The Australian share market is a great place to generate passive income thanks to the countless dividend-paying stocks that trade on the ASX boards.
But would it be possible to make $1,000 a month passively from ASX stocks?
The good news is that history shows that it is possible. And while there's no guarantee that history will repeat itself, investors can set themselves up to give them the best chance of achieving this goal.
$1,000 of monthly passive income from ASX stocks
If you want to make $1,000 monthly, you'll need to pull in $12,000 of dividend income a year.
That's a significant sum, so it will require a rather substantial investment portfolio.
Let's imagine that you can achieve an average dividend yield of 5% across a portfolio of solid ASX stocks. This would mean that you need an investment portfolio valued at $240,000 to be able to make passive income of $12,000 per annum or $1,000 per month.
If you're lucky enough to be already sitting on this amount of cash, then job done! But if you're not, then let's look at a way to get there in the future.
Building your portfolio
It isn't as hard as you might think to grow a portfolio to $240,000. All you need is some capital, an equal amount of patience, and compounding.
For example, if you can afford to invest $1,000 a month into ASX shares and generated an average return of 9% per annum, then it would take just under 12 years to grow a portfolio to our target level.
But which ASX shares could be great long-term options for build your wealth?
Goodman Group (ASX: GMG) could be a rock solid ASX stock to buy and hold. It is global industrial property and digital infrastructure specialist company with operations in key consumer markets across Australia, New Zealand, Asia, Europe, the United Kingdom, and the Americas. Citi currently has a buy rating and $40.00 price target on its shares.
Another ASX stock to consider is Life360 Inc (ASX: 360), which is the location technology company behind the eponymous Life360 family tracking app. It has over 70 million monthly active users. Bell Potter has a buy rating and $20.50 price target on its shares.
Finally, Australia's leading pureplay online furniture and homewares retailer, Temple & Webster Group Ltd (ASX: TPW), could be another top long-term option. Morgan Stanley has an overweight rating and $13.15 price target on its shares.
The final step
Once your portfolio is at the target level, you would need to reshape it with high quality ASX dividend shares. After which, you can then sit back and watch the passive income roll in.
