A decade gives businesses plenty of time to grow, new industries to develop, and investment returns to compound.

For investors looking towards 2036, these are three Vanguard exchange-traded funds (ETFs) I think could be worth considering.

Vanguard Diversified All Growth Index ETF (ASX: VDAL)

The VDAL ETF is one of the newer additions to Vanguard’s Australian range, and I like how much it can cover in a single investment.

The fund invests entirely in shares and provides exposure to more than 6,000 stocks across over 50 markets. That includes Australian shares, large international companies, emerging markets, and global small caps.

For me, the attraction is the sheer number of places growth can come from.

The businesses leading global markets in 2036 may look quite different from those dominating today. New companies will emerge, existing leaders will expand, and some industries could become far more important.

The VDAL ETF does not require investors to predict all of those changes beforehand. Its broad exposure allows the portfolio to evolve alongside global share markets.

I think it could be an attractive Vanguard ETF for investors who want broad share market exposure over a long timeframe.

Vanguard Global Technology Index ETF (ASX: VTEK)

Technology is one area where I expect the world to look considerably different by 2036.

Artificial intelligence is already changing how businesses operate, while cloud computing, cybersecurity, semiconductors, automation, and digital services should continue developing over the coming decade.

The VTEK ETF provides exposure to around 300 global technology stocks across developed and emerging markets. It also caps individual positions, helping prevent the portfolio from becoming completely dominated by its largest holdings.

I like this approach because the next decade of technology growth may spread well beyond the companies currently receiving the most attention.

The fund can participate as new technology leaders emerge while retaining exposure to established businesses benefiting from continued digital investment.

There will be periods when technology shares struggle, particularly after valuations become stretched. However, over a decade, I think continued innovation gives this Vanguard ETF an exciting long-term opportunity.

Vanguard MSCI International Small Companies Index ETF (ASX: VISM)

The VISM ETF looks further down the size spectrum.

It invests in smaller companies across major developed markets, with its largest country exposure currently coming from the United States, followed by markets including Japan, the United Kingdom, Canada, Sweden, and Germany.

I think small caps can be particularly attractive over a 10-year timeframe because many are still relatively early in their growth journeys.

Some will expand into new countries, develop new products, or grow into much larger businesses. An ETF provides a way to participate in that potential across a broad collection of companies rather than needing to identify the eventual winners individually.

Smaller companies can experience greater volatility, and plenty will inevitably disappoint. But I think the chance to capture growth across hundreds of businesses makes the fund worth considering for a long holding period.

Foolish takeaway

Ten years is long enough for markets to change in ways that are difficult to predict today.

That is why I like ETFs that either spread their exposure widely or give investors access to areas where I can see substantial growth ahead.

I would be comfortable buying any of these Vanguard ETFs now and giving the investment plenty of time to work.

The post 3 Vanguard ETFs I’d buy and hold until 2036 appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino 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.

When it comes to retirement, it’s good to have a handle on how much income you can expect to have on hand to get by on.

How much do you need for a comfortable retimrent?

The Association of Superannuation Funds of Australia (ASFA) calculates a retirement standard each year which is a guide to how much money you need for what they deem to be a comfortable retirement.

A “comfortable retirement” includes the ability to afford top level private health cover, to own and maintain a reasonable car, to maintain your home, and to travel occasionally, among other things.

The figures for a comfortable retirement are currently calculated at $730,000 for couples and $630,000 for singles.

ASFA also assumes that the retiree will draw down all of their capital over time and receive a part Age Pension.

For simplicity’s sake, I am going to assume a retiree is living off of dividends alone and not drawing down any capital.

In that case, what sort of income stream can you expect from a $630,000 lump sum?

The figures are pretty simple. If you can achieve a 10% dividend stream you would receive $63,000 per year, and for 5% it would be $31,500.    

I would argue that a 10% dividend yield from shares each year is unrealistic, while 5% is achievable.

Franking credits boost your earnings

You have to remember that once you are retired, you will get the benefit of franking credits from shares which have them attached.

In simple terms franking credits allow you to claim back the tax a company has already paid on their profits, which can be quite lucrative for retirees who are on a zero per cent tax rate.

In practice this means that if you have a full franked share paying a 5% dividend, the actual return will be 7.14%.

There are plenty of shares which will generate these sort of returns.

For steady dividend returns I am a fan of real estate investment trusts, which often hold a large number of diversified assets, therefore reducing risk.

The Charter Hall Social Infrastructure REIT (ASX: CQE) is paying a trailing dividend of 6.88%, while at the smaller end 360 Capital REIT (ASX: TOT) is paying 7.31%.

Among the banks Bendigo and Adelaide Bank Ltd (ASX: BEN) is paying 5.65% while Bank of Queensland Ltd (ASX: BOQ) is paying 6.22%.

Among the resources stocks Fortescue Ltd (ASX: FMG) is paying 6.87% while Woodside Energy Group Ltd (ASX: WDS) is paying 5.03%.

Given these sorts of returns, I’d argue a yield of 7.5% on your superannuation investments is realistic, which would equate to $47,250 per year from a balance of $630,000.

The post How much passive income could I earn from a $630,000 superannuation balance? appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England 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 positions in and has recommended Bendigo And Adelaide Bank. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Superannuation is a great way for Australians to build wealth for their retirement.

But it’s not just a savings pot.

Did you know that you can also earn a passive income off your balance once you transition to the pension phase?

But how much do you need in your super to be able to get the passive income you want when your retirement years arrive?

And how achievable is a $10,000 per month passive income?

Let’s investigate.

How much do I need in my superannuation to get a passive income of $10,000 every single month?

First, you need to work out what $10,000 in passive income every month equals over the entire year. 

So, $10,000 x 12 = $120,000.

Then you need to divide your annual passive income by the dividend yield of your overall portfolio. 

For example, $120,000 ÷ 5% = $2.4 million (that’s the portfolio size you’d need).

The catch is that the answer varies depending on your dividend yield.

That means a portfolio with a dividend yield of around 6% only needs to be half the size of one with a dividend yield of around 3% to generate the same level of passive income.

Break it down for me

Say your overall portfolio has a yield of around 2% or 3%. You’ll need a balance of around $6 million or $4 million to earn your $10,000 per month ($120,000 per year) passive income.

Of course, these are huge figures and this level of superannuation balance is out of reach for the majority of Australians.

But the good news is, as your yield goes up, the amount you need to earn the same $10,000 per month passive income, goes down.

So, if your portfolio yields closer to 4%, you’d need around $3 million.

Then if your portfolio yields a little higher, around 5%, you’d need more like $2.4 million to earn the same amount.

At 6%, you’d need a superannuation balance of around $2 million to earn the same amount.

Increase that to a 7% or 8% yield, and you’re looking at closer to $1.7 million or $1.5 million, respectively.

Then if you have the appetite for higher yielding and riskier shares, around the 9% or 10% mark, you’d need around $1.33 million or $1.2 million in your super to earn the same level of passive income.

Remember, most ASX dividend shares pay dividends on a semi-annually or yearly basis. Which means that while you could target the equivalent of $10,000 per month in passive income, you won’t actually receive the money on a month-by-month basis, but instead in a lump sum every six or 12 months.

Why can’t I invest in the highest yielding ASX shares available so I can earn the same passive income off a lower balance?

Technically this is possible, but it comes with a significant amount of risk.

When it comes to ASX dividend shares, high-yielding shares could be cyclical businesses that fluctuate significantly with market cycles, niche companies with strong cash conversion, or they have discounted share prices. 

It doesn’t mean high-yield shares should be avoided, but rather, they should be part of a diversified portfolio rather than account for the entire portfolio.

Rather than trying to get rich quick, it’s best to concentrate on a diverse range of good-quality businesses with strong balance sheets and stable earnings. Ideally, you want to focus on stocks that are most likely to stand the test of time.

Ok, so what does a diversified portfolio look like?

If you plan to earn $10,000 per month off a 5% yielding portfolio, you’d need a balance of around $2.4 million.

That doesn’t mean that every investment in that superannuation portfolio has to be 5%. It can be a variation which equates to a combined overall 5% yield.

And remember, you don’t need to invest the whole sum in one go. Start with a monthly investment and let compounding do some of the hard work for you.

I’d look at splitting my superannuation portfolio into different yielding stocks, across different sectors.

You could look to have around 10% of your portfolio invested in 3% yielding ASX shares, 20% into 4% yielding, 35% into 5% yielding, 25% into 6% yielding, and 10% into 7% yielding. Overall, this would give a total overall portfolio yield of just over 5%.

Alternatively, you could split it down far more simply and allocate 20% equally to 2%, 3%, 4%, 5%, and 11% yielding shares. Again, overall, this would total a 5% yield and you’d benefit from a range of exposures.

The post How much superannuation do I need to earn $10,000 per month in passive income? appeared first on The Motley Fool Australia.

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Motley Fool contributor Samantha Menzies 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.