Here’s how you could build a £23,455 second income with just £100 a month!

Drip-feeding money into growth and dividend shares can eventually deliver a stunning second income in retirement. Royston Wild explains how.

Posted by Royston Wild

Published 16 January

GAW

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services

Looking to build a life-changing second income? For me, the best way to chase a strong and sustained income — and one that requires considerably less effort than most popular side hustles — is to invest in the stock market.

Last year, the FTSE 100 delivered an enormous 25% total return to investors. For the S&P 500 index of US shares, the figure was 18%. Those buying stocks at the start of 2025 could have supercharged their portfolios, then, boosting their chances of eventually enjoying a large passive income.

Returns were larger than usual, sure. But even at typical rates, a small investment can generate considerable wealth over time. The FTSE All-World Index of large- and mid-cap shares has delivered an average annual return of roughly 12% over the last five years.

Here’s how investing just £100 in global stocks could eventually produce a £23,455 second income with minimal effort.

Generating wealth

One of the simplest ways to invest in stocks is with an index tracker fund. They allow individuals to own a slice of many different companies, spreading risk and providing exposure to a broad selection of growth and income opportunities. And all at relatively little cost, too.

The Vanguard FTSE All-World ETF, for instance, tracks the performance of 3,657 stocks across regions and industries. And it has an ongoing charge of just 0.19%. If it can continue delivering the 12% annual return of recent years, a £100 monthly investment over 30 years will eventually turn into £335,074.

If then invested in 7%-yielding dividend stocks, a portfolio of this size would generate a £23,455 passive income a year.

Buying single stocks

Rather than gaining broad stock market exposure with a fund, investors can also choose to invest directly in companies. This requires a lot more effort than simply sticking your cash in an index tracker. However, it can also lead to far better results.

I think a portfolio of 15-20 stocks offers excellent diversification to spread risk and aim for big returns. Games Workshop (LSE:GAW) is one of the FTSE 100’s finest growth stocks I’ve bought for my own portfolio.

Thanks to its leading role in a rapidly growing market, the tabletop gaming specialist continues to enjoy booming profits even as the broader retail sector struggles. Last year it delivered a total return of 47%, smashing the broader FTSE index’s performance.

Further price gains in 2026 mean the average annual return over the last decade is 45%. If you’d drip fed £100 each month into Games Workshop shares since then, you’d now be sitting on a cool £218,409 (assuming dividends were reinvested).

If then invested in 7%-yielding dividend stocks, a portfolio of this size would generate a £23,455 passive income a year.

The big risk is that even if you achieve the target, there will be enough shares yielding 7% for a diversified portfolio.