Make supplemental income

September 15, 2013 12:13 PM

I asked earlier about how to invest my savings (twenty-five thousand). And although a lot of the answers were good, many were not realistic for someone living in Canada, as our tax laws are different. Also, I have decent retirement fund already so I don't want to put anything into that. So for now I'm just keeping it in my 3% savings account until I decide later what to do with it.

Anyway, my actual question is a little different. Essentially (just for the immediate future) I was wondering if anyone had some ideas on how I could use this money to make some supplemental income. I'm not suggesting a lot here. I'm literally wondering if there is anyway to use this money to bring in an extra 100-200 a month. I just want it to cover my utilities/ maybe some food.

posted by Atlantic to Work & Money (11 answers total)

You would need to find an investment that paid approximately 5% to 10% interest (annualized) to earn $100 to $200 monthly. I do not believe that this is realistic for a fixed income investment.
posted by The Architect at 12:21 PM on September 15, 2013

Yes i understand that. I was more so referring to some ideas possibly with buying/selling. I dunno, anything that can generate some money.
posted by Atlantic at 12:24 PM on September 15, 2013

There's no way I know of to just have a pile of money and have it generate income without spending or investing it and assuming some risk.

So, are you willing to spend $10k on a venture, with the chance of losing it all? You could spend that money on ingredients and licensing and equipment make tamales, sell them locally, and grow a businesses.

You could become a partner with other investors in a restaurant franchise.

You could put it into dividend-generating high grade stocks (but you're extraordinarily unlikely to get a reliable 10% return).

If you're a programmer or engineer you could buy the equipment you need to do your job freelance.

And so on.
posted by zippy at 12:41 PM on September 15, 2013

I know someone with a few hundred thousand dollars in the bank. Her father sold a gas station chain last year, and passed some of the money to her. She makes less than a thousand dollars a month from the interest. This is passive income shaped into investments by a wealth manager, which is probably what you are imagining.

You'd have to make an investment with more risk, or you'd have to use the money more actively to generate a monthly return of 10%.
posted by oceanjesse at 12:48 PM on September 15, 2013

If you already hold long term investments you could sell covered call options on them. Pricing has many variables but your goal of 100-200 a month isn't unreasonable and would only require a couple of contracts (each contract requires you to own 100 shares)
posted by mrdrummed at 12:49 PM on September 15, 2013

Could you elaborate on covered call options?
posted by Atlantic at 1:01 PM on September 15, 2013

Here is a link that describes covered call options: LINK
posted by The Architect at 1:26 PM on September 15, 2013

By the way, I am not sure if the 3% savings account interest rate in your question is accurate, but if so it is quite good. I believe that generally savings accounts are paying less than 1% interest, so for that return you will not find anything safer than keeping your money there.

Sorry - I know that this did not answer your question. I do agree with other posts that I believe you will need to take some real risks with your money in either investments or your own business to see the returns that you are looking for. I do not recommend investing in a restaurant; it is very risky and could be very hard to get your money out when you need it.
posted by The Architect at 1:45 PM on September 15, 2013

What about something like Lending Club? Not sure if you can invest in that if you're Canadian but it looks like over half of all lenders who have diversified accounts with more than 100 loans are earning 9% or more in interest. Of course there is risk...
posted by jabes at 1:53 PM on September 15, 2013

I would suggest researching dividend paying stocks, specifically Canadian ones.
You would want to buy several different stocks and in different industries (ie diversify)

Research, research, research!
I use the Globe and Mail for articles like this.
I also subscribe to Moneysense Magazine and Canadian Moneysaver which have both provided me with lots of information and stock ideas and paid for their subcripitons many times over.

You could hold these in your TFSA and collect the dividends.
You could consider Questrade for the low trading fees. If you want someone else to do the research and make suggestions, you could try Canadian Shareowner which only sells certain quality dividend paying stocks.
I do have accounts with both, for what it's worth.

Two things:
Research all the suggestions you get and make sure you understand risk and tax implications.
If you do have a savings account paying 3% and need the money anytime soon, I would leave it there.
posted by Snazzy67 at 4:02 PM on September 15, 2013

If you go to the blog IWillTeachYouToBeRich.com, Ramit has all kinds of ideas for things you can do to make money using your money without actually doing (hardly) any physical work. He calls it passive income. It usually consists of putting something out there on the web that folks can download, then somehow inspiring lots of folks to want it, so your work is only in the front-end of creating the "thing" in the first place. It sounds good, but I can't figure out anything I have or know to put out there, which folks would want to download. And I know LOTS of people who put in a LOT more daily effort putting stuff out there who still can't inspire folks to download their stuff. So, I guess if you are the lucky or the charming inspirational type, it could work. But it might not.
posted by CathyG at 3:48 PM on September 16, 2013