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Investing £3.33 into an ISA every day from 22 could result in a £60,000 passive income
Story by Dr. James Fox

I already had a Stocks and Shares ISA when I started work at 22, and it was topped up by inheritance and sporadic gifts. However, it wasn’t until much later that I started making regular contributions to my ISA.

The rationale

Investing £3.33 per day is the equivalent of investing £100 per month. That would have been about 5% of my first paycheque. It might not sound like a lot, especially as it would now take me more than three months to afford one Tesla share, but it adds up over time. Plus, investors can use fraction shares to gain access to more expensive stocks.

The secret ingredient is compounding. This is what happens when investors keep their money invested over the long run. It’s like a snowball that, as it gets bigger, can pick up even more snow.

As we can see from the below graph, £100 really starts to compound after 15 years — this example assumes a growth rate of 10% annually. Towards the end of the 46-year period, £100 of monthly contributions should seem very affordable, while the portfolio will be growing at an impressive rate.

Why 46 years? Well, that’s the number of years between me starting work at 22 and my predicted retirement age at 68.

Source: thecalculatorsite.com

Getting there

So, we’ve got the formula. But how can we actually turn £3.33 a day into a small fortune? Well, many novice investors will invest in index-tracking funds. This is a wise move that provides diversification and relatively low risk.

Buffett’s value investing approach, focusing on undervalued companies with strong fundamentals, has proven successful over decades. However, investors should consider risks such as Berkshire Hathaway’s large size potentially limiting future growth opportunities, the challenge of finding attractively priced acquisitions in the current market, and the eventual succession of leadership as Buffett ages.

Despite these concerns, Berkshire Hathaway’s strong balance sheet, cash-generating businesses, and proven investment philosophy make it an attractive option for long-term investors seeking stability and growth potential. Over 10 years, the average return is 12.3%. This is one I’m adding to my daughter’s pension.

The passive income part

In the above example, £100 a month would grow into almost £1.2m over 46 years. Now, with all that money invested in stocks, funds, and bonds with an average yield of 5%, an investor would receive around £60,000 a year or £5,000 monthly.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

The post Investing £3.33 into an ISA every day from 22 could result in a £60,000 passive income appeared first on The Motley Fool UK.

9% dividend yield! Could buying this FTSE 250 stock earn me massive passive income?

Story by Stephen Wright

9% dividend yield! Could buying this FTSE 250 stock earn me massive passive income?

With the Bank of England cutting rates, savers are likely to get weaker returns on their cash than they did before. But there’s a FTSE 250 stock that I think looks interesting right now.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

Reliable income

Assura owns 625 properties, including GP surgeries, primary care hubs, and outpatient clinics. Over 99% of the portfolio is currently occupied and the average lease has over 10 years remaining.

With the vast majority of its rent coming from either the NHS or HSE, the threat of a rent default is minimal. And the company stands to benefit from a general trend towards people living longer. 

Debt can often be an issue for REITs, but Assura is in a reasonable position. Its average cost of debt is around 3% – which isn’t bad at all with interest rates currently at 4.25%. 

In other words, Assura looks like it’s in decent shape. It operates in an industry that should be fairly resilient, it has tenants that are unlikely to default, and its balance sheet doesn’t look like a concern. 

A 9% dividend yield can often be a sign to investors there’s something to be concerned about. It isn’t immediately obvious what that might be in this case – but a closer look is more revealing.

Share count

With any company, investors need to keep an eye on the number of shares outstanding over time. In particular, they need to pay attention to whether this is going up or down.

Assura’s share count has been rising quite considerably over the last few years. Since 2019, the number of shares outstanding has grown by around 4.5% per year. 

That means investors have had to increase their investment by 4.5% each year in order to maintain their ownership in the overall firm. And that really cuts into the return from the dividend.

If this continues, investors aren’t going to be in a position to simply collect a 9% passive income return. They’re going to reinvest around half of it to stop their stake in the business reducing.

This is actually a symptom of a wider risk with Assura. Its dividend policy means it often has to raise capital through debt or equity, so there’s a real risk of the share count continuing to rise.

A huge passive income opportunity?

A stock with a 9% dividend yield often comes with a catch. And I think this is the case with Assura – while the firm distributes a lot of cash, a good amount has to be reinvested to prevent dilution.

That’s not necessarily a devastating problem. But it is something for investors to be realistic about when thinking about passive income opportunities.

The post 9% dividend yield ! Could buying this FTSE 250 stock earn me massive passive income ? appeared first on The Motley Fool UK.

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The yield you earn will be the yield based on your buying price, hopefully gently rising over time, unless they cut the dividend.

Why Dividend Investing Wins in a Crazy Market Market volatility freaks a lot of people out. Stocks drop, headlines scream, and suddenly everyone’s convinced the sky is falling.  But if you’re a dividend investor? You don’t have to stress—because you’re still getting paid. That’s the beauty of dividend investing. Instead of relying on stock prices going up, you’re collecting real cash along the way. And in unpredictable markets, that steady income can be a total game-changer. Here’s why dividend investing is one of the best strategies, especially when things get wild. 1. You Get Paid No Matter What Stock prices bouncing all over the place? Doesn’t matter—your dividend checks keep rolling in. Unlike growth stocks, where you’re hoping the price goes up, dividends are real money hitting your account. You can reinvest them, buy more stocks when prices drop, or just pocket the cash. Either way, you’re making money no matter what the market’s doing. 2. Compounding Does the Heavy Lifting Reinvesting dividends is where the real magic happens. Each payout buys you more shares, which then earn even more dividends. It’s a compounding machine that keeps running in the background, growing your portfolio year after year. The best part? The longer you stay invested, the bigger that snowball gets. 3. Dividend Stocks Are Built for Stability Sure, high-growth stocks are exciting—until they crash. Dividend stocks, on the other hand, are usually well-established businesses with steady profits. They don’t rely on hype; they rely on consistency. And here’s the kicker: many of these companies increase their dividends every year—even during recessions. That means your income stream keeps growing, no matter what the market throws at you. 4. Volatility Becomes an Opportunity When stock prices drop, most people panic. But if you’re a dividend investor, lower prices just mean higher yields and a chance to buy more at a discount. Instead of stressing about red days, you’re in a position to take advantage of them—boosting your future income while others are selling in fear. 5. It Helps Fight Inflation Inflation eats away at your buying power, but dividend stocks help offset that. Many companies regularly raise their payouts, meaning your income grows over time instead of losing value. While cash in the bank gets weaker, your dividends keep getting stronger. Final Thoughts Dividend investing isn’t about chasing hype—it’s about getting paid, staying patient, and letting time do the work. Markets go up and down, but dividend stocks keep putting money in your pocket. That’s why I love them. Whether stocks are flying high or in free fall, dividend investing keeps you in control. So keep buying, keep reinvesting, and let your dividends do the heavy lifting.

By Frank Buhagiar

BlackRock Energy and Resources Income’s (BERI) double-digit returns

BERI outperformed over the full year: +15.3% net asset value (NAV) per share return and +14% share price return both easily ahead of the blended comparator index – 40% MSCI ACWI Select Metals & Mining Producers Ex Gold and Silver IM (Mining), 30% MSCI World Energy Index (Traditional Energy) and 30% S&P Global Clean Energy Index (Energy Transition). For the record, the comparator index could only manage +0.5%. M&A within the mining portfolio cited as one of the reasons behind the outperformance. The strong showing no outlier either: +125% NAV return over 5 years compared to the +81.5% net total return of the MSCI ACWI Select Metals & Mining Producers Ex Gold and Silver IMI Index and +71.4% net total return of the MSCI World Energy Index.

Chairman Adrian Brown highlights “the flexibility of the Company’s investment mandate with the ability to shift exposure between Mining, Traditional Energy and Energy Transition sectors”. Helpfully, “The Board considers that all three sectors have an important role to play as the energy system continues its transition to a lower carbon economy; the Mining sector provides the material supply chain for low carbon technologies from steel for wind turbines to lithium for electric cars; traditional energy is needed to support base load energy to continue to power economies during the transition”. Sounds like BERI has got it all covered. Shares, which have had a strong run over the past year, took a pause for breath though, finishing the day largely unchanged at the 120p level.

Winterflood: “Stock selection contributed to relative performance. Top contributor was pipeline company Targus Resources, driven by expected power demand uplift from AI data centres. Nuclear energy benefitted from the same trend, with Cameco contributing. Traditional Energy was 31% of NAV. M&A (Filo Corp, Stelco) drove performance in Mining (40% of NAV) segment of the portfolio, while weak demand for commodities from China detracted. Key contributors to Energy Transition sleeve (29% of NAV) were industrials manufacturing energy efficiency products and electricity grid infrastructure equipment suppliers.”

JPMorgan Emerging Europe, Middle East & Africa (JEMA) outperforms too

JEMA, another to outperform and another to clock up double-digit returns for the year: NAV total return of +13.6% compared to the S&P Emerging Europe, Middle East & Africa’s +11.9%. Good stock selection, a key contributor to the outperformance. As for the share price, don’t be fooled by the +0.9% total return for the year into thinking performance was pedestrian. Far from it: over the period, 31 October 2024 to 31 January 2025, the share price oscillated between 120.5p and 244.0p. Chairman Eric Sanderson and the Board believe this “is due to the uncertainty about the values attaching to our Russian shareholdings.” As the investment managers note “the Company’s Russian holdings continue to be subject to strict sanctions, and their valuations have been discounted accordingly.” Salvaging any value from these would be something of a bonus then.

Those Russian holdings, which are subject of ongoing litigation in the courts, of course, a legacy of the previous Russian-focused strategy. As Sanderson points out, very much a different strategy these days “The Company continues to invest in higher quality companies, with a tilt towards value and income and a focus on maximising total return for shareholders. The portfolio’s geographical focus is on Saudi Arabia, South Africa and the United Arab Emirates, which at the year end represented 21.6%, 17.0% and 14.4% of the portfolio respectively.” And the investment managers believe “The portfolio will continue to evolve over coming years as our target markets develop and deepen”. With the Russian court case approaching, some investors appear to have taken some money off the table, for now at least – share price finished the day 5p lower at 204p.

Numis: “Whilst it is positive to see a period of outperformance, we suspect that investors will be more focussed on the status of the Russian holdings, which continue to be held at a nominal value. We note there has been some progress with the sale of one Russian holding, Nebius (Yandex), following its sole listing on Western exchanges, although the Board emphasises the unlikeliness of this being the case for further holdings in the near future, whilst their remains uncertainty with respect to an appeal related to VTB’s court proceedings against JPMorgan entities.”

European Opportunities Trust (EOT) looks forward to being vindicated

EOT can’t make it a hat trick of outperformers after NAV total return came in at -8.4% for the half year. That compares to the MSCI Europe Total Return Index’s -3.3% (sterling). At -10.6%, the share price fared worse. Weakness among the fund’s largest holdings, specifically previous high-flier Novo Nordisk, blamed as well as “our ‘style bias’” towards investing in “innovative, world-leading companies in other sectors”. Longer term, the tables are turned: the +10.5% annualised NAV total return since launch, almost double the benchmark’s +5.8%. Still, Chair Matthew Dobbs is not hiding behind that long-term track record “the results and our returns in recent years are clearly disappointing. Our Investment Manager pursues a differentiated, high conviction approach to investment and we, as a Board, along with the team at Devon are fully committed to returning the Company to its former ranking at the head of its peer group.”

Investment manager Alex Darwall sees plenty of reasons why the portfolio’s holdings will come good. Firstly, there’s valuation “We believe that our portfolio is better value than at any time since 2017.” Then there’s earnings “Our earnings forecasts for the portfolio companies are markedly higher than those projected for the wider market.” As for balance sheets, EOT’s companies “have less debt than most European listed companies”. And at some point, the macroeconomic environment is expected to become supportive of the fund’s strategy which is “to identify ‘winners through the cycle’, a strategy that has been thwarted somewhat by the huge money printing programmes of the COVID era. The extended business cycle will turn down at which point our companies’ earnings resilience will be clear.” And when it does “Our healthcare, technology and payments companies should all make good progress. We remain confident that our strategy of picking companies that compete and succeed on the world stage will be vindicated.” Shares were up 4p to 872p – perhaps investors thinking vindication will come sooner rather than later.

Winterflood: “Board has proposed to make additional tender offer for up to 25% of shares at 2% discount to NAV, expected to take place in Q2 2025. Key (performance) detractors included Novo Nordisk, Edenred, Dassault Systèmes, Infineon Technologies and Worldline. Performance also negatively impacted by EOT’s style bias, with no exposure to Financials, which was the best performing sector in the index. Further, performance also suffered from outflows from European equities.”

Story by Becca Stanek, The Week US

Examples of passive income include dividends earned from stocks, income from a rental property and royalties from an e-book you published© Illustrated / Getty Images / Shutterstock

Making money without even trying might sound too good to be true — but there are ways to do it. Unlike the “active” income you earn from, say, your 9-to-5 job, “passive” income is a stream of cash that flows without regular work on your part. 

But before you jump in and start buying up apartments to rent or dividend stocks, it’s important to understand everything that passive income entails. Some sources are more passive than others, and there are tax implications to consider.

Passive income is money you make “without a large amount of additional work added to your day-to-day routine,” said Kiplinger. Examples of passive income include dividends earned from stocks, income from a rental property and royalties from an e-book you published. 

The aim of passive income is to generate an additional source of income alongside the money you’re bringing in from your job and other places. Doing so can “help you to grow your savings and increase cash flow,” Kiplinger said.

What to know before setting up a passive income stream

You’ll want to start by being realistic about how much time, effort and money you want to sink into your passive income project. 

Typically, you will need “startup capital” to get your passive income endeavors off the ground, said Investopedia. “To develop a meaningful passive income stream from financial assets like cash-equivalents, stocks and bonds, you’ll need a decent account balance.” That said, there are some passive income streams that require a type of initial investment that isn’t necessarily monetary, such as talent or time.

When determining which passive income stream is a good fit for you, it is also helpful to assess what skillsets you already have. Do you already have experience with investing? Do you know how to create online content or courses? By zeroing in an area in which you already have some knowledge and experience, you can cut down on the time involved. 

But regardless of your familiarity with your chosen income stream, you’ll likely need to put in some time at the outset to get the ball rolling. The amount of time involved will vary depending on your chosen method. For instance, opening a high-yield savings account or a certificate of deposit (CD) only takes a bit of research up front, plus some time invested in opening the account. Real estate investing, meanwhile, can be far from passive.

It’s also important to realistically assess the risk involved. Some passive income endeavors are riskier than others, and you’ll want to ensure you are only taking on as much risk as you’re comfortable with. For example, if you create a course that flops, your only loss would be the time it took for you to make it. But if you buy a potential rental property that ends up needing extensive repairs, that presents a much higher level of financial risk.

And last but certainly not least, you will want to factor taxes into the equation. Usually “net income from passive income investments is reported as ordinary income,” said Good Financial Cents, with the exception of capital gains income. 

4 passive income ideas to consider

Now that you’ve read up on the basics of passive income, you can start thinking of some ways to earn it. Here are four of the most reliable sources of passive income.

Dividend investments

This can include dividend stocks as well as dividend index funds and exchange-traded funds (ETFs). In either case, you’ll get a regular payout of a portion of a company’s profits. However, income is not guaranteed; companies may have to decrease dividends or could become unable to pay them.

To get started, you’ll need to open a brokerage account. Also note that “you likely will have to tie up thousands, if not tens or hundreds of thousands, of dollars to earn significant income from dividend stocks,” said Forbes.

Bonds and bond index funds

Bonds allow investors to lend money to companies, as opposed to taking an ownership stake like they would when investing in stocks. Investors will then earn interest income.

For those who are more risk-averse, such as individuals approaching retirement, bonds can be a safer bet “because of their lower volatility and relative safety compared to stocks,” said NerdWallet. However, they will also “generally earn a lower return on your investment.” 

High-yield savings accounts or CDs

The trick to making investing in a high-yield CD or savings account a solid stream of passive income is to search for the top rates. Often, you’ll find those at online banks.

Plus, said Bankrate, “investing in a CD or savings account is about as safe a return as you can find.” The downside is that returns might not be as impressive.

REITs

While your initial instinct might be to invest in physical real estate to generate investment income, that can come with a lot of headaches and more time investment than you may want. An alternative way to earn passive income through real estate is by investing in a real estate investment trust (REIT).

REITs “own and manage income-producing properties and distribute the profits to investors,” said Good Financial Cents. In some cases, you may need to be an accredited investor, though other platforms make real estate investing more accessible.

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You may not have enough funds to follow WB and have a meaningful stake in Coca Cola but if what if we use LWDB as the working example, this time without dividends re-invested.

If you bought at 182p, six years later you are back to the beginning, thankfully you have dividends to re-invest, wherever you think best, it could be back into LWDB as the price fell.

Your buying yield was 3.4%, which has risen to a buying yield of 17.5% on 2k capital

If you bought 1098 shares for 2k, they would be worth today £9,936.00 plus dividends or £14,087 including dividends.

The current dividend is 32p so on the current value of £9,936.00 a running yield of 3.5% (1098 shares at 32p = £351.36)

If you intend to retire on your dividend stream, you could always re-invest part in higher yielding Trusts.