For many investors, the idea of earning $1,000 per month — or $12,000 per year — in passive income from ASX shares is a key financial goal.
The good news is that it is entirely possible. All you need is a clear plan and realistic expectations.
There are two main paths to get there: one for investors with capital ready to deploy, and one for those starting from scratch and building over time.
Starting with cash in the bank
If you've already built up a portfolio worth around $240,000, then you are in the perfect position to start generating $12,000 per year in passive income immediately.
Assuming you invest in a well-diversified portfolio of ASX shares or ETFs and target a 5% average dividend yield across your holdings, your capital would produce the target amount.
Many ASX dividend-focused ETFs, like Vanguard Australian Shares High Yield ETF (ASX: VHY) provide a yield around this level. As do select individual shares such as Accent Group Ltd (ASX: AX1) and APA Group (ASX: APA).
In addition, while this 5% yield is the focus, these types of investments can also offer long-term capital growth. Based on an average return of 10% per annum, it is possible that your portfolio will grow by 5% each year even after pulling out your passive income.
And as their dividends (hopefully) grow, so too will your passive income.
Passive income starting at zero
If you are starting from zero, the journey to $1,000 a month in passive income is more about consistency, compounding, and time. The key is to build wealth first, then transition to income.
Let's say you can invest $1,000 per month into a diversified portfolio of growth-oriented ASX shares and ETFs — think TechnologyOne Ltd (ASX: TNE), Xero Ltd (ASX: XRO), or the Betashares Nasdaq 100 ETF (ASX: NDQ).
Assuming a 10% average annual total return (growth and dividends reinvested), your portfolio could grow to approximately $240,000 in just over 11 years.
Once you have hit that magic number, you can pivot your strategy and reallocate the portfolio toward income-producing shares or ETFs yielding around 5%.
Foolish takeaway
Building a $1,000 a month passive income stream is very achievable — whether you're starting with capital or building from zero.
For those with $240,000 or more, it can begin right away. For others, it's a longer-term project requiring consistent investing, dividend reinvestment, and a shift toward income as your portfolio matures.
Either way, the combination of quality ASX shares, generous dividend yields, and compounding can turn a modest monthly investment into meaningful, lasting passive income over time.
