How much would someone need to invest to win £ 43,100 per year in passive income?

According to the Association of Saves of Pensions and Lifetime, someone who earns £ 43,100 per year can enjoy a comfortable retirement. So win this in passive income seems to me a good investment objective.

Dividend shares are a good cash source for investors. But although investing enough to generate £ 3,591 per month is not simple, there are some things that investors can do to facilitate the process.

The numbers

At this time, the action with the highest dividend yield in the Ftse 100 It is from Phoenix Group Holdings. The company currently returns 10.25% of its market capitalization every year to investors.

At that level, someone would need to invest £ 420,487 to generate £ 43,100 per year. But focusing on an action is risky, especially when it comes to a life insurance company, where unforeseen liabilities can accumulate.

The FTSE 100 as a whole has an average dividend yield of 3.48%. I think it is a much more reasonable expectation, but it means that the amount needed to win £ 2,608 per month in dividends is £ 1.24 million.

That is a lot: someone leaves aside £ 1,000 per month would take 103 years reaching that level. But the great advantage of investing is that these things are more attainable than they seem.

How to get ahead

For someone who invests £ 1,000 per month, there are two main ways to reduce the time it has been to build a portfolio that can return £ 43,100 per year. The first is to win and reinvest dividends.

Doing this to an average yield of 3.5% per year reduces the time required to around 45 years. This is a great improvement, but I think that investors can reasonably try to do it even better.

The best companies not only return effective to shareholders, but also grow over time. And that can help investors to have a goal of converting £ 1,000 per month into £ 1.24 million quite significantly.

A combination of growth and dividends has seen that the FTSE 100 manages an average annual yield of 6.89% in the last 20 years. That is sufficient to shorten the term around 30 years.

An action to consider

An action that I think is capable of doing both is Admiral (LSE: ADM). It is another insurance company, but I think it is an unusually good business that is not subject to the same risks as Phoenix Group.

The company is mainly exposed to car insurance, where policies can be repressed after a year instead of operating for decades. This helps to limit the threat of long -term unforeseen liabilities.

Inflation is a constant risk of considering, as prices are higher, car repairs and replacements cost more. But the Admiral has a great competitive advantage that helps him maintain strong subscription margins.

This comes from the data that the company collects on its customers using its telematic initiatives. This allows the company to set the price of policies with greater precision, generating better profits and returns.

Growth and dividends

Admiral actions currently come with a dividend yield of around 4.5%, above the FTSE 100 average and I think that their unique strengths will help it grow and distribute more effective to investors over time.

This is the type of combination that can make £ 43,100 per year in much more realistic passive income than it seems initially. Therefore, investors who hope to achieve this should seriously look at the shares.