A first level investment trust to consider to obtain a possible second income of more than 17,000 each year!

My goal is to get a second important income for when I finally retire. That is why I invest the vast majority of the cash that I have left over every month in actions, trusts and funds from the United Kingdom.

Like most people, I deposit some money on a savings account to obtain guaranteed performance and have funds for difficult times. However, investing too much in a low performance cash product can also mean a high risk for those who, like me, we aspire to comfortable retirement.

Here is why.

Cash returns

Today, Cash Isa, easily accessible and better payment, offers an interest rate of 5.1%. That is not bad, and certainly in the context of the low rates that savers endured during the 2010 decade.

But leaving everything or most of the cash here could be, depending on our investment goals, a serious error.

On average, the British currently save approximately £ 105.43 per month, according to the personal finance website. They also have £ 17,773 reserved for savings.

If someone park this in an ISA in cash with a yield of 5.1%, after 30 years it would have £ 171,199 in their account, not including the commissions. If they then withdraw 4% of this money per year, they would have annual passive income of only £ 6,848Excluded the state pension.

Given the growing cost of life and social assistance, it is unlikely that this will be sufficient to retire comfortably. And what is more, ensuring a savings rate of 5.1% over the next three decades can be a difficult task, depending on future interest rates.

A passive income of more than 17,000

Last performance is not a reliable guide for the future. However, higher long -term yields from investment in shares since the mid -twentieth century suggest that this could be a better option to consider to generate wealth.

Let's say that an investor invests £ 20 per month in that ISA in cash of 5.1% and the remaining £ 85.43 in a diversified combination of actions, funds and trusts in an isa of shares and shares.

Based on a reasonable average annual performance of 9%, and assuming that £ 17,773 of savings in the stock market is also invested, this investor could earn £ 435.162 after 30 years.

A 4% reduction in this situation would then provide an annual passive income of £ 17,406. These figures exclude runners' fees.

Superior confidence

There is no unique answer about how much we will need to retire comfortably. This is very subjective, while the cost of future life is also difficult to predict.

But prioritizing investment on savings can significantly improve the possibilities of accumulating decent savings. And a way to consider to achieve this is to invest in a background.

He XTrackers MSCI World Momentum ETF (LSE: Xdem), for example, is a background that I bought for my own portfolio. While its value can rise or lower according to economic conditions, its participations in around 350 companies allow investors such as distributing the risk and at the same time aspire to great profitability.

Just under a quarter of the fund is invested in high growth information technology actions such as Nvidia and Apple. It also provides strong exposure to telecommunications, finance, consumer and industry segments, reducing its dependence on a single sector.

Since its autumn launch of 2014, this fund quoted in the stock market (ETF) has obtained an average annual profitability of 11.52%. That is higher than the average of 9% I mentioned earlier. If the fund continues to achieve greater profitability, it would allow the investor to accumulate greater savings over time.