Want $1,000 of monthly passive income? Yes please! I believe that by consistently investing in ASX dividend shares and making the most of compounding, I could cut back on my nine-to-five without sacrificing my financial well-being.
Here's how I would build an ASX portfolio capable of providing $1,000 of passive income each month, starting today.
How I'd build $1,000 of monthly passive income
Imagine receiving a consistent income while enjoying hobbies, holidaying, or even sleeping. It might sound like a dream, but I think I could make it a reality by investing strategically in ASX dividend shares over the coming years.
Indeed, by investing $150 a week – around $7,800 annually – I think I could be bringing in $1,000 a month in less than two decades. And that's before considering capital gains or franking credits.
Let's assume I invested $150 a week in stocks capable of paying a generous (but not outlandish) average dividend yield of 6.5% and reinvested any and all dividends I received.
By doing so, I could boast a portfolio worth more than $209,000 in 16 years. Meanwhile, I would have forked out just $125,000 – that's the power of compounding!
At that point, my ASX dividend shares could bring in $13,585 each year – or around $1,132 a month.
How I'd find ASX dividend shares to buy
But which stocks I choose to invest in could make or break my passive income investing strategy.
While buying the highest-yielding shares might seem like the best way to grow dividend income, I think the sustainability of a company's payouts is far more important.
My passive income plan relies on long-term growth. Therefore, I'd look for shares with a strong balance sheet and a history of paying consistent dividends.
And I'd look for them in a variety of shapes, sizes, and sectors. That's because one of the best ways to protect a portfolio over the long term is to diversify.
Finally, and perhaps most importantly, I would look for quality ASX dividend shares trading at good prices.
By buying in at a good price, I believe I could start my investment off on the right foot and potentially kickstart my returns.
However, even the most considered investment isn't guaranteed to provide returns, and past performance doesn't indicate future performance.
