How to Start Making Passive Income for Only £ 50 A Week

I was reading The Motley Fool’s personal finance site this week article About the average salary in the UK. It made me think: how much can I save based on average salary? I just don’t want to save it. I want to start making passive income with my salary. To do this, I would like to explore where I can invest to create a diversified portfolio.

next, Payroll machine Determine a reasonable weekly investment for myself. Based on the UK average salary of £ 25,971, the net weekly amount is £ 410. Considering other invoices and expenses, I think you can save £ 50 out of £ 410 each week and invest. This is about 12% of the net average salary.

Now that you’ve calculated how much you can save, the next step is to start building a passive income stream.

Find the right stock trading account

The first thing to do before choosing an investment is to find a suitable trading account. There are many choices from. You need to consider the fees you have to pay to your account and the transaction costs. Ease of use and investment choices are also very important. The Motley Fool is comparing several online brokers here, And also provide star ratings for them.

I chose Interactive Investor for my stock trading account.One of the main reasons was a free subscription Features.. From £ 25 a month, I can make a total of 25 months of direct debit investment. This means that you only need to consider your monthly account fees, not the additional transaction costs of £ 50 per week.

Dividend stock

My preferred way to invest to build passive income is to buy dividend stock. I will be part of the business owner and reduce profits as a shareholder.

In my view, the UK market is a great place to find a high-yielding dividend payer.Large-cap stock FTSE 100 The index’s forward yield is 4%, which is a significant dividend income.

If you buy individual stocks, you can aim for a higher price. However, this is risky because many problems can occur in your business. Dividends could be reduced, then I would lose my passive income flow.

Still, we set up a weekly investment of £ 50 on our trading platform to buy dividend stock.Companies such as Legal & General, Aviva When Rio tinto It currently offers much higher yields than the FTSE 100. I was able to switch the stocks I bought every few months to diversify my portfolio.

Investment fund for passive income

One of the last ways I consider building passive income is to use mutual funds.I can start from iShares Core FTSE100 An ETF that is an index fund that tracks the FTSE 100. As mentioned earlier, the 4% dividend yield is still very good and I will soon be diversified into 100 shares.

Another fund I use iShares FTSE UK Dividend Plus ETF. This is aimed at choosing high-yielding stocks, so the 12-month trailing yield is 5.7%. Currently, there are 55 stocks, so I would like to make diversified investments here as well rather than buying a single share.

Dan Appleby owns shares in Rio Tinto, Legal & General, Aviva and iShares FTSE UK Dividend Plus. The Motley Fool UK does not have a position in any of the shares mentioned. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, given the various insights, A better investor than us.