Man writing ‘now’ having crossed out ‘later’, ‘tomorrow’ and ‘next week’© Provided by The Motley Fool
Story by Ben McPoland
One of Warren Buffett’s well-known pieces of advice is: “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”
In other words, we will need to regularly invest and be patient. The good news is that this is possible and can lead to a sizeable passive income stream down the road.
Harness the power of compound interest
When it comes to building wealth, compounding is an investor’s best friend. Indeed, Buffett himself admitted that: “My life has been a product of compound interest.”
Specifically, the ‘Oracle of Omaha’ has consistently reinvested the profits from his investments back into the market. This strategy has allowed his capital to keep growing. The longer he holds onto his winning investments, the more they compound, significantly increasing in value.
Indeed, the effect has been so powerful that around 90% of his $135bn fortune was accumulated after the age of 60 (he’s now 93).
While nothing to grumble about, it’s not really a mouthwatering sum. However, if I reinvest my dividends back into buying more shares at the same average price, that £3,500 becomes £38,061 after 30 years
High-quality stock
I’ve chosen this reinvestment strategy with my shares in BBGI Global Infrastructure (LSE: BBGI).
This is a FTSE 250 infrastructure investment company that manages a portfolio of 56 assets across the UK, Europe, North America, and Australia. These include schools, hospitals, toll bridges, motorways, and army barracks.
BBGI earns income from public authorities based on the availability and performance of these assets rather than their usage. This provides the company with predictable cash flows, which in turn has supported consistent and rising dividends.
Now, I should mention that the yield is at a historic high due to the high interest rate environment. This has negatively impacted the value of the firm’s assets and also made building out its portfolio much more challenging. There’s a risk these conditions could persist for some time or even worsen.
Reassuringly though, BBGI says its current portfolio of assets could support rising dividends for another 15 years. That’s music to my ears.
A mighty portfolio
Let’s assume I start from scratch and invest £750 every month into quality stocks like BBGI. Assuming I generate a long-term average return of 8.5% (with dividends reinvested), this is what would happen.
My portfolio would grow to an incredible £1.16m in 30 years (excluding any platform fees)!
If my shares were by this point yielding an average of 7% in dividends, I could be earning £81,303 a year in passive income.
In my view, turning £750 a month into this would be equivalent to building a passive income empire.
The post No savings at 35? I’d follow Warren Buffett and aim to build a passive income empire appeared first on The Motley Fool UK.
19 June 2025
BBGI Global Infrastructure S.A. (“BBGI”)
Announcement of Cancellation of Listing
Further to the announcement made by BBGI on 17 June 2025, BBGI confirms that the listing of the BBGI Shares on the Official List and the admission to trading of the BBGI Shares on the Main Market of the London Stock Exchange were each cancelled with effect from 8.00 a.m. (London time) on 19 June 2025.
Leave a Reply