A $500,000 superannuation balance can start to take on a new purpose once retirement arrives.

After years of building the balance, the focus may shift towards what that money can provide each year.

There are several ways to approach that, and I would be careful not to focus on the biggest possible income number.

Start with a sustainable approach

For me, retirement income should come from investments I would still be comfortable owning for years.

That could mean holding a mixture of dividend-paying ASX shares, exchange-traded funds (ETFs), and other assets rather than filling the portfolio with whichever shares currently offer the highest dividend yields.

A large dividend can be tempting, but it becomes far less attractive if the underlying business struggles and eventually cuts the payment.

I would prefer companies with dependable cash flows and a reasonable chance of at least maintaining (but preferably increasing) their dividends over time.

What could the income look like?

How much income a $500,000 balance could generate depends on how the money is invested.

At an average yield of 4%, the portfolio would produce around $20,000 a year.

A 5% yield would increase that to approximately $25,000, while 6% would generate around $30,000.

I think somewhere in that range gives investors a sensible idea of what could be possible without assuming an unusually high yield.

The income would not necessarily stay the same every year. Dividends can rise, fall, or occasionally disappear, which is another reason I would spread the portfolio across several investments.

Which ASX shares might help?

Telstra Group Ltd (ASX: TLS) could be one income holding I would consider.

Its mobile and internet services generate recurring demand, while the company has placed a growing dividend at the centre of its shareholder return plans.

Aurizon Holdings Ltd (ASX: AZJ) offers another type of income exposure through rail infrastructure and freight operations.

I might also consider Sonic Healthcare Ltd (ASX: SHL). Diagnostic testing provides exposure to healthcare demand, and the company has a long history of returning cash to shareholders.

These would only form part of a broader portfolio. I would want enough diversification that my retirement income was not overly dependent on one company or industry.

Growth still has a role

A retiree may need their superannuation to last for decades.

That means I would still want some investments capable of growing earnings and distributions over time.

Inflation gradually reduces what $20,000 or $25,000 can buy, so a portfolio that can produce increasing income has an advantage.

I would also be comfortable selling a small amount of investments when necessary rather than insisting that every dollar of retirement spending must come from dividends.

Foolish takeaway

A $500,000 superannuation balance could potentially generate somewhere around $20,000 to $30,000 a year from investments yielding between 4% and 6%.

I would be more interested in building a durable income stream than pushing for the top end of that range.

For retirement, I think a diversified portfolio with dependable income and some room for growth gives that $500,000 the best chance to keep working for years.

The post How much passive income could a $500,000 superannuation balance generate? appeared first on The Motley Fool Australia.

More reading

• $10,000 a year in passive income buying just $10k worth of ASX shares? Here’s how I’d go about it
• How much do I need in my superannuation to earn $10,000 passive income every month?
• Post-earnings: I’d buy these ASX dividend stocks for income today
• How I’d target $5,000 a year in passive income from ASX shares
• These ASX shares benefit from a high Aussie dollar

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 positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) is heading lower on Tuesday, with the market dropping back below 9,000 points.

At the time of writing, the benchmark index is down 0.68% to 8,949 points.

That puts the ASX 200 at its lowest level in 3 sessions and wipes out Monday’s small gain, when the index closed at 9,010 points.

The selling is also fairly widespread. Around 115 ASX 200 shares are falling, compared with 70 trading higher and 15 unchanged.

So, what is weighing on the market today?

Oil is back near US$100

Oil prices are getting plenty of attention after another skirmish in the Middle East conflict.

Brent crude settled at US$97.31 a barrel on Monday after reaching US$98.06, its highest level since late July. It is trading around US$96.80 this morning.

The move followed another escalation between the US and Iran, including attacks involving oil tankers and warships around the Strait of Hormuz.

That’s keeping concerns around energy prices, inflation and interest rates in focus.

There was also little direction from Wall Street overnight, with the US stock market closed for the Labor Day public holiday.

Heavyweights are pulling the index lower

Several of the ASX 200’s largest companies are trading lower this morning.

Commonwealth Bank of Australia (ASX: CBA) shares are down 0.64% to $160.51, while ANZ Group Holdings Ltd (ASX: ANZ) shares have fallen 0.61% to $37.70.

CSL Ltd (ASX: CSL) shares are down 0.81% to $171.79, and Wesfarmers Ltd (ASX: WES) has slipped 0.40% to $76.99.

REA Group Ltd (ASX: REA) is also among the weaker large-cap shares, falling 1.22% to $161.17.

Resources are holding up better

The resources sector is providing some support, helped by higher commodity prices.

BHP Group Ltd (ASX: BHP) shares are almost flat at $62.94, while copper prices have climbed to record levels in London trading.

Gold miners are also doing better. Northern Star Resources Ltd (ASX: NST) shares are up 0.77% to $23.47, while Evolution Mining Ltd (ASX: EVN) shares are 0.27% higher at $14.94.

Santos Ltd (ASX: STO) shares are up 0.36% to $8.38 as energy stocks benefit from higher oil prices.

Foolish takeaway

What I find more interesting is how quickly the ASX 200 has lost momentum over the past month.

The index was trading above 9,250 points in mid-August, but has now fallen by more than 3% from those levels.

Yes, that’s still only a modest pullback. But with oil prices rising and interest rate concerns hanging around, investors may need to get used to a bit more volatility.

The post The ASX 200 has dropped to a 3-day low. Here’s what’s happening appeared first on The Motley Fool Australia.

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• UBS names its 10 top ASX picks for the next 3-6 months
• Are CSL shares still cheap after almost doubling since June?
• Top 3 ASX shares to buy with $3,000 in September
• Which ASX shares win when the Aussie dollar is strong?

Motley Fool contributor Aaron Teboneras 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 CSL and Wesfarmers. The Motley Fool Australia has recommended BHP Group, CSL, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Bubs Australia Ltd (ASX: BUB) shares soared on Monday this week when the company announced it had secured approval to supply the US market with its infant formula products.

Bell Potter has since upgraded its price target on the company, and the analyst team believes there’s about 46% more upside in the shares as a result of the announcement.

I’ll get to their exact share price target on the stock shortly.

First let’s look in some more detail at what the company announced this week.

Key US approval is in the bag

Bubs said in a statement to the ASX that it had secured permanent US Food and Drug Administration (FDA) approval for its Bubs Goat, Bubs 365 Day Grass Fed and Bubs Essential infant formula products.

The company said the authorisation confirms that Bubs products, manufacturing systems and scientific evidence satisfy US regulatory requirements for safety, nutritional adequacy and quality.

The company added:

The United States infant formula market is one of the most highly regulated consumer categories globally, with substantial scientific, regulatory and manufacturing requirements for entry. Permanent FDA authorisation strengthens Bubs’ competitive position as the only Australian infant formula brand and one of a limited number of international manufacturers able to participate in this market. The approval provides a foundation for continued growth across Bubs’ branded portfolio while creating strategic optionality for future product innovation and market expansion.

Bubs Managing Director Joe Coote said it was a “transformational milestone” for the company.

He added:

This approval provides the platform to accelerate our US growth strategy, deepen retailer partnerships, strengthen consumer awareness of the Bubs brand and expand consumer reach across a market where we are already represented in more than 10,000 stores nationwide. Importantly, it also creates additional opportunities to broaden our product offering and evaluate participation in the US private label infant nutrition segment. While any private label expansion remains subject to further regulatory, technical and commercial milestones, the FDA authorisation represents a significant strategic asset that we consider enhances Bubs’ long-term growth potential.

Bubs Australia shares looking cheap

Bell Potter said in a research note to clients that the authorisation was a “material derisking event” for Bubs.

The broker added:

It has been overhanging the stock for some time and is now resolved. Our forecasts already assume ongoing US market access, but having gained USFDA approval, there may be a pathway to accelerate distribution point expansion beyond current projections.

Bell Potter has increased its price target on Bubs Australia shares from 13.5 cents to 19 cents, comparted to the current price of 13 cents.

Bubs is valued at $89.4 million.

The post How high could Bubs Australia shares go, according to Bell Potter? appeared first on The Motley Fool Australia.

More reading

• Bubs shares just rocketed 40%. Here’s the news investors were waiting for
• This ASX share jumped 7% before a trading halt. What’s going on?
• How high do brokers think Bubs Australia shares will go?

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 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.