Close Menu
FintechFetch
    FintechFetch
    • Home
    • Fintech
    • Financial Technology
    • Credit Cards
    • Finance
    • Stock Market
    • More
      • Business Startups
      • Blockchain
      • Bitcoin News
      • Cryptocurrency
    FintechFetch
    Home»Stock Market»£20,000 in a Stocks and Shares ISA? Here’s how you could turn that into a £15,053 passive income
    Stock Market

    £20,000 in a Stocks and Shares ISA? Here’s how you could turn that into a £15,053 passive income

    FintechFetchBy FintechFetchOctober 1, 2025No Comments3 Mins Read
    Share Facebook Twitter Pinterest LinkedIn Tumblr Reddit Telegram Email
    Share
    Facebook Twitter LinkedIn Pinterest Email


    Image source: Getty Images

    With a £20,000 annual limit, the Stocks and Shares ISA provides an effective way for most investors to target a passive income in retirement.

    Thanks to the huge tax savings the ISA provides — not to mention the significant compound gains share investing can deliver — someone who maxes out their £20k allowance could eventually sit back and enjoy an annual second income above £15,000.

    Thinking long term

    But how realistic is this target? ‘Very’ is the simple answer, based on the long-term returns of the global stock market.

    Past performance isn’t always a reliable guide to the future. However, the 8% to 10% average yearly return that share investors have enjoyed over the decades is a pretty encouraging omen in my book.

    Let’s split the difference, and say an investor with £20,000 in their Stocks and Shares ISA can get an average annual return of 9%. After 25 years, they would have a portfolio of £188,168, which — if they invested in 8%-yielding dividend shares — should throw off an annual passive income of £15,053.

    Selecting dividend stocks

    Of course, dividends are never, ever guaranteed. But a diversified portfolio of, say, 20 or more dividend stocks can protect against any company-specific shocks and help to deliver a stable second income over time.

    Choosing companies with robust balance sheets, market-leading positions, and a diverse range of revenue streams can also help investors meet their passive income goals. It can also be a good idea to select companies in growing industries alongside ones in more mature, defensive sectors, as this can lead to healthy dividend growth over time.

    As an example, M&G (LSE:MNG) is a UK dividend share I think individuals should consider for a passive income. It’s raised annual payouts every year since it listed on the FTSE 100 in 2019. And as the graph below shows, its dividend yields have comfortably beaten the Footsie‘s long-term average of 3% to 4%.

    M&G shares have long provided robust passive income for Stocks and Shares ISA investors
    Source: dividenddata.co.uk

    For 2025, its dividend yield is an enormous 8.1%. And for 2026 and 2027, this improves to 8.4% and 8.7%.

    A top FTSE 100 share

    Dividends could disappoint if economic conditions worsen, dampening demand for M&G’s financial products. However, the likelihood of further interest rate cuts could help sales hold up in an otherwise tough environment.

    Besides, the FTSE 100 company’s strong balance should continue giving it the confidence to pay large and growing dividends. As of June, its Solvency II capital ratio was an impressive 230%, more than double regulatory requirements.

    Over the long term, I’m confident profits and dividends here will rise strongly, driven by ageing populations in its markets and a growing need for personal financial planning. As part of a diversified portfolio, I’m confident M&G could help deliver the passive income of £15,000 — or perhaps even more — that a £20,000 lump sum in a Stocks and Shares ISA could generate.



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    Previous ArticleMetaplanet Expands Bitcoin Holdings To Over 30K BTC – Details
    Next Article Crypto Market Drop Looks More Like Consolidation Than Capitulation: Bitfinex
    FintechFetch
    • Website

    Related Posts

    Stock Market

    £5,000 in this FTSE 250 stock could more than triple – here’s how

    October 18, 2025
    Stock Market

    How much does someone need to invest in dividend shares to target a £30k passive income at 55?

    October 18, 2025
    Stock Market

    Building a steady passive income: the power of growth and dividends on the FTSE 100

    October 18, 2025
    Add A Comment
    Leave A Reply Cancel Reply

    Top Posts

    Peace of Mind Over Pounds – Loqbox Research Reveals Emotional Toll of Money Worries

    May 12, 2025

    LLMs are the users now

    September 8, 2025

    Is Donald Trump Crypto Going to Pardon CZ: Will CZ Move to Florida?

    September 20, 2025

    Test ($TST) Price Pumps 2,000% Over Weekend – Coul MIND of Pepe Post Similar Gains?

    February 11, 2025

    2 high-yielding UK income shares with added growth potential

    October 1, 2025
    Categories
    • Bitcoin News
    • Blockchain
    • Business Startups
    • Credit Cards
    • Cryptocurrency
    • Finance
    • Financial Technology
    • Fintech
    • Stock Market
    Most Popular

    Kraken Makes First Move into Equities Trading, Adds Over 11,000 US Stocks and ETFs

    April 14, 2025

    JPMorgan and Citi Explore Stablecoins as Digital Payments Grow In Popularity

    July 16, 2025

    Is Tesla stock a brilliant bargain lots of people don’t see?

    May 17, 2025
    Our Picks

    Investors Pile In After Bitcoin’s Decline — Here’s What It Could Mean

    October 19, 2025

    Revolut’s Full UK Bank Licence Is on Hold over Global Risk Control Concerns: Report

    October 19, 2025

    Australia shares tips to wean teens off social media ahead of ban. Will it work?

    October 19, 2025
    Categories
    • Bitcoin News
    • Blockchain
    • Business Startups
    • Credit Cards
    • Cryptocurrency
    • Finance
    • Financial Technology
    • Fintech
    • Stock Market
    • Privacy Policy
    • Disclaimer
    • Terms and Conditions
    • About us
    • Contact us
    Copyright © 2024 Fintechfetch.comAll Rights Reserved.

    Type above and press Enter to search. Press Esc to cancel.