The recent Australian federal budget changes appear to make superannuation the best way for Australians to invest for passive income.

I think that’s true because superannuation has a lower tax rate compared to many individuals, trusts and companies. With the set-and-forget nature of superannuation, it makes it very easy to invest for the long-term with the retirement system.

Receiving passive income is a very simple and laid-back strategy when it comes to investing in shares. However, when considering the passive income return, we need to remember that the focus should be on the net income, meaning the after-tax return. Full-time working Aussies that invest for passive income in their own name could lose a third of those payments to tax each year, which isn’t ideal.

In my view, investing in superannuation is more appealing because of its lower tax rate in the accumulation phase compared to the typical individual’s tax rate for a full-time earner. It’s possible that the tax rate could be 0% in retirement.

It should be said that every household’s tax situation is different, so let’s look at the targeted income level of $11,000 per month, without talking about tax for the rest of this article.

How much is needed in superannuation for $11,000 of monthly passive income?

Receiving $11,000 in dividends each month equates to an annual goal of $132,000 per year. I bet lots of Australians would like to receive that amount of dividends each year without needing to do ongoing work to get the money flowing into the bank account.

I’d suggest Australian investors need to consider what types of investments they want to own and the yield that comes with it. In my view, ASX shares are the best pick for passive income, partially due to the likely franking credits that come attached to dividends from companies.

A portfolio with a dividend yield of 6% could be half the size of a portfolio with a dividend yield of 3% and generate the same level of dividend income.

For example, if a portfolio were approximately $2.2 million in size, it would generate approximately $132,000 of annual dividends with a 6% dividend yield. If a portfolio had a 3% dividend yield, it would need to be around $4.4 million in size to generate the same amount.

Of course, other dividend yields would require different-sized portfolios to achieve targeted levels of passive income. For example, a 5% dividend yield would require a portfolio size of $2.6 million to reach $132,000 annually.

The types of ASX dividend shares I’d want to buy

If an Australian superannuation investor wants to unlock mid-to-higher dividend yields, then they’re in luck. The ASX share market gives access to great companies with franking credits, real estate investment trusts (REITs) with compelling payouts and attractive valuations, as well as listed investment companies (LICs) with a pleasing track record of rising dividends.

Two of the businesses with a great track record of growing their payouts include investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and Kmart and Bunnings owner Wesfarmers Ltd (ASX: WES). I believe these two businesses will be able to compound their payouts.

I’m attracted to some mid-yielding names like Rural Funds Group (ASX: RFF), Centuria Industrial REIT (ASX: CIP), Australian Foundation Investment Co Ltd (ASX: AFI), Telstra Group Ltd (ASX: TLS) and WCM Quality Global Growth Fund (ASX: WCMQ).

Finally, for a higher dividend yield, I’d look at names like MFF Capital Investments Ltd (ASX: MFF), WCM Global Ltd (ASX: WQG), Future Generation Global Ltd (ASX: FGG) and Future Generation Australia Ltd (ASX: FGX).

The post How much is needed in superannuation to target an $11,000 monthly passive income? appeared first on The Motley Fool Australia.

More reading

• How I’d build $50,000 of ASX passive income
• There are still some well-priced ASX dividend shares. Here’s where to look
• 3 ASX dividend shares to buy and hold for years of income
• Here are the top 10 ASX 200 shares today
• Where to invest $500 on the ASX right now

Motley Fool contributor Tristan Harrison has positions in Future Generation Australia, Future Generation Global, Mff Capital Investments, Rural Funds Group, Washington H. Soul Pattinson and Company Limited, Wcm Global Growth, and Wcm Quality Global Growth Fund. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited and Wesfarmers. The Motley Fool Australia has positions in and has recommended Mff Capital Investments, Rural Funds Group, Telstra Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Building $50,000 of passive income from ASX shares is a serious goal.

It is not just about buying a few high-yield stocks and hoping the dividends arrive. I think it requires a portfolio that can produce cash, handle different market conditions, and keep enough growth in the mix so the income does not lose its value over time.

If I were trying to build that kind of income stream, this is how I would approach it.

I’d treat the portfolio like a cash-flow machine

The first thing I would want is a portfolio built around businesses with a real reason to keep earning money.

That could include companies providing essential services, owning infrastructure, leasing important properties, selling everyday products, or operating in sectors with repeat customer demand.

I would be looking for cash flows with structure behind them.

Telstra Group Ltd (ASX: TLS) is one example. Mobile connectivity is part of daily life for households and businesses. APA Group (ASX: APA) owns energy infrastructure that helps move gas and electricity through the economy. Transurban Group (ASX: TCL) owns toll roads that sit inside major transport networks.

These are not identical income shares, and that is the point. I would want different cash-flow engines working together rather than relying too heavily on one sector.

I’d avoid chasing the biggest yields

A $50,000 income target can tempt investors toward the highest-yielding shares on the market.

I would be careful with that.

A very high yield can sometimes be a warning sign. It may reflect a falling share price, a stretched balance sheet, weak growth, or doubts about whether the dividend can be sustained.

I think a portfolio yielding around 5% is a reasonable middle ground. At that level, an investor would need about $1 million invested to generate $50,000 a year in passive income.

That is a large portfolio, but it is also a useful reminder. The real work is not only finding income shares, but also involves building the capital base first.

I’d keep inflation in mind

A $50,000 income stream sounds useful today, but inflation can change the picture over time.

That is why I would want some dividend growth in the portfolio.

The best passive income shares are not always the ones with the biggest starting yield. Sometimes a lower-yielding business with stronger growth can become more valuable over a decade, especially if it can lift earnings and dividends at stronger-than-average rates.

For example, a portfolio could include a mix of higher-yield infrastructure and property shares alongside banks, supermarkets, packaging companies, telcos, and other businesses that may have scope to grow distributions over time.

I would want the income stream to have some chance of rising, not simply standing still.

Foolish takeaway

Building $50,000 of ASX passive income is really about building a portfolio that can keep sending cash without becoming fragile.

I would want useful businesses, varied sources of income, sensible yields, and enough growth to help protect purchasing power.

At a 5% yield, the rough target is a $1 million portfolio. Getting there may take years of saving, investing, reinvesting, and patience. But once the machine is built, ASX shares can provide something very valuable: regular cash flow from real businesses, without needing to sell shares every time money is needed.

The post How I’d build $50,000 of ASX passive income appeared first on The Motley Fool Australia.

More reading

• There are still some well-priced ASX dividend shares. Here’s where to look
• 3 ASX dividend shares to buy and hold for years of income
• Here are the top 10 ASX 200 shares today
• Transurban Group overhauls NSW toll enforcement, ditches paper notices
• 3 buy-rated ASX dividend shares forecast to yield 5%+ in FY 2027

Motley Fool contributor Grace Alvino has positions in Transurban Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Apa Group, Telstra Group, and Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The new financial year is approaching, and I still want growth at the centre of my ASX portfolio.

There are a lot of options to pick from, but these are five ASX growth shares I would consider owning in FY27:

Pro Medicus Ltd (ASX: PME)

I think Pro Medicus is one of the highest-quality software businesses on the ASX.

Its Visage imaging platform helps healthcare providers manage and view large medical imaging files. That may sound technical, but the value is easy to understand. Doctors and radiologists need fast, reliable systems that help them work through complex cases and make timely decisions.

Medical imaging is becoming more data-heavy, and hospitals need software that can keep up. I think Pro Medicus is well placed because it operates in a specialist market where performance really counts.

For a long-term portfolio, I like the combination of healthcare need, software economics, and global opportunity.

WiseTech Global Ltd (ASX: WTC)

WiseTech is another ASX growth share I would want to own.

Global logistics is full of friction. Goods move through ports, warehouses, carriers, freight forwarders, customs systems, and regulators. A single shipment can involve multiple parties, documents, currencies, time zones, and compliance rules.

WiseTech’s CargoWise platform helps logistics companies manage that complexity.

I like software that becomes part of how a customer actually runs its business. If a system helps reduce manual work, improve visibility, and manage compliance, it can become hard to replace.

WiseTech still needs to execute well, especially after acquisitions. But I think its role in the machinery of global trade gives it a long growth runway.

Xero Ltd (ASX: XRO)

Xero is a business I would include because small business finance is still being rebuilt for the digital age.

The company started with accounting software, but I think the bigger opportunity is helping small businesses manage more of their financial lives in one place. Invoicing, payroll, payments, tax, reporting, cash flow, and bank feeds can all be part of the same daily workflow.

That workflow is important because small business owners often want fewer systems, less admin, and better visibility.

Xero’s challenge is to keep deepening its usefulness without losing simplicity. If it can do that, I think it can become even more valuable to customers over time, particularly as automation and artificial intelligence improve everyday financial tasks.

Life360 Inc. (ASX: 360)

Life360 is a very different type of ASX growth share.

The company sits inside family life. Its app helps users keep track of loved ones, locations, driving, safety, and connected devices. That gives it an emotional layer that many consumer technology businesses do not have.

I think that is powerful. If a product becomes part of how families coordinate, communicate, and feel safer, it can earn a place in daily routines. From there, Life360 has several ways to grow, including subscriptions, advertising, Tile devices, driving-related features, and broader family safety tools.

Trust and privacy are crucial, and the company must keep handling those issues carefully. But I like the size of the user base and the potential to build more services around it.

Hub24 Ltd (ASX: HUB)

Hub24 is the wealth platform share I would want in this group.

Australia’s wealth system is large, and advisers need technology that helps them manage portfolios, reporting, administration, and client communication more efficiently.

Hub24 benefits if more advisers choose its platform, but I think the attraction goes deeper than funds under administration. A good platform can become part of the adviser’s operating model. It can shape how portfolios are built, monitored, reported, and adjusted.

That creates a valuable position if the company keeps winning trust. I think Hub24 has the right exposure to long-term trends in advice, retirement, and wealth management.

Foolish takeaway

The growth shares I want for FY27 are not all chasing the same opportunity.

That is what appeals to me. Healthcare imaging, logistics software, small business finance, family safety, and wealth platforms all have their own engines of demand. Each business has a chance to become more useful to customers as its market becomes more digital, more complex, or more data-driven.

There will be volatility, and not every year will look tidy. But if I were building an ASX growth portfolio for FY27 and beyond, these are the kinds of businesses I would want working for me.

The post 5 ASX growth shares I want in my portfolio in FY27 appeared first on The Motley Fool Australia.

More reading

• What’s spooking investors about Xero shares?
• These ASX 200 shares are down 40% to 65% and could be bargain buys
• 3 cheap ASX shares that could be hiding in plain sight
• Xero shares just crashed to COVID-era lows. Is this ASX 200 tech stock broken?
• 3 reasons to buy the dip on Life360 shares today

Motley Fool contributor Grace Alvino has positions in Hub24. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Hub24, Life360, WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended Life360, WiseTech Global, and Xero. The Motley Fool Australia has recommended Hub24 and Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.