£ 20,000 in savings? This is how it could be used to aim for a second monthly income of £ 278

Winning a second income can be made in different ways. One is to invest in a diversified portfolio of proven blue chip actions that pay dividends.

Doing that in the way in which Illuspo below, an investor that begins with £ 20k ​​today could realistically expect to have a second income of £ 278 per month after 15 years, and a portfolio of considerable shares to start.

From here is where money comes from

To start, I will explain mathematics. That £ 278 per month suppose an average dividend yield of 6.5%. Communicating £ 20k ​​at 6.5% annually would mean that after 15 years, the portfolio would be worth around £ 51,436. With a 6.5% yield that should generate £ 278 per month.

Now, 6.5% are above Ftse 100 Average yield, which is around 3.6%. My compound annual growth rate could include some capital growth, although, of course, shares may fall in value and increase. It is worth choosing carefully.

However, in this example, I suppose that 6.5% annual growth composed of dividends alone. It is well above the current average of FTSE 100 but attainable in the current market of many proven blue chip dividends.

The type of actions to buy and where to find them

As an example, a part that I think that investors looking for a second income should consider is Phoenix (LSE: Phnx).

The insurer FTSE 100 exceeds my average yield objective of 6.5%, which currently offers 10.3%. In fact, that makes it the greatest performance of any FTSE 100 Share.

However, performance alone is not what must be focused. After all, dividends are never guaranteed to last.

Phoenix faces risks, like any company. For example, it has a mortgage book. So, if the real estate market is immersed and the valuations in reality do not reflect the assumption of Phoenix, it could suffer a loss as writes the values ​​of the loans.

But in general, I see a lot that I like Phoenix. It is not a family name, but it has some, such as standard life. Phoenix aims to be the main savings and retirement income business of the United Kingdom, and already has around 12 million customers.

The business has a proven model for the generation of cash and in the first half of last year £ 954 million in cash. That has helped finance a healthy and growing dividend.

How to make the ball around

Of course, dreaming of a second income and thinking about what they could provide the actions is one thing. But not a single penny of dividends will enter unless an investor really buys some actions!

For that, establishing a account of actions or actions and actions and actions that Isa would provide a house where £ 20k ​​could now park, ready to invest when the right actions are found.