. These types of collective investment schemes are often used as part of or alternatives for pension funds and retirement funds.

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Most people thinking about starting investments that can earn monthly income often consider buying shares of a company, becoming credit providers, or opening their own business or even taking out an income paying insurance policy. Regardless of sector or type, a good investment can guarantee you a regular monthly income. In most of these investments, they are often asset based and the income should increase with time in order to beat inflation. Read on to learn some of the investments that will earn you monthly income.

Buy to Let Real Estates

Real estates are the most convenient way to secure a monthly income, albeit being expensive investment options. There are several types you can invest in, including Commercial Real Estates, Residential Real Estates, and Self Storage Units.

Commercial Real Estates are buildings offered as work space. These are typically used for offices. They have a higher rent than other real estates for this reason. They are equally more expensive to buy than the other types. It is one of the best investments for a monthly income.

Residential Real Estates are the next most profitable types after Commercial ones. These types are living spaces. You can derive a good income from them provided you choose the best type of housing for your chosen location.

The last type of Real Estate you can invest in for regular income is Self-Storage Units. Self-Storage Units are in demand throughout, unlike Commercial and Residential Real Estates that have highs and lows depending on the time of the year and the economy. They provide room for safe keeping of rarely used tangible personal property.

Any of the three will earn you monthly income for as long as you have tenants. If you don’t have the initial buying capital for a Buy to Let Real Estate investment, you should consider a mortgage. With proper planning and an ideal location, you should find it easy paying off the mortgage. After the mortgage term is over, you will enjoy a substantial monthly income from your investment.

Also, if you are unwilling to deal with repairs, maintenance, rent payment follow ups and remunerating regular government dues; you can outsource these managerial roles to a real estate agency or invest in REITs.

Equity Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts, or REITs, are companies that invest on real estates for you so that all you need to do is invest in them. There are two types of REITs, Equity REITs and Mortgage REITs. Equity REITs rent out Real Estate for income while Mortgage REITs sell mortgages and loans. You can get part ownership of these REITs by buying their shares (also called stocks).

Buying shares in an Equity REIT is a cheaper option compared to buying property because they are available at very low prices. Buying shares guarantees you dividends which are usually given out as monthly payments. They can be bought on a stock market, an exchange market (like the Johannesburg Stock Exchange) or through financial service providers (like banks).  

Preferred Stocks

A stock or share is part ownership of a company. There are two main types of stocks, common stock and preferred stock. Common stocks give investors controlling interest in the company while preferred stocks give investors more consideration when dividends are given out. Owning a preferred stock guarantees you a higher better income than any other kind. The income can also be given out monthly. More so, if the company collapses, the first persons to be reimbursed are preferred stock owners. Just like Equity REITs, preferred stocks can be bought on the stock market, on an exchange market, or through financial service providers.

Living Annuity

Although a living annuity is usually part of retirement planning, it is available to anyone who wants it for the regular monthly income it offers. Living annuities are common with retirees not only because those who receive lump-sum pensions are required by law to invest two thirds of it in an annuity, but also because they have to be annuitized before they start doling out monthly payments. Annuitization is the process through which an annuity is funded before it matures into a regular income. If you have a lump-sum amount, the annuitization process is faster than if you want to buy using small regular instalments. For this reason, it may be too expensive for investors with a small budget.

The regular monthly income drawn from a living annuity is not fixed. This is because living annuity is an investment kitty that must be used to buy securities. A fact that makes living annuities a good go between for an investor who wants to earn a regular income and grow their regular income at the same time. Only, you risk reducing your living annuity too. So you must make good investments on your living annuity. Most of the time, living annuity providers does not decide for you where your living annuity should be invested. However, you are allowed to employ a financial advisor to help you invest your living annuity. You should use a financial advisor if you don’t know how to invest.

A living annuity is an insurance policy because it is an annuity. It is not a security like stocks and currencies. It therefore does not ascertain your income will last forever. The income is fully dependant on the returns you make on investments. The added bonus is that when you die, your living annuity will be inherited by your beneficiaries and dependants. For this reason, it is a good legacy strategy. The transfer from your account to the beneficiary’s account and full lump-sum or partial payments they get are not taxed. All other transfers you make are also not taxed. The tax benefit extends even further. Your living annuity is not liable to capital gains, dividends and income taxes. You will help you maximise returns on your investments because of this.

Sole Proprietorships

As an investor, you have the option to start and grow a business. This is the simplest way to invest, but it is also the most involving investment. In a sole proprietorship, you have to adopt both the ownership and managerial roles of the business because you are investing in yourself. On one hand, both roles give you the flexibility to make business decisions. On the other hand, it puts a lot of responsibility on your shoulders. The business lives or dies with you.

As the owner and manager of your sole propriety, you also have the liberty to pay yourself at any time with any duration in between. You can schedule your payments daily, weekly, or monthly for example. Monthly payments are the most convenient because it is easier to manage tax payments, employee salaries and business health oversight if you do. It is important to note that a sole proprietorship is not a passive income idea. Start-ups need a lot of time and effort from the founder members. Thus, it is not a good idea for a monthly income if you are already preoccupied by another time consuming job.


Partnerships are types of business to that are founded, managed and owned by two or more people. Like sole proprietorships, partnerships allow you to allocate the periodic salary payments you will receive and are time and energy consuming. In the case of partnerships though, you share the costs, input and subsequent profits with your partners. Collective effort and collective investment coupled with a shared vision and mission make partnerships a better choice of investment than sole proprietorships. Partnerships grow faster as compared to sole proprietorships. They should be a good investment if you find the right partners.

Peer to Peer (P2P) Lending

Peer to peer lending (P2P), is giving out loans to individuals and small businesses through an intermediary. These intermediaries are found on P2P lending websites like Rainfin or in walk in offices like Ekasi bucks lending (which is currently closed). Peer to peer lending is preferred by debt seekers who do not like loaning directly with financial institutions like banks. Although risky, it is a good way to get interest on your investment that is paid monthly.

Short Term Bonds

Buying government, corporate or agency bonds is a good way to gain a monthly income. Bonds are debt instruments that the government, institution or a company issues to raise funds or capital. Buying a bond is essentially giving out a loan. It is expected that a loaner gets paid back with interest and that is also the case with bonds.

The interests bonds earn are paid before the debt is paid back. They are paid during the term of the bond. That is how you will earn a monthly income. The principal amount is paid back at the end of the term (known as the maturity date). Bonds come with a risk of default. Buying a bond, especially corporate or agency bonds increases the likelihood you might lose your money if the bond issuer defaults. Short term bonds last for one to five years. If you buy them, you will have a lower risk of default. However, the draw back with short term bonds is that they have low interest. All bonds are found in exchange markets like the Johannesburg Stock Exchange (JSE) and can be a good way of diversifying your investment portfolio. 

Long Term Bonds

Long term Bonds have terms lasting between 12 to 30 years. For this reason they come with the advantage of a higher interest rate and the disadvantage of a higher risk of default. Investors buy them for their higher interest rates. It is important to note, however, that these bonds are more affected by interest rates than short term bonds. Normally, higher interest rates reduce the value of a bond that is in holding. This is because the bond would cost more if it were on the market. And so, at the same interest, the price must be lower to keep up with the changes on the market. It is necessary to do so because the bond will only sell at the adjusted value. If you want regular income from a lump-sum amount, long term bonds are an option. You can also invest in local bonds via unit trusts and on the JSE.

Fixed Deposits

Fixed deposits are accounts that banks offer retail customers who want to save. In these accounts, you deposit an amount of money for a fixed period in which you gain interest. Most fixed deposit accounts let you draw the interest on a monthly basis at your discretion. The deposit is supposed to stay for the duration of the deposit. In case you request to withdraw from the account, you will be charged an early withdrawal penalty fee. Due to the nature of these accounts, they are mostly used for savings rather than as an investment. However, if the interest rates on the amount you have present a lucrative opportunity, you can use fixed deposit accounts as an investment tool.

In Summary

If your investment goal is to gain a monthly income, real estate is the best investment you can make. Unless they are mismanaged, real estate’s rarely depreciate. As a consequence of this, they almost always beat inflation. The only downside to real estate is the fact that they require a big capital investment.

Investing in businesses is a good idea for a monthly income. If you start one, you’ll have to be more hands on with the business to earn consistent income. If you buy into an existing one, your income will be decided by the C.E.Os’ decisions. Either way, investing in businesses gives you a guaranteed monthly income in the form of a salary or dividends.

Lending money to individuals, business, or institutions in the form of loans or bonds also guarantees you a monthly income. However, be careful to ensure that your debtor does not default.


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Job is a seasoned writer with a good understanding of the emerging markets, Africa to be specific.