Investments That Pay Monthly Income
Build a passive income stream in South Africa.
Whether you're retired, building passive income, or just want your money working for you - there are several investment options in South Africa that pay out monthly.
In this guide, we compare the best options from low-risk money market funds to higher-yield property and dividend investments. We'll help you find the right balance between income and safety.
Quick Summary
- Safest: Money Market Funds - 8-9% yield, instant access, very low risk
- Best Yield (Low Risk): RSA Retail Bonds - Up to 11%, government guaranteed
- Best for Growth + Income: Property ETFs (REITs) - 6-10% dividends + capital growth
- For Retirees: Living Annuities - Draw 2.5% to 17.5% annually
Income Investment Comparison
| Investment | Yield | Risk |
|---|---|---|
Money Market Funds | 8% - 9% | Low |
Fixed Deposits (Monthly Payout) | 8% - 10.5% | Low |
RSA Retail Savings Bonds | 9% - 11% | Low |
Property ETFs (REITs) | 6% - 10% | Medium |
Dividend ETFs | 3% - 6% | Medium |
Income Funds (Unit Trusts) | 7% - 10% | Low-Medium |
Corporate Bonds | 10% - 14% | Medium-High |
Living Annuities | 4% - 17.5% drawdown | Variable |
Our Top Picks for Monthly Income
Money Market Funds
The safest option for monthly income. Your money is invested in short-term government and bank instruments. Capital is virtually guaranteed, and you can withdraw anytime.
RSA Retail Savings Bonds
Issued by the South African government. Your capital is 100% guaranteed. Choose between fixed or inflation-linked bonds with 2, 3, or 5-year terms.
Property ETFs (REITs)
Real Estate Investment Trusts own shopping malls, offices, and warehouses. They must pay out most of their income as dividends. You get property exposure without buying buildings.
How Much Monthly Income Can You Earn?
Here's what R100,000 invested would pay you monthly at different yields:
Note: Higher yields typically come with higher risk. The 15% scenario would require riskier investments.
For Retirees: Living Annuities
If you have retirement savings from a pension or provident fund, you can use a Living Annuity to draw a monthly income. You choose how much to withdraw (2.5% to 17.5% per year).
Pros:
- • Flexible drawdown rate
- • Your money stays invested
- • Leaves inheritance to family
Cons:
- • You bear the investment risk
- • Could run out of money
- • Complex to manage
Tax on Investment Income
Investment income is taxable, but there are exemptions:
Interest Income
From money markets, fixed deposits, bonds:
- • Under 65: First R23,800 tax-free
- • Over 65: First R34,500 tax-free
Dividend Income
From shares and ETFs:
- • 20% Dividends Tax (already deducted)
- • No further tax to pay
Watch Out for Scams
- • If it sounds too good to be true, it is. Legitimate investments don't offer 20%+ "guaranteed" returns
- • Avoid unregistered schemes. Check if the company is registered with the FSCA
- • Be wary of "property syndications" promising high monthly income - many are scams
- • Never invest money you can't afford to lose in high-yield options
Our Recommendation
For most South Africans seeking monthly income, we suggest a blended approach:
50% - Safety
Money market or RSA Retail Bonds for guaranteed capital
30% - Income
Property ETFs or income funds for higher yield
20% - Growth
Dividend ETFs for long-term capital appreciation