12 Investments That Pay Monthly Income in South Africa

Investing in monthly income options is a practical way to ensure financial stability and meet recurring expenses. 

South Africa offers a range of investment products designed to generate consistent monthly returns, catering to different risk appetites and financial goals.

So whether you’re saving for retirement, investment, creating passive income, or diversifying your portfolio, this guide covers 12 investments that pay monthly income in South Africa.

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Investments That Pay Monthly Income in South Africa

1. Money market accounts
2. Unit trust income funds
3. Rental property income
4. Fixed deposits with monthly interest
5. High-yield savings accounts
6. Bank notice deposit accounts
7. Income mutual funds
8. Living annuities
9. Income-generating ETFs
10. Peer-to-peer lending
11. Preferred stocks
12. Staggered government retail bonds

1) Money Market Accounts

Money Market Funds in South Africa are low-risk investment vehicles that pool money from multiple investors to invest in short-term, high-quality debt instruments. 

These funds aim to provide stable returns, preserve capital, and offer liquidity, making them a popular choice for conservative investors.

They’re suitable for conservative investors who prioritize safety over high returns. They are also accessible to most South Africans since the minimum amount required is low. 

That said, the minimums are quite high compared to MMFs in Kenya, and other African countries.

Why choose money market accounts?

• Low risk: Your capital is secure.
• Flexibility: You can access funds easily, though notice periods may apply.
• Steady returns: Competitive interest rates are paid monthly.

Popular money market funds

• Stanlib Money Market Fund
• Nedgroup Investments Money Market Fund
• Allan Gray Money Market Fund

Key details

• Minimum investment: R1,000 to R5,000, depending on the fund.
• Returns: Interest is calculated daily and paid monthly.
• Regulatory body: Overseen by the Financial Sector Conduct Authority (FSCA).

Who should invest in MMFs

• Conservative investors: Looking for safe, low-risk investments.
• Retirees: Seeking stable monthly income without significant exposure to market volatility.
• Emergency fund savers: Needing quick access to funds while earning interest.

How to Invest in Money Market Funds

• Choose a fund: Research different money market funds, focusing on their returns, fees, and ratings.
• Open an account: Register with a fund provider or through your bank.
• Deposit funds: Most funds have a minimum investment requirement, usually between R1,000 and R5,000.
• Monitor performance: Although returns are stable, check the fund’s performance periodically to ensure it aligns with your financial goals.

Money market funds are a safe, flexible way to generate stable returns and manage short-term financial goals. If you’re ready to start investing, you could consider popular options from trusted providers like Stanlib or Allan Gray. 

Be sure to do your due diligence, it’s your money afterall.

2) Unit Trust Income Funds

Unit trust income funds pool money from multiple investors to buy income-generating assets like bonds, property, and high-dividend shares.

Why choose unit trust income funds?

• Diversification: Your money is spread across various assets.
• Professional management: Experienced fund managers handle investments.
• Monthly payouts: These funds are designed to generate regular income.

Popular unit trust income funds

• Old Mutual Income Fund
• Coronation Strategic Income Fund
• Ninety One Diversified Income Fund

Like money market funds, management fees typically range from 1% to 2% annually.

3) Rental Property Income

Rental properties generate consistent monthly income from tenants, whether residential, commercial, or industrial. 

Short-term rentals through platforms like Airbnb offer additional opportunities for higher yields.

Why choose rental properties?

• Stable income: A reliable way to earn monthly cash flow.
• Capital growth: Properties tend to appreciate over time.
• Control: You can manage the property directly or hire a service.

Options for investment

• Direct property ownership via Private Property or Property24.
• Fractional ownership platforms like EasyProperties.

Key details

• Initial investment: Substantial upfront capital or deposit is required.
• Ongoing costs: Includes maintenance, taxes, and insurance.
• Regulatory body: South African Property Owners Association (SAPOA) governs property standards.

4) Fixed Deposits With Monthly Interest

Fixed deposits are a secure and reliable investment option where you deposit a sum of money with a financial institution for a fixed period, earning a guaranteed interest rate. 

They are popular among investors seeking stable returns without exposure to market risks, since banks are relatively stable.

How Fixed Deposits Work

• Deposit your money: Choose a bank or financial institution and specify the amount you wish to invest.
• Lock-in period: Agree to a fixed term, typically ranging from 6 months to 5 years. During this period, you cannot withdraw your funds without incurring penalties.
• Earn interest: The bank pays a guaranteed interest rate, which can be credited monthly, quarterly, annually, or at maturity, depending on your preference.
• Receive your capital and interest: At the end of the term, your principal amount and any earned interest are returned to you.

Benefits of Fixed Deposits

• Low risk: Fixed deposits are one of the safest investments as they are not affected by market volatility.
• Guaranteed returns: Interest rates are fixed, ensuring predictable earnings.
• Flexibility: Choose a term that matches your financial goals.
• Suitable for retirees: Monthly interest payouts provide a steady income stream.
• Accessibility: Offered by all major banks with straightforward setup processes.

Limitations of Fixed Deposits

1. Liquidity constraints: Funds are locked in for the agreed period, and early withdrawal incurs penalties.
2. Lower returns: Fixed deposits generally offer lower returns compared to high-risk investments such as stocks.
3. Inflation risk: Over time, fixed returns may lose purchasing power due to inflation.

Popular fixed deposit options

• Capitec Bank Fixed Deposit
  • Offers competitive rates with flexible terms starting from 6 months.
  • No fees for managing the account.
• Nedbank Fixed Deposit
  • Provides higher rates for longer terms.
  • Available for individuals and businesses.
• Absa Fixed Deposit
  • Offers flexible interest payment options (monthly, annually, or at maturity).
  • Minimum deposit starts at R1,000.

Fixed Deposits vs. Other Investments

Key details

• Terms: Range from 6 months to 5 years.
• Penalties: Early withdrawal may incur fees.
• Regulatory body: South African Reserve Bank (SARB).

5) Bank Notice Deposit Accounts

Bank notice deposit accounts are a hybrid savings product that offers higher interest rates than regular savings accounts while allowing you to access your funds after giving a predetermined notice period. 

They are ideal for individuals seeking a balance between flexibility and earning potential.

Notice deposit accounts offer a middle ground between savings and fixed deposits. 

Why choose notice deposit accounts?

• Higher returns: Compared to regular savings accounts.
• Flexibility: Choose notice periods that suit your needs (e.g., 7, 30, or 90 days).
• Low risk: A secure option with consistent payouts.

Popular notice deposit accounts

FNB Notice Deposit

• Flexible terms starting at 7 days.
• Competitive interest rates.
• Minimum initial deposit: R20,000. (Learn more.)

Standard Bank Notice Deposit

• Offers notice periods from 7 to 60 days.
• Higher interest for longer notice periods.
• Minimum deposit: R250. (Learn more.)

Nedbank 32Day Notice Investment Account

• Notice period: 32 days
• Minimum initial deposit: R250
• Ideal for short-term savings. (Learn more.)

Key details

• Interest: Calculated daily and paid monthly.
• Minimum deposit: Varies by bank.
• Regulatory body: SARB.

How Bank Notice Deposit Accounts Compare to Other Options

6) Income Mutual Funds

Income mutual funds are investment vehicles designed to generate regular income by pooling money from investors to invest in Fixed-income securities, such as,:

• Bonds,
• Money market instruments, and 
• High-dividend-paying stocks. 

These funds are ideal for investors seeking consistent monthly payouts while maintaining moderate risk exposure.

How Income Mutual Funds Work

• Investor contributions: Multiple investors pool their money into the fund.
• Fund management: Professional managers invest in a diversified portfolio of income-generating assets.
• Monthly income payouts: The returns from these investments are distributed to investors as regular income.

Limitations of Income Mutual Funds

• Market risk: Returns may fluctuate due to interest rate changes or market conditions.
• Fees: Management and administration fees can impact overall returns.
• Capital appreciation: Focus is on income, so capital growth may be limited.

Popular income mutual funds

• Allan Gray Balanced Income Fund
  • Focuses on a balance of income and long-term growth.
  • Minimum investment: R20,000.

• Ninety One Diversified Income Fund
  • Invests in bonds, money markets, and equities for stable returns.
  • Suitable for medium-risk investors.

• Coronation Strategic Income Fund
  • Offers flexible asset allocation with a focus on income generation.
  • Minimum investment: R5,000. (Learn more.)

7) Living Annuities

Living annuities are post-retirement investment products that provide a regular income stream, offering retirees the flexibility to control their income withdrawals and investment strategy. 

They are popular among individuals using their retirement savings to ensure a steady income during their retirement years.

These are highly customizable, allowing retirees to choose how much income they withdraw monthly.

Why choose living annuities?

• Flexibility: Adjust withdrawal rates between 2.5% and 17.5% of the investment value annually.
• Tax efficiency: Only the income drawn is taxed.
• Longevity: Tailored for long-term income.

How Living Annuities Work

• Transfer your retirement savings: After retirement, transfer funds from your pension, provident fund, or retirement annuity to a living annuity.
• Choose withdrawal rates: Decide on an annual income withdrawal rate between 2.5% and 17.5% of the fund’s value.
• Invest remaining capital: The rest of your funds remain invested in a portfolio of your choice, generating returns over time.
• Receive regular income: Income is paid monthly, quarterly, bi-annually, or annually, based on your preference.

Popular options

• Liberty Living Annuity
• Sanlam Glacier Living Annuity

Key details

• Investment performance affects long-term income.
• Ideal for retirees looking to manage their own pension payouts.
• Regulatory body: FSCA.

Benefits of Living Annuities

• Flexibility: You control the withdrawal rate and can adjust it annually within the allowed range.
• Tax efficiency: Income is subject to income tax, but no capital gains or estate duty applies to the remaining capital.
• Investment growth: Unused funds continue to grow in your chosen portfolio, potentially increasing your income over time.
• Estate planning: Any remaining funds are passed to your beneficiaries upon your passing.

Just note that, unlike life annuities, income is not guaranteed and depends on the fund’s performance.

Living Annuities vs. Life Annuities

8) Income-Generating ETFs

Income-generating Exchange-Traded Funds (ETFs) are financial products that focus on assets generating regular income, such as high-dividend stocks, bonds, or real estate investments. 

These ETFs are traded on the Johannesburg Stock Exchange (JSE), offering an easy way to earn steady returns while benefiting from diversification and liquidity.

ETFs (Exchange-Traded Funds) provide exposure to income-generating assets like bonds, dividend-paying stocks, and real estate. These are traded on the JSE (Johannesburg Stock Exchange).

Why choose ETFs?

• Low fees: Cost-effective compared to actively managed funds.
• Diversification: Invest in multiple assets within a single fund.
• Liquidity: Easily buy or sell shares on the stock market.

Popular income-generating ETFs

• Satrix Divi Plus ETF
• Prescient Income Provider Feeder ETF

Key details

• Payouts: Monthly or quarterly, depending on the ETF.
• Minimum investment: Accessible through brokerage accounts.
• Regulatory body: FSCA and JSE.

9) Peer-to-Peer Lending

Peer-to-peer (P2P) lending is an innovative investment platform that connects individuals or businesses needing loans with investors willing to lend money in exchange for regular interest payments. 

This direct lending approach eliminates the need for traditional financial intermediaries, often resulting in higher returns for investors.

How Peer-to-Peer Lending Works

1. Choose a platform: Register on a P2P lending platform and fund your account.
2. Browse loan opportunities: View borrower profiles and loan requests, including details about interest rates, loan terms, and risk ratings.
3. Invest in loans: Choose loans that align with your risk tolerance and expected returns.
4. Earn regular payments: Borrowers repay the loan in installments, which include principal and interest.

Why choose P2P lending?

• High returns: Potentially higher interest than traditional investments.
• Diversification: Spread funds across multiple borrowers to reduce risk.
• Accessibility: Easy to start with a relatively small amount.

Like any lending investment, defaulting is a real risk, as borrowers may fail to repay loans, leading to potential losses.

Popular platforms

• RainFin
  • One of the first P2P platforms in South Africa.
  • Provides detailed risk assessments for borrowers.
  • Learn more.

• LulaLend

• Focuses on small business loans with quick approvals.
• Transparent fee structure and competitive rates.
• Learn more.

• Fundrr

• Specializes in funding for SMEs (small and medium-sized enterprises).
• Offers short-term loans with flexible repayment terms.
• Learn more.

Key details

• Risks: Borrower defaults can affect returns.
• Returns: Depend on borrower creditworthiness and loan terms.
• Regulatory body: FSCA.

Who Should Invest in Peer-to-Peer Lending?

• High-yield seekers: Investors looking for returns higher than those offered by traditional savings accounts or fixed deposits.
• Diversification-focused investors: Individuals seeking to spread investments across multiple loans for risk mitigation.
• Experienced investors: Those who understand the risks associated with lending and are comfortable evaluating borrower profiles.

How to Get Started with Peer-to-Peer Lending

1. Research platforms: Compare P2P platforms based on their loan options, borrower risk assessments, and fees.
2. Open an account: Register on your chosen platform and verify your identity.
3. Fund your account: Deposit the minimum required amount to start investing.
4. Select loans: Choose loans based on your preferred risk-return profile.
5. Monitor repayments: Track borrower payments and reinvest earnings to maximize returns.

Peer-to-Peer Lending vs. Traditional Investments

Peer-to-peer lending offers an exciting opportunity to earn high returns while directly supporting individuals or businesses.

However, the risks associated with defaults and limited liquidity require careful planning and diversification.

10) Preferred Stocks

Preferred stocks, also known as preference shares, are hybrid investment instruments that combine features of both bonds and common stocks. 

They offer fixed dividend payouts and priority over common stockholders when it comes to dividend payments and liquidation proceeds, making them an attractive option for income-focused investors.

How Preferred Stocks Work

• Priority dividends: Preferred stockholders receive fixed dividends before common stockholders.
• Fixed income: The dividend rate is usually set at the time of issuance, providing predictable income.
• Limited voting rights: Preferred shareholders typically have no or limited voting rights compared to common stockholders.
• Priority in liquidation: If a company is liquidated, preferred stockholders are paid before common stockholders but after debt holders.

One main downside is that Preferred stocks generally do not experience the same level of price appreciation as common stocks.

Popular Issuers of Preferred Stocks in South Africa

While not as common as in other markets, certain sectors in South Africa, particularly financial institutions, occasionally issue preferred stocks. 

Examples include:

• Banks: Some South African banks issue preference shares as part of their capital-raising strategies.
• Industrial companies: Select industrial firms issue preferred stocks for targeted investors.

How to Invest in Preferred Stocks

1. Research opportunities: Identify companies offering preferred stocks on the Johannesburg Stock Exchange (JSE).
2. Open a brokerage account: Platforms like EasyEquities provide access to the JSE.
3. Evaluate dividend yield: Compare the fixed dividend rates of preferred stocks to alternative fixed-income investments.
4. Monitor market conditions: Keep an eye on interest rates, as they can affect preferred stock values.

Key details

• Payouts: Typically semi-annual, though some offer monthly payouts.
• Risks: Less growth potential compared to common stocks.
• Regulatory body: JSE and FSCA.

11) Staggered Government Retail Bonds

Staggered government retail bonds investment involves purchasing government-issued bonds with semi-annual interest payments at different intervals to create a consistent monthly income stream. 

These bonds, offered by the South African government, provide a low-risk investment option for individuals seeking stable returns.

How Staggered Government Retail Bonds Work

1. Choose bond types: Select from fixed-rate or inflation-linked RSA Retail Bonds, depending on your income needs and risk tolerance.
2. Stagger purchases: Buy bonds at different times so that their semi-annual interest payments occur in alternating months.
3. Receive monthly income: Over time, the staggered schedule results in consistent monthly payouts.

Benefits of Staggered Government Retail Bonds

1. Reliable income: Government bonds are one of the safest investments, ensuring regular payouts.
2. Customizable payouts: By staggering purchases, you can tailor your income stream to align with monthly expenses.
3. Inflation protection: Inflation-linked bonds adjust the capital value with inflation, maintaining purchasing power.
4. Low risk: Backed by the South African government, these bonds are highly secure.

Types of RSA Retail Bonds for Staggering

• Fixed-Rate Retail Savings Bonds
  • Terms: 2, 3, and 5 years.
  • Interest: Semi-annual payouts or monthly payouts for individuals over 60.
• Inflation-Linked Retail Savings Bonds
  • Terms: 3, 5, and 10 years.
  • Interest: Paid semi-annually, with capital adjusted for inflation.
• Top-Up Bonds
  • Terms: 3 years with flexible contributions.
  • Interest: Reinvested quarterly, compounding over time.

Key details

• Minimum investment: R1,000 per purchase.
• Risk profile: Low risk, backed by the South African government.
• Accessibility: Bonds can be purchased directly through the RSA Retail Bonds website.
• Flexibility for seniors: Individuals over 60 can opt for monthly payouts on fixed-rate bonds.

Example of Staggering Bond Purchases

This schedule ensures payouts every two months, which can be tailored further for monthly income.

12) High-Yield Savings Accounts

High-yield savings accounts are a simple yet effective way to grow your savings while earning better interest rates than standard savings accounts.

These accounts are offered by South African banks and are ideal for individuals seeking a secure place to store money while receiving consistent interest income.

Popular High-Yield Savings Accounts in South Africa

• FNB Savings Account
  • Competitive interest rates that increase with your balance.
  • Allows flexible access to your funds.
• Standard Bank MyMo Account
  • No monthly fees and earns interest on balances.
  • Suitable for savers with small to medium balances.
• Capitec Flexible Savings Account
  • Offers interest rates that rival fixed deposits while maintaining accessibility.
  • No minimum deposit required.

Tax Implications on Monthly Income Investments

Tax considerations play a vital role when planning your monthly income investments. 

Understanding the applicable tax rates and benefits can help maximize your returns:

• Income tax: Any income generated through rental properties, interest from fixed deposits, or money market funds is taxable. It’s essential to report this income on your tax return to avoid penalties.
• Dividend withholding tax (DWT): Dividends earned from stocks or ETFs are subject to a 20% withholding tax. This tax is deducted at the source, meaning you receive your dividends net of tax.
• Tax-free savings accounts (TFSAs): TFSAs provide a tax-efficient way to invest in ETFs or unit trusts. All returns, including interest, dividends, and capital gains, are completely tax-free, making them ideal for long-term savings.

Pro tip: Consult a tax advisor to ensure you leverage deductions and tax-efficient investment options effectively.

Diversification Tips for Monthly Income Portfolios

Diversification reduces risk and ensures consistent returns. 

A well-balanced portfolio includes investments across different risk levels and asset classes:

• Low-risk options: Fixed deposits, government retail bonds, and money market accounts offer stability and predictable payouts. These are ideal for covering essential expenses.
• Medium-risk investments: Unit trust income funds and income-generating ETFs provide a balance between risk and reward. They offer diversification within a single product and professional management.
• High-risk ventures: Peer-to-peer lending and dividend-paying stocks can generate higher returns but require careful selection to minimize potential losses.

Actionable tip: Use online tools or consult a financial advisor to create an asset allocation plan that aligns with your goals and risk tolerance.

Platforms and Tools for Monthly Income Investments

South Africa offers a range of platforms to simplify investment management and maximize your returns:

• EasyEquities: A user-friendly platform to invest in shares, ETFs, and fractional property ownership. It’s perfect for beginners due to its low fees and easy access.
• Old Mutual Wealth: Tailored solutions for income-focused investments, retirement planning, and wealth management.
• Property platforms: Websites like Private Property and Property24 are excellent for finding rental property opportunities.

Pro tip: Use investment calculators provided by these platforms to estimate your monthly payouts and overall returns.

Investment Advice and Financial Planning

Professional advice can significantly improve your investment outcomes. 

Financial advisors can help you choose suitable products, optimize taxes, and align your investments with your financial goals:

• Personalized planning: Advisors analyze your financial situation and recommend investments tailored to your needs.
• Goal setting: Whether it’s generating passive income, saving for retirement, or creating an emergency fund, advisors can help set realistic goals.
• Ongoing monitoring: Regular reviews of your portfolio ensure it remains aligned with your objectives, especially when market conditions change.

Actionable tip: Choose advisors certified by the Financial Planning Institute of Southern Africa (FPI) to ensure you receive professional and reliable guidance.

Risks and Considerations

No investment is entirely risk-free, and understanding potential pitfalls is crucial to making informed decisions:

• Market volatility: Investments like ETFs or dividend-paying stocks may fluctuate in value, impacting income stability.
• Default risk: In peer-to-peer lending, there’s a chance borrowers may fail to repay loans.
• Inflation: Fixed returns from deposits or bonds may lose purchasing power over time if inflation rises.
• Liquidity: Some investments, like property or fixed deposits, may lock in your capital for extended periods.

Pro tip: Maintain an emergency fund separate from your investments to cover unexpected expenses without disrupting your financial plans.