How I’d invest $20k in ASX 200 shares to earn a second income of $140 a month

The S&P/ASX 200 Index (ASX: XJO) has fallen 4% since its March peak, and the downturn has likely left plenty of shares boasting notable dividend yields. That means now could be an ideal time to work on building a second income.

This month has brought the collapse of Silicon Valley Bank, UBS’ takeover of Credit Suisse, and worries Deutsche Bank could also be in trouble.

That’s likely left many wondering if such liquidity concerns among international financial giants could be the first sign of a market crash. Such sentiment may have, in turn, weighed on quality shares.

As a result, now might be a good time for me to consider building my passive income by buying ASX 200 dividend shares.

How I’d invest for a second income, starting TODAY

Falling share prices often herald more appealing dividend yields. I think I could find some particularly juicy offerings in the aftermath of the ASX 200’s recent 4% fall.

In fact, I think I could find a handful of ASX 200 shares capable of providing an average dividend yield of more than 8.5%.

If I invested $20,000 in such stocks, I could realise $1,700 of annual passive income without lifting a finger. That’s more than $140 a month.

At the same time, I’d make a point to manage the risks associated with investing.

First, I’d diversify my passive income portfolio. By buying at least five shares across different industries, I could better protect my investments from single-sector falls.

Second, I’d also aim to hold my investments for at least 10 years. That way I’d hope to make the most of the stock market’s volatility.

5 ASX 200 shares yielding over 8.5%

But what handful of shares can provide an average dividend yield of more than 8.5%?

These five ASX 200 shares each offer a dividend yield of more than 7% and, together, provide an average yield of 8.8%. Take a look:

If I were to invest $20,000 equally across the five above stocks, I could secure an 8.8% average dividend yield.

At that point, my portfolio would be capable of providing $1,760 of passive income each year – or approximately $147 a month.

And that could be just the beginning.

I would hope the value of my investments rises over the coming years and decades, thereby growing my passive income in the future. Who knows, my ASX 200 shares might even allow me to retire a little bit earlier than I could have otherwise.

Though, no investment is guaranteed to provide returns and past performance doesn’t indicate future performance.

The post How I’d invest $20k in ASX 200 shares to earn a second income of $140 a month appeared first on The Motley Fool Australia.

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SVB Financial provides credit and banking services to The Motley Fool. Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Harvey Norman and SVB Financial. The Motley Fool Australia has positions in and has recommended Harvey Norman. The Motley Fool Australia has recommended SVB Financial. 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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