7 hours Ago
I'm sure most readers will agree that generating an without having to lift a finger would be a dream. Well, the good news is that you can turn this dream into a reality with ASX shares. And if you are already sitting on $10,000 in savings, then you are part of the way there.
But how could you turn this money in a meaningful passive income? Here's how I would do it. Turning $10,000 into passive income with ASX shares Firstly, as much as I would want to have an immediate source of passive income, I would accept that good things come to those that wait. Instead of investing this money with a focus on income, I would try and it into something significant.
I would also look to add to my investments regularly to take full advantage of compounding. For example, if I were to start with a $10,000 investment and then put $500 each month into ASX shares, I would have a portfolio valued at approximately $125,000 in 10 years if I were able to generate a return of 10% per annum. This return is in line with the historical average of the share market, which I think makes it a realistic goal.
At that point, I could either keep going to grow my portfolio further, or I could switch to a passive income focus. If I decided to do the latter, I would look to build a diversified portfolio filled with high yield ASX dividend shares. There are plenty of shares out there that offer 6% , so that would be my target yield across the portfolio.
If I then invest the funds into this portfolio, I would be pulling in passive income of $7,500 each year. This is the equivalent of $625 per month. Adding extra for longer If I wanted a larger passive income, I could look at putting extra into ASX shares each month and for a longer period.
Let's imagine I started with $10,000, then put $1,000 a month into ASX shares for a total of 15 years. This would turn my portfolio into approximately $440,000 if I achieved a 10% annual return. Putting this money into my passive income-focused portfolio would generates $26,400 in dividends each year, which equates to $2,200 a month.
Overall, I think this demonstrates how with a combination of patience and capital, investors can generate a significant passive income from the share market..
