How I’d earn a passive income that covers 100% of an annual wage

first_imgHow I’d earn a passive income that covers 100% of an annual wage “This Stock Could Be Like Buying Amazon in 1997” Peter Stephens | Monday, 21st December, 2020 Our 6 ‘Best Buys Now’ Shares Image source: Getty Images. Simply click below to discover how you can take advantage of this. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Making a passive income that covers 100% of an annual wage is likely to be a long-term goal for many people. After all, this would mean they no longer need employment to obtain the same level of financial freedom enjoyed while working.Although many UK shares have fallen in value over the past year, they offer a sound means of obtaining a nest egg from which an income can be drawn. With many of them currently trading at cheap prices following the 2020 stock market crash, now could be the right time to start buying them.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Building a portfolio to make a passive incomeWith the median UK salary currently around £31,000, a passive income of a similar figure is likely to provide many people with financial freedom. Assuming they build a nest egg during their lifetime, they would need a lump sum of around £775,000.This is based on the assumption that they withdraw 4% of their capital each year. This has historically been a common amount to withdraw, since it can mean a nest egg retains its value on an after-inflation basis over the long run.Clearly, achieving a £775,000 nest egg sounds like an extremely challenging task at first glance. However, the track record of the stock market shows it may be far more achievable than many realise. For example, the FTSE 100 has delivered an annual total return of 8% since its inception in 1984.Assuming that same percentage return on a £500 monthly investment, it would lead to a portfolio valued at £775,000. And that would provide a £31,000 annual passive income in just over 30 years.Buying cheap UK shares todayOf course, the above example assumes an investor obtains the same annual return as the stock market. However, there are currently many cheap UK shares available to buy that could deliver even higher returns. Not to mention a more attractive passive income. Buying them today could be a sound move, since they appear to offer scope for above-average capital gains in many cases.For example, many high-quality companies are trading at prices that may undervalue their prospects. That’s down to short-term uncertainty caused by political instability or coronavirus. Given their financial strength and market positions, they’re likely to overcome such threats to produce sound share price recoveries over the long run.The result could be a larger portfolio than one which tracks the performance of the FTSE 100. As well as a larger passive income in older age.Understanding risksClearly, it’s important to diversify when building a portfolio and making a passive income. Holding a variety of stocks may lead to higher returns with less risks. This may improve an investor’s capacity to fully replace their hard-earned wage, and enjoy financial freedom in the long run. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Enter Your Email Address See all posts by Peter Stephens Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee.last_img

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