How I’m using my Stocks and Shares ISA to generate lifelong passive income

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I’m building out my investments in my Stocks and Shares ISA. Ultimately, the aim is to use my annual allowance to acquire assets that can support me in my retirement.

To do this, I’ll need assets that will distribute cash to me without me having to do anything. In other words, I need investments that are going to provide me with passive income.

This involves three things. The first is saving money to invest in stocks. The second is identifying stocks to invest in. The third is keeping track of my investments.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.


Early on, the most important thing for me is going to be saving aggressively. Making sure that I get as close as I can to using the full allowance on my Stocks and Shares ISA each year is my priority.

This is important early on because I plan to compound my investment gains. And compounding works best when it is given a long time to take effect.

For example, if I invest £1,000 today and achieve an average annual return of 7%, that will generate £498 in 2052. If I wait five years and invest it, then it will only generate £355.

The point is, it’s important for me to get as much money as possible invested as early as possible. And that means that saving is the first priority right now.


The next job is to identify the right investment opportunities. Even if I save money carefully, if I invest it poorly, I’ll do badly over time and won’t build the kind of asset base I’m looking for.

I’m looking for a portfolio that will ultimately provide me with passive income in my retirement and that will come from dividends. But that doesn’t mean that I should only buy dividend stocks right now.

When I get closer to retirement, I can always redistribute my investments towards dividend stocks if need be. But for now, I think the most important thing is to invest in the best opportunities I can find, whether that’s dividend stocks like Unilever or stocks that don’t pay dividends, such as


Lastly, it will be important for me to keep track of my investments and see how they’re doing. This will involve a few things.

First, it will involve having an idea of what the company is going to achieve in the future. This can evolve over time, but I’ll need an initial view of what the underlying business is likely to make.

Second, I’ll need to pay attention to updates from the company about how the business is performing. That might involve looking at trading updates, earnings calls, or other news releases.

To do this, I’ll have to focus on businesses that I can understand really well. But if I follow the steps I’ve outlined here, I’m optimistic about building a portfolio that can provide me with passive income in retirement.

The post How I’m using my Stocks and Shares ISA to generate lifelong passive income appeared first on The Motley Fool UK.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Stephen Wright has positions in Amazon. The Motley Fool UK has recommended Amazon and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.