Investing For A Monthly Income: Our 7 Easy Strategies For FIRE

Our family uses 7 simple strategies for investing for a monthly income on our journey to FIRE (Financial Independence, Retire Early). Five of these already pay us €1,500 every month. The other two will generate income in the next few years, helping us scale our passive income streams. Discover how you too can earn stable, passive income with smart investing.

In this post, I’ll share 7 easy investment strategies you can start today to earn passive income tomorrow. I’ll also explain why we chose these strategies to support our family with a steady monthly income in early retirement—and how much we earn with each one. We are planning for semi-retirement and share our story to a semi-retired lifestyle here.

Why Investing For A Monthly Income?

If you’re thinking about investing for a monthly income, you likely have one goal: supplementing or replacing your earned income with passive income. For those pursuing FIRE, this is THE way to achieve financial freedom, as it provides consistent cash flow without working for it. That’s the foundation of early retirement planning.

There are two types of investing for a monthly income:

1. Passive investing – investing money in financial assets like dividend stocks or ETFs.
2. Time investments – less passive but still strategic. A great example is filing for a tax refund, which takes minimal effort but provides a significant financial return.

But investing isn’t just about earning passive income—there’s another eye-opening reason why everyone should consider it.

The Role Of Inflation-Proofing Your Income Streams

Inflation-proofing your income streams means protecting your money and purchasing power against inflation.

What is inflation?

Inflation is a dynamic in the market that causes prices to go up – constantly and steadily. If inflations rise, the price of goods like food and services like public transportation rise too. Typically it does so by 2-3 % or a bit more. But recently, inflation in Europe was 7-8 % and it already has been at an all-time high of around 12 % in the 1950s. The US and other countries too even experienced an inflation rate of over 20 % in 1917.

Why does this matter for your income?

What does it mean to protect yourself (and your money) against inflation? You want your income and salary to grow because inflation goes up too. That’s how you can maintain your purchasing power. Or in other words: your money can still buy the same amount of things without you feeling restricted. If your income doesn’t grow with inflation so to say, you will be able to buy less amount of the same things.

That’s why inflation-proofing your income streams is essential for financial stability and security. And this is where investing for a monthly income comes into play.

Our 7 Easy Strategies For Investing For A Monthly Income

Here are, in our opinion, the 7 easiest ways for investing for a monthly income you can start today so you can earn a passive income tomorrow. All of them (and more) will be presented in detail in the next post. For now, I’ll give you a quick overview.

Some of those are financial investments meaning you invest your money into those for getting a passive income. Others are time investments where you need to invest your time to earn a (more or less) passive income. Some time investments are so tiny that they deserve to be called earning a passive income from those investments. We start with financial investments first.

Financial Investments (Money-Based Investments)

These require money upfront but provide passive income over time.

1. Savings Or Money Market Accounts (MMAs)

A money market account (MMA) is a high-yield savings account that offers higher interest rates than regular bank accounts. But those are variable and may fluctuate over time. So you cannot assume that the interest rate offered today will also apply tomorrow. You get a less predictable passive income. But it is a low-risk and safe way of investing for a monthly income.

You should also know that you need to withdraw from such an account strategically. That’s because withdrawing money may be limited to a certain amount such as making six withdrawals or transfers per month.

Risk Level: Low
Expected Returns: Low but stable

2. Dividend Stocks & ETFs / Index Funds 

Dividend stocks or ETFs and Index Funds provide the highest potential return among all investment options presented. You get paid a certain amount of money for holding a stock and share or ETF, typically once a year. Keep in mind that the higher the potential return the higher the risk for your invested money to be volatile. That means your investments and capital goes up and down. So, this type of investment is a medium to high-risk way of investing for a monthly income.

But actually, that doesn’t have to bother you as you typically still get dividend payouts if taking care of the following. Look out for dividend stocks or ETFs with a long history of consistent dividend payouts like Coca Cola or the S&P 500 dividend aristocrats. Over decades they always paid dividends to their investors but those fluctuated.

Risk Level: Medium to High
Expected Returns: Medium to High

3. Capital Gains Allowance

Next, we look at time investments which may require more or less time to earn a monthly income. Capital gains allowance requires quite a bit when doing the first time. But then it gets easier and will require less time the more often you do it. Also, you only have to do it once a year.

Capital gains allowance means you are allowed to sell assets like stocks, ETFs, Index Funds or other investments like crypto currencies tax-free. That means the profits you make when selling are tax-free. That allows investors to earn a certain amount in profit before being subject to capital gains taxes. But, that amount may not be very high. For our family, it’s just around 160-170 per month.

To get capital gains allowance you need to apply for that at the government of the country you live in. For example, while doing a tax refund which is our next favorite way of investing for a monthly income.

Risk Level: Medium
Expected Returns: Medium

Time Investments (Effort-Based Income)

These require some effort but provide significant returns.

4. Tax Refund & State benefits

This is my favorite way of investing for a monthly income. In my opinion, that is totally underrated. I only need to invest a couple of days per year for earning thousand of Euros. What a return, right? I’ll come to that later on in more detail.

We start with tax refunds. That is money returned to you by the government when you’ve paid more taxes than you should have. It happens when too much tax is withheld from your paycheck or when you qualify for new tax deductions that came up recently. Typically, you get the refund from tax offices after filing your return. Nowadays, you can almost automate that with online services that are especially designed to help you submitting your tax refund application. I use the German App wiso.steuer.

In addition to that our family applies for state benefits for our kids. Those are financial support programs provided by the government to help families like ours with living costs under all. For example, we get childcare subsidies (like most families in Germany). In general, state benefits offer financial assistance based on income, employment status or personal circumstances. So, families can get even more state benefits than just for their kids. However, to get state benefits you need to send your application. For some, you only need to do it once in a lifetime which is again a great return on investment.

Risk Level: None
Expected Returns: High

5. Cash Gifts

A cash gift is money given to you from another person without expecting repayment or something else in return. Typically it comes from family, friends, or employers. The most common example are birthdays, Christmas, weddings or other special events and when getting a baby. While cash gifts are generally tax-free for the recipient, gift tax laws may apply to the giver, depending on the amount and country.

We get cash gifts for birthdays, Christmas, eastern or when our girls have a special event and we count that as an income. I know most people don’t and immediately spend it. We don’t do that because to us it is an additional on-top income for the respective month. We talked to our family about that once and from that point on the money came in. That is another great return on our time investment so to say.

You can use cash gifts for investing for a monthly income the following. Save the gifted money you get throughout the year in a separate savings fund, ideally in a money market account as mentioned before. I use the personal finance app Ynab to keep track of all our our savings funds and more. Then, when a new year starts, you look at all of the gifted money you received. Split it by 12 for 12 months. Now, set up a monthly payment plan to your regular bank account to split and transfer that gifted money for additional, passive income.

Risk Level: None
Expected Returns: Medium

Hybrid Investments (Money & Time-Based)

These require both money and effort.

6. Rental Income

If you own any form of property you could rent that out to generate a monthly income. Real estate is the most popular form generating a steady rental income. You’re buying a flat for example and rent it out. Other rental examples are renting your car, parking slot, special equipment, vacation property or land in itself. So, rentals refer to the temporary use of any property, vehicle or good in exchange for a rental payment. Rentals come with full ownership and full responsibilty too. You are the owner and responsible for solving whatever problem comes up with what you owe and rent. That’s why rentals are typically less passive income sources but still mostly ensures a consistent monthly income.

Risk Level: Medium
Expected Returns: Medium to High

7. Affiliate / Advertising Revenue

This is the least passive investment strategy that is presented here. At least in the beginning which can last years. Then, after some time, it becomes a very passive monthly income. With affiliate and advertising revenue you can earn an income, typically from an online business, by promoting products or displaying ads on a blog for example.

With affiliate revenue you earn commissions by promoting products or services through affiliate links. Advertising revenue means you earn money for displaying ads on a website or YouTube channel under all. Both affiliate marketing and advertising revenue offer scalable passive income opportunities to online creators and business owners. But, we can tell from our own experience, that takes a lot of time and effort. To us, it’s prefect and I talk about that later on in more detail. So, that type of investing for a monthly income must feel really good to you so that you stay the course as it’s not the easy way.

Risk Level: High (time investment)
Expected Returns: High (long-term)

Why We Chose These Investments & Our Current Income Breakdown

We do not invest in:

• Fixed deposits or annuities (low returns, limited liquidity).
• Bonds (inflation risk, locked-up capital).

Instead, we prefer liquid, flexible investments.

That’s why we have selected those 7 investment strategies for earning a passive, monthly income. With 5 of those 7 strategies we already earn €1.500 per month. We will explain all investment types in detail in the upcoming post. But for now, we just want to give you an overview.

As you can see, we heavily rely on our tax refund but even more on state benefits (mostly for our kids) at the moment. We will continue doing so until our kids are out of the house. As we plan to semi retire early before that happens, we count on that money for our early retirement plan. In addition, we plan to scale our stock market income A LOT. But currently we are still in the wealth accumulation phase and like to increase our money in the market.

Also, with the last two investment strategies we earn 0 at the moment. But, we expect them to provide additional passive income streams in the next couple of years. So, now we happily invest our time and money into them without earning money already. But, we do that very strategically so we will earn a more or less passive income from those investments in the near future, especially once we will semi retire early.

Balancing Active vs. Passive Income Strategies

In general, I don’t mind that some of our investments may be less passive like doing a tax refund or working in our online business. I like investing my time and money into those type of investments with the outlook of earning more money in the near future. But that is just my personal preference for investing for a monthly income at the moment.

For example, the tax refund I make once a year provides a yearly payment of several thousands of Euros wich is way over 500 a month. I have to wait a couple of months until my time investment pays off so to say. But to me that time investment of a couple of days only once a year is well worth it.

On the other hand, we also make investments that are very passive and requires 0 time effort on my side. Examples are our savings and money market accounts as well as state benefits we get for our kids like childcare subsidies. I still have to invest a couple of hours per year for those investments but that is negligible to me.

That’s how I balance set-it-and-forget-it investment strategies that are very passive with more active investment strategies, that all provide a monthly income to support our family.

As you continue your journey of investing for a monthly income, remember that investing is a lifelong learning process. Not every step will bring you closer to your passive income goals. But all steps will help you figure out how and where you prefer investing money for a monthly income.

Best of luck on your investing journey, and feel free to share your investing tips in the comments below!

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Title image source: Alexander Grey on Unsplash