Invest $500 Each Month to Create $1,564.65 in Passive Income in 2024

Passive income can be yours this year, and what’s more, it can be done safely — especially when you consider this dividend stock.

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A year ago, passive income was all I could talk about. Yet there was a focus on creating passive income from nothing — finding side hustles or easy ways to make cash so that you can start investing.

Well, it’s a year later. So, I’m hoping that either you’ve started creating some extra cash flow or investors are simply in a better scenario. Inflation and interest rates are still up, of course. However, it seems as though we’re headed towards a light at the end of a very long tunnel.

So, let’s look at what it would take to get investing again. Investors should be putting cash aside each month to create major passive income in 2024 — or, even better, passive income for life!

How to start

When it comes to creating passive income, the best way to start is to create a budget — even if you’ve done this lately! The market and economy is constantly changing, so that budget may not work for you anymore, especially if you have extra cash coming in as well!

First off, make that budget. Next, make sure you have a consistent plan to pay down all your debts if you have any. Then, look at your essentials and non-essentials to see where you can make cuts. This could even include consolidating your debts to bring down your interest rate. It might include ignoring your credit card for now to stay away from high interest. Or it could be as simple as having coffee at work rather than Tim Hortons. 

Once you’ve narrowed down your spending, you can see what’s left and put that to work. Honestly, you’re likely going to be surprised by how much you have left over! It could be a couple bucks or it could be hundreds of dollars!

Where to invest

Now, again, the market is constantly changing, and so is the economy. So, if you want to make passive income in this next year, I would go with a high-quality stock that’s going to continue paying you. In fact, perhaps one of the best options right now is insurance companies.

A company such as Great-West Lifeco (TSX:GWO) is great because it’s one of the largest insurance companies in Canada, with several businesses under its umbrella. It provides diversification from this strategy of managing everything from wealth and assets to group benefits.

What’s more, it’s proven that it can handle whatever the economic weather holds. Shares are up 21% in the last year while still trading at just 14.51 times earnings. It offers a 5.22% dividend yield as well, with a payout ratio of 71% as of writing. So, that dividend looks quite secure.

Putting it to work

So, let’s say you’ve managed to put aside a couple hundred dollars each month — perhaps as much as $500! That alone would bring in $6,000 in savings. But now you’re going to see your shares grow perhaps another 21% from your investment as well as earn dividends. Here is what that might look like.

GWO – now$42.50141$2.22$313.02quarterly$6,000
GWO – high$51.43141$2.22$313.02quarterly$7,251.63

With this investment, you would have returns of $1,251.63 and dividends of $313.02! That’s total passive income of $1,564.65. And that could happen in just 2024 alone.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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