When it comes to retirement, wouldn’t it be nice to get your feet up and make your money work for you?
Well, this certainly is possible. You just need to build an investment portfolio that has the potential to provide you with a suitable income.
On this occasion, letâs aim for a retirement income of $50,000. Can we get there?
The good news is that if you have time on your side, history shows that growing a portfolio capable of yielding $50,000 a year in income is more than possible.
How to generate $50,000 of income from ASX shares
There are a large number of ASX shares out there that provide investors with 5%+ yields. This includes the likes of ANZ Group Holdings Ltd (ASX: ANZ) and BHP Group Ltd (ASX: BHP).
And while we donât know what they will offer in the ultra long term, you can bet that there will be something similar.
Something else you can bet on is the share market rising. Historically, the share market has provided investors with an average annual return of 10%.
There is no guarantee that this will happen again over the long term, but weâre going to base our calculations on this.
With that in mind, if you were to invest $10,000 into the share market each year for the next 24 and a half years and earned the market return, you would have a portfolio valued at just over $1 million.
At that stage, you can switch your focus to income and if you average a 5% yield, you will be watching $50,000 come rolling in each year without lifting a finger. The dream!
The key is to build a diverse portfolio filled with high quality ASX shares and let compounding work its magic. Companies with strong business models, competitive advantages, and positive long term growth outlooks would be top of my list.
The post How to make $50,000 of retirement income with ASX shares appeared first on The Motley Fool Australia.
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More reading
- How to generate $20k of passive income from BHP shares
- Hereâs how I would secure monthly dividends in the 2024 financial year with these ASX stocks
- Why is the BHP share price taking a flogging on Friday?
- Why are ASX 200 bank shares like CBA being annihilated today?
- Buy these ASX dividend shares before it’s too late: brokers
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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