Stock market

How would I go about turning a £50k lump sum into £606 per month of passive income?

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Getting a lump sum of cash doesn’t happen every day. Yet it happens from time to time. This could be from an inheritance, selling an asset, paying for work or an injury… whatever the reason, if I had a lump sum of £50k, I think I would put it to work for me with passive income potential. can be used for .

Getting my ducks in a row

As a full disclaimer, it may not be appropriate for all investors to allocate £50k to the stock market. I’m assuming that in my position, I don’t have urgent bills to pay or a large mortgage to pay. Rather, I can afford to put money to work in the market and don’t mind not having immediate access to funds on a daily basis.

My goal is to surprise buy shares over several months. I want to strike a balance between investing money (obviously eligible for dividend payments in the future) but also having spare cash to take advantage of opportunities.

The second part is less of a problem, because I’ll usually be able to invest using money out of pocket. Yet I’d rather build a pot over a number of months than buy £50k worth of stocks in one day.

Over the course of six months, I would like to invest the entire amount. Next focus goes to what I want to achieve. For example, the Bank of England’s prime rate is 5.25%. gave FTSE 100 The average dividend yield is 3.58%. Based on these and a few other factors, I want a 6% yield.

An example of this

I believe this is a reasonable expectation when I consider adding ideas to a portfolio. For example, Land Securities (LSE:LAND). It is a leading real estate company that owns and manages retail, office and mixed-use spaces across the UK.

The stock has gained a modest 3% over the past year, but I’m more focused on the dividend yield, which currently sits at 6.12%. It has been able to generate sustainable income thanks to rent and lease payments from its tenants. Every quarter, it pays dividends to investors, meaning I will continue to receive money regularly. From there, I want to reinvest the funds and buy more shares of Land Securities. This will allow my pot to grow at a faster rate.

A risk with such stocks is that the share price partially reflects the value of the properties held in the portfolio. The property market has been on a rocky road for the past two years. This means the share price is under pressure. If the UK economy underperforms over the next year, the share price could fall.

Investment potential

If I include stocks like Land Securities, I think I can build my £50k pot in six months. From this point, if I achieve my average yield of 6% and top up the account with an extra £250 each month, my portfolio can grow exponentially.

After a decade, my pot could be worth £121.2k, which would mean it would pay me £606 a month next year.


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