How much do I need in a Stocks and Shares ISA to earn a £300 monthly passive income?

James Beard considers the passive income potential of a Stocks and Shares ISA

Posted by James Beard

Published 7 February

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It’s estimated that approximately 15% of UK adults have a Stocks and Shares ISA. Many of these individuals will be using them to buy dividend shares to help provide a second income. As an added bonus, this cash can be enjoyed tax-free.

So without having to work for it, how much would someone need in an ISA to earn an extra £300 a month ? Let’s take a closer look.

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What’s achievable?

The answer to this question depends on the level of return achieved. For example, the FTSE 100 currently (5 February) has a historic yield of 3.1%. With a return like this, an ISA would have to be worth £116,129 to meet our £300 a month target.

But I reckon it’s possible to achieve a higher return by carefully choosing a diversified selection of high-yielding stocks. The 10 highest on the index are currently offering 6.4%, meaning our portfolio would need to be worth £56,250 to achieve our objective.

Of course, dividends cannot be guaranteed. However, there are plenty of stocks that have a long history of steadily increasing their payouts and offering above-average returns