Invest $533 Each Month to Create $588.96 in Passive Income in 2024 (2024)

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If you want stable passive income, don’t invest every penny you have. Instead, keep it safe and stable for long-term income.

When it comes to investing long term, Canadian investors need to be real with themselves. Don’t look at your New Year’s resolution and plan to put all your cash aside to invest at a market bottom. There are so many reasons why this is the wrong thing to do.

First off, no one knows when the market bottom will be. It may have already happened, it may come summer 2024. Who knows? If the pandemic crash taught us anything, it’s that anything can happen on the market. And it usually does.

But furthermore, don’t commit to putting yourself practically into debt for investments. That’s why today we’re going to focus on how to invest a stable amount of cash on a regular basis, which can still create major riches.

What can you actually afford

To plan out how to invest properly this year, you want to find that magical number. The number you can invest comfortably month after month, pay cheque after pay cheque, without fearing that you’re going to need to use your credit card more than usual.

The goal is to make money. You’re not going to achieve this goal if you’re putting everything on a credit card with super high interest rates! Instead, it’s time to budget, and create some automated contributions.

Look at your spending habits over the last three months and assign a dollar amount to each and every line item. Then look at what you’re making. The goal here is to identify how much money is left that you can put aside for investing every month. For example, let’s say you can put aside $533 every month, with $200 saved for spending on various recreational items. You still have fun money while still putting cash aside consistently.

Consider dollar-cost averaging

A great way for new investors to use that money to their advantage is to consider dollar-cost averaging. This is where investors assign a certain amount of money to a certain investment the same time, every month.

Over time the share price will go up and down, but average out over the long term. And that long term will show that your investments will go up higher and higher. That way, you’re not playing the market or trying to get in on a market bottom. Sometimes, you’ll get a deal; other times, you won’t. But if you choose the right stock, overall, you’ll certainly make some strong returns.

But what is the right stock? There are quite a few things to consider. So, let’s look at where a great place to begin might be.

Go big

Now, I don’t just mean go towards the biggest companies. Instead, I mean go towards the Big Six banks. These Canadian banks have proven time and again that they are not going anywhere. And what’s more, these provide a strong opportunity for today’s investor.

Canadian banks have been through every type of downturn you can think of and come out the other side. There simply isn’t as much competition here as there is in the United States, for example. So, these banks have more provisions on hand for loan losses to keep them secure.

Yet of them all, right now I would consider Royal Bank of Canada (TSX:RY) the safest option. It offers a dividend yield of 4.13%, with shares rising higher. This comes from Royal Bank stock recently being approved to purchase HSBC, which will add a huge roster of wealthy clients to the bank’s bottom line.

So, let’s say you invested in this stock, putting that $533 aside each and every month. In total, that would be $6,396 for the year. Here is what that could create if shares then hit 52-week highs.

Even with that small increase, you could achieve returns of $324 and $264.96 in dividends. That’s passive income totalling $588.96. But Royal Bank stock likely has even more room to run this year.