Calculate how much you need to invest to generate your desired passive income from dividends, interest, and capital gains. This calculator estimates the investment corpus required to produce a target monthly income, how long it will take to reach that goal based on your current savings and monthly contributions, and the projected growth of your passive income portfolio.
Investment Needed
£900,000
To generate £3,000/month
Years to Goal
21 years
At £1,000/month
Total Annual Return
8%
Goal: Invest £900,000 in assets yielding 4% dividends to earn £3,000/month passively. At your current savings rate, you'll reach this in 21 years.
Passive income is money earned with minimal ongoing effort — it flows from investments, rental properties, royalties, or businesses that operate without your daily involvement. The most common and accessible form of passive income comes from investment portfolios through dividends, interest, and capital appreciation.
Dividend-paying stocks distribute a portion of company profits to shareholders, typically quarterly. Dividend yields of 2-4% are common for quality stocks. A £400,000 portfolio with a 3% dividend yield generates £12,000 per year (£1,000/month) in passive income. Dividends can also grow over time as companies increase their payouts.
Bonds, CDs, and high-yield savings accounts generate interest income. While yields are typically lower than dividend stocks, the income is more predictable and the principal is more stable. A bond portfolio might yield 3-5% depending on the type and maturity of bonds held.
To generate £2,500/month (£30,000/year) in passive income at a 4% yield, you need a £750,000 portfolio. At 3% yield, you need £1M. The required corpus depends on your target income and the yield your investments produce. Higher yields often come with higher risk.
Reinvest all dividends and interest until you reach your target portfolio size. Dividend growth investing focuses on companies that increase their dividends annually — a stock paying 2% today might pay 4% on your original investment in 10 years through consistent dividend growth. Time and patience are your greatest allies.