3 possible ways to generate a second monthly income of £ 1k in the stock market

The idea of ​​obtaining a second income by possessing dividend actions is not new or radical, but it can be financially lucrative.

If someone wanted to point to an average of £ 1,000 per month of second income income that buys dividend shares, here are three possible approaches that could adopt.

Focus 1: Invest on a top index tracker bottom

£ 1,000 per month adds to £ 12k in a year. At the moment, the Ftse 100 The index of leading companies produces around 3.4%. So, to achieve that goal immediately, someone could invest around £ 353K in a FTSE 100 trackers fund.

Most people do not have a replacement of £ 353k and even if they did, they may prefer not to invest everything at once, but use their annual assignment over time in an ISA of actions and actions.

However, this approach has some possible advantages. The second income could begin to flow in a matter of months and would be generated by a first -base business basket.

A range of indices trackers is offered. It would make sense to compare them, since they can charge in different ways for monthly income retreats.

Keep in mind that tax treatment depends on the individual circumstances of each client and may be subject to changes in the future. The content in this article is provided only for information purposes. It is not intended to be, it does not constitute any form of fiscal advice. Readers are responsible for carrying out their own due diligence and obtaining professional advice before making investment decisions.

Focus 2: Drip Feed Money in Blue-Chip actions

Another approach is to start from scratch and invest an affordable amount monthly in an ISA or shared treatment account.

No dividend is never guaranteed, but I see value in following Blue-Chip actions with proven businesses. However, instead of just tracking FTSE 100, an investor could buy a diversified portfolio of selected individual shares. When doing that, I think it is possible to point out a 7% yield in the current market.

An action that investors could consider is American British tobacco (LSE: bats). The owner of the brands, including Fortunate strike It has a highly effective generative business that helps finance a great dividend. The dividend by action has grown annually for decades and the current performance is 7.4%.

British American has a solid brand portfolio, proven business model and a large customer base. However, I see risks. Cigarette sales are decreasing in many markets, eating income and profits. Products that are not figures such as vapes can replace some of those sales volumes. But that remains to be seen, and how profitable they will be long term.

Even so, the cigarette market is still substantial and I hope it is still present for a good time. British American has proven to be able to generate a lot of excess effective and willing to divide it among the shareholders.

If an investor put £ 500 a month in blue-chip shares that produce an average of 7%, hopefully their second income should grow annually and within 29 years they should win £ 1k every month.

Focus 3: unleash the financial power of compound dividends

That 29 -year wait to achieve the goal could be cut to only 16 years using the same approach, with a difference. Instead of getting the dividends along the way, an investor that places the same £ 500 each month with an average yield of 7% could initially reinvest the dividends.

Then, once the portfolio was large enough (after 16 years), they could begin to receive dividends as second income. This approach is known as compound, and is a simple way to try to increase a second considerable income of dividend shares faster.