Need to turn $100,000 into a monthly income ?!?

[resorte]

I currently have $100,000+ in an online savings account which started beautifully making $500+ per month but is now earning less than 3% interest and making $200-something/month. I am at a point where I really need to make this sum of money work for me and be able to access that income on a monthly basis. I considered splitting the money up and putting it in several Rewards Checking Accounts that earn 6% but I do not have direct deposit of any kind as they most require and would go crazy trying to make the right number of debit purchases on four different accounts. Does anyone have any advice of how to make this money turn into a stable income ASAP?

[kork13]

How much income are you looking for? $100k will not produce very much income in any case. With that, you can reasonably hope for $300-$450.

Assuming you want this money ONLY as an income generator (meaning under no circumstances do you need to tap it), my best recommendation would be to find the highest possible rate for a long-term CD. Looking at my personal banking outlets, I can find rates between 4.5% - 5.2%, ranging in terms from 3-10 years. In your case, 4.5% is $375/mo interest, 5.2% is $433/mo, so that's the range you're probably looking at. When you open this CD account, you can choose to have those monthly dividends deposited into a separate account of your choosing. Those monthly dividend throw-off's would be your income. This method will guarantee a steady, reliable income without having to deal with debit transactions or any of that madness. You just won't be able to touch the original $100k until the CD's term is up. Good luck.

[resorte]

Thanks for the reply. I would not be able to lock the money up for any amount of time because I am waiting for the right moment to use a large sum on a creative project of mine. I just need it to generate as much as possible in the meantime.

[mrpaseo]

A CD Ladder might be an option. The longer you purchase a CD the better the interest rate (For obvious reasons). The thought is, you purchase a 3 month, 6 month, 9 month, 12 month CD. At each maturity, you purchase a 12 month CD. This will give you access to your money within one year, and after the first year would give you the 1 year interest rate on all your CD's that would give you access to 1/4 of your money every three months.

1 JAN 09, 1st CD: $25,000 (3 Month CD) earn 3%
1 JAN 09, 2nd CD: $25,000 (6 Month CD) earn 3.5%
1 JAN 09, 3rd CD: $25,000 (9 Month CD) earn 4%
1 JAN 09, 4th CD: $25,000 (12 Month CD) earn 4.5%

Three months later your first CD matures:
1 APR 09, 5th CD: $25,000 (12 Month CD) earn 4.5% (Any interest earned is dropped into an account and you tap into the account monthly.)

Three months later your second CD matures:
1 JUL 09, 6th CD: $25,000 (12 Month CD) earn 4.5% (Any interest earned is dropped into an account and you tap into the account monthly.)

And so on, every three months you would have access to 1/4 of your money and all within 1 year. Of course you could do this with a smaller percentage.

The original plan that I read about this involved starting out with 100 dollars in each CD. Then save 100 per month. As each CD matured, the saved 100 dollars (Per month) would go into the next CD purchase effectively (If you purchased a new CD every three months the CD would grow three hundred dollars every time you purchased a new one (100 per month for three months). After doing this for 20-40 years you would have a nice chunk of change saved up an a secure boat. Of course this was a good plan when you could earn 6-8% on these CD's, now a days this is not a good plan unless you are one of those that do not trust Stocks and Bonds and need a venue to keep above water.

CD's are not a good idea for long term investments as taxes and inflation eat up your profits. However, if you will use the money within three to five years and you are concerned with maintaining you principle this might be something worth looking into.

Good luck,
Ray

[mrpaseo]

Here are some links to help you decide:

This link will show you to the cent how much you will make on a CD:
Certificate of deposit calculator

This link will help you find the best rate in your state or by the highest reate of return:
CD rates in the United States-- Free search for the best certificate of deposit rates


Good luck,
Ray

[mrpaseo]

Of course, on line bank accounts and CDs are offering about the same return:

Top 50 Money Market Rates & High Interest Savings Accounts

High Yield Rates for*3 month $25K CD

High Yield Rates for*6 month $25K CD

The best I could find for a Jumbo ($100,000 minimum 1 yr CD) is 4.1%
High Yield Rates for*1 yr jumbo CD


But this would lock your money up for 1 year.

If you put the money in a savings account for 3% you would have income and access to your funds,
Ray

[disneysteve]

Of course, on line bank accounts and CDs are offering about the same return

True, but CD rates are fixed for the term of the CD whereas MMA rates can and do change regularly. If income is important, a CD locks in a certain income.

[jIM_Ohio]

Cd ladder is a good idea- the penalty is usually 3 months interest.

Because you have the 100k for a project anything other than
a) fdic accounts (cds, savings accounts, MMA)
or
b) individual bonds from treasury direct or similar

are what I would consider- without knowing the reason/opportunity, tough to give better advice. If education-savings bonds have some distinct advantages for example. If a business, there are other deductions to consider.

[xplosionplaya15]

invest in the stock market because it is at its lowest

[maat55]

Trying to find an investment in this climate with a good guaranteed return is not easy. I personally, might look at buying and selling one property a year with an very diligent structure.

This is not an investment for everyone, but one with real profit potential if done with great diligence.