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How I’d set up passive income streams with £50 a month

on January 28, 2022

Money I get without working for it sounds too good to be true. But that is the theory of passive income. In practice, some of my favourite passive income streams are shares that pay dividends.

If I had a spare £50 a month and wanted to set up such streams in three easy steps, here is the plan of action I would use.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

1. Start saving £50 a month

I would decide how I was going to set aside my monthly sum of £50. For example, would it be cash I put in a piggy bank or a bank transfer? However I decided to set the money aside, I would want to make sure that I did so on a regular basis. Getting into the habit of putting aside the money to build my passive income streams would be important. That is because if I am disciplined about building the right mindset and habits when it comes to income, I think I am more likely to stick to my resolutions.

Although I would not start buying shares immediately, this would also be a good moment to set up some sort of share-dealing account. That way, once my monthly contributions start to pile up and I am ready to make my first share purchase, I will be able to do so.

2. Identify dividend shares I could buy

Share-dealing charges mean I would wait a few months to start investing, at which point I would have several hundred pounds. That way I could hopefully suffer less impact from any charges as a percentage of the amount I am investing.

I would put the time to good use, though. Specifically, I would start looking for dividend shares that might meet my own investment criteria. Not all shares pay dividends and even those that do can cancel them. So I would focus on the future prospects for a business. I would want to judge whether I thought it could generate enough free cash flow in future to fund and ideally even grow its dividends. A great source of information for this is a company’s annual report and accounts. These are usually available free online.

I would make sure that I did not concentrate too heavily on just one company or business area. For example, I like the high dividend yields of tobacco stocks. But if I put all my money into tobacco companies British American Tobacco and Imperial Brands I would be concentrating my risk. If new regulation threatened the profitability of tobacco products, I could see all my passive income streams dry up at once. So in choosing shares, I would diversify.

3. Set the passive income streams in motion

Then, as my funds grew and I decided what sorts of shares suited my objectives, I would start buying them. As an investor with a long-term outlook, I would likely keep them rather than trading frequently. That way I could sit back and enjoy the passive income.

At first, my investments would be fairly modest. £50 a month is £600 a year. The average FTSE 100 yield tends to be around 3% to 4% a year. So my first year’s investing would hopefully get me annual dividend income of around £18 to £24. But if I keep putting away my £50 a month, over time, hopefully my passive income streams would get larger.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!


Christopher Ruane owns shares in British American Tobacco and Imperial Brands. The Motley Fool UK has recommended British American Tobacco and Imperial Brands. 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.

Green tech stocks: is now a great time to buy?

on January 28, 2022

Source: Getty Images

If you’re familiar with the stock market, you may have noticed that green tech stocks have taken a dip. As a result, many investors are left on the fence about possible investment decisions. On one hand, a number of investors have bought the dip in hopes of a future price surge. On the other, some investors have rushed to sell their shares to avoid any further decline.

The stock market can be extremely volatile, so predictions about future performance can never be spot on. Here at The Motley Fool UK, we advise individuals to seek professional advice before making any investments.

If the green tech stock dip is something that has caught your interest, then read on for everything that the CEO of fintech firm iClima has to say about the current state of green tech stocks.

Why has the price dip occurred?

On the subject of why green tech stocks have dipped, Gaby Herculano, CEO of iClima, explains that many companies have fallen victim to supply chain issues. She also notes that a “lack of faith in the energy sector may be a driving force behind the dip”.

However, Herculano goes on to explain that demand for green tech stocks has not decreased. Instead, she predicts that the demand for green tech will only increase as a rising number of companies make net-zero commitments.

“Now is a great time to buy!”

Amid her optimistic outlook, Gaby suggests that “now is a great time to buy” into the stocks. The CEO explains that the rising price of gas will only increase demand for renewable green tech.

Furthermore, only a small fraction of companies have made efforts towards net-zero commitments. Yet, countries around the globe have set tight targets for renewable energy usage. For example, Germany aims to be using 80% renewable energy by 2030 and will attempt to make the entire country carbon neutral by 2045.

For this reason, it is reasonable to expect green tech stocks to surge in the future. This is due to the fact that a rising number of companies will be looking towards renewable energy sources as the deadlines for net-zero commitments draw nearer.

Herculano believes green tech stocks are being oversold by investors. This is driving the price even lower and creating a great opportunity to buy.

How to invest in green tech stocks

Before investing in green tech stocks, it is important to understand that any investments will put your capital at risk. While we seek to share the opinions of knowledgeable industry professionals, it’s a good idea to conduct your own research and seek opinions from multiple sources before making a decision about an investment.

If you are interested in adding green tech stocks to your portfolio, you can find them on most reputable trading platforms. Green-tech stocks are typically found under ‘renewable energy’ or ‘technology’ stock categories. You can also search each individual stock by name.

If you want to learn more about how to invest in stocks, take a look at our beginners’ guide to investing in the stock market.

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Ruby Layram

Ruby is a freelance writer who enjoys writing about all things personal finance. After embarking on her own side hustle journey three years ago, Ruby is passionate about helping others to learn about the ins and outs of persona… Read More


Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

New bank switch bonuses for 2022: grab an easy £150 for moving banks

on January 28, 2022

Image source: Getty Images

The new year seems to have ignited the bank switch bonus war. Two providers have launched new switching incentives in the past week.

Remember, switching bank accounts is easy and takes just seven days or so. So, if you’re looking for some free cash to help with the January blues, read on.

What bank switch bonuses have recently launched?

NatWest and RBS (part of the same banking group) and Santander, have launched juicy new bank switch offers in the past week. Here’s the lowdown.

Free £150 with the RBS or NatWest Select account

If you switch to the RBS or NatWest fee-free Select account, you can bag yourself a free £150. To get the bonus, you must make the switch by 7 April either online or via the RBS/NatWest mobile app. 

To qualify for the offer, you need to pay at least £1,250 into the account once it’s open. You also need to log into mobile banking by 12 May. Follow these steps, and the £150 will be paid to you by 9 June. 

The offer is also available if you switch to the RBS or NatWest Reward account. To get these accounts you have to pay in at least £1,250 per month. The accounts also come with a £2 monthly fee, though you can earn a £4 monthly reward if you pay out two or more direct debits.

With the offers above, you won’t get the bank switch bonus if you’ve already received cash for switching to RBS, NatWest or Ulster Bank since 2017.

Free £140 with the Santander Everyday account

Santander has boosted its £130 bank switch offer to £140. To get the bonus you need to switch to its Everyday account and, within 60 days, move over at least two direct debits as part of the switch.

You also have to pay in at least £1,000 and log into online or mobile banking within 60 days. Do this, and the £140 will be paid into your account within 90 days. 

The offer is also available with the Santander 123 Lite account. This account pays up to 3% cashback on household bills, up to a maximum of £15 each month. To hold the account you have to pay a £2 monthly fee and pay in at least £500 each month. 

It’s worth knowing that you won’t qualify for Santander’s switching offers if you’re switching from a Santander, Cahoot or Cater Allen account. You also won’t get the bonus if you’ve ever had a bank switch bonus from Santander before.

What other bank switch bonuses are available?

Aside from the new offers outlined above, there are currently four other bank switch offers available. However, if you’re keen to access HSBC’s £150 offer, you’ll have to be quick as it ends on 28 January.

Below is a brief overview of the bank switching incentives currently available. If one of them takes your fancy, do ensure you read the full terms of the offer!

HSBC Advance – £150 (Until 28 January)

Until Friday, the HSBC Advance account is paying £150 if you switch and pay in at least £1,500. You won’t qualify for the bonus if you’ve had an HSBC or First Direct account since 2019.

First Direct 1st Account – £130 for switching

If you haven’t previously had a First Direct current account (or an HSBC account since 2019), then you can get £130 for switching to the First Direct 1st account.

To get the bonus you need to make a one-off payment of at least £1,000.

Nationwide FlexDirect – £125 for existing customers, £100 for newbies

If you’re new to Nationwide, then you can get £100 for switching to its FlexDirect account from another provider. To get the cash you need to complete the switch within 30 days, and move over at least two direct debits as part of the switch. 

If you’re already a member of Nationwide, then you’ll qualify for a higher £125. However, there’s a way to get the boosted Nationwide bonus even if you aren’t an existing customer.

Virgin Money – £150 ‘Experience Day’ voucher

Switch to Virgin Money’s ‘M’ account and you can grab yourself a Virgin Experience Day voucher worth £150. If that’s not for you, then you can grab a Virgin Wines voucher for the same amount instead.

To get the offer, you must open an account and then make the switch within 45 days. As part of the terms of the offer, you must also open Virgin’s linked savings account and pay in at least £1,000. You also have to log into the Virgin Money mobile banking app at least once.

Complete all of these steps and you’ll get your voucher within 14 days.

What else do you need to know?

The seven-day switch guarantee ensures that your switch will be completed within seven business days. When switching, all payments are re-directed for you. Plus, if anything goes wrong, you’re covered under the guarantee. 

For more general information, see our article that explains how to switch bank accounts.

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About the author

Avatar for Karl Talbot

Karl Talbot

Karl is a writer specialising in investing and personal finance content. He regularly contributes articles on savings, bank accounts, mortgages, and loans. He was previously a Personal Finance Writer for MoneySavingExpert.


Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

Stock market crash: why I’m buying shares NOW

financialnews1 on January 28, 2022

The stock market has been highly volatile this year. While the UK’s FTSE 100 index hasn’t taken too much of a hit to date, some areas of the market have been decimated. The tech-focused Nasdaq Composite index, for example, is down around 15% for the year, and is now not far off ‘bear market’ territory.

Beginner investor? 3 tips to avoid costly trading mistakes

on January 28, 2022

Image source: Getty Images

Traders have been warned not to ‘jump on the bandwagon’ when making investing decisions. That’s the view shared by a CEO of a leading Forex Broker, who also suggests investors should take ‘expert’ opinions on social media with a pinch of salt.

So what other tips should traders – particularly beginner investors – follow in order to avoid costly mistakes? Let’s take a look.

How can beginner investors avoid costly mistakes?

According to David Shayer, UK Vantage CEO, traders can avoid making costly mistakes by choosing news sources carefully, being cautious of tips on social media and avoiding the need to jump on any investing bandwagons.

Let’s take a look at each of these tips in more detail.

1. Choose news sources carefully

Many traders today rely on news sources in order to select stocks. The theory is that by reading the news, understanding company reports and reading up on any potential policy changes, investors can pick up on any trends that may impact the share prices of specific companies. 

However, in the age of the internet, there are almost limitless news sources to choose from. With this in mind, it goes without saying that some publications are more trustworthy than others.

Shayner says investors should pay close attention to the news sources they rely on and be wary of social media. He explains: “No trader should rely on traditional publications exclusively. The world has moved on. However, nor should they depend exclusively on social media and make trades based on a single Tweet.

He further clarifies by saying, “Traders must gather information from a range of sources and work out which ones are best for what.”

2. Be cautious of social media investing tips

Social media has undoubtedly changed the way we learn about breaking news, with Twitter often the first port of call if we’re particularly keen for the latest insights on a developing story.

While social media has its supporters, many of the most popular platforms attract a fair amount of fake news. With no borders to contend with, fake news on social media can sweep across the globe and easily deceive large numbers of people.

Shayner points at a recent fake press release from Walmart shown on social media. The release incorrectly suggested the retailer would soon accept a new cryptocurrency as a form of payment. When the release went viral, the price of the mentioned cryptocurrency skyrocketed, until falling sharply after it was discovered the news was fake. 

Shayner also comments on the ease with which inaccurate news can develop, especially within the investing sphere. He explains: “Anyone can start up a channel and post trading advice, for which there’s plenty of demand. The pandemic has seen a sudden rise in the popularity of financial influencers who post tips on the likes of TikTok.

“However, the ungoverned nature of social media means there’s no shortage of unscrupulous people out there providing false information and selling get rich quick schemes.”

3. Don’t jump on investing bandwagons

A final tip for beginner investors is to avoid stocks that have been ‘pumped’ because of online hype. That’s because traders jumping on investing bandwagons can turbocharge the share price of a particular stock. This can make a particular stock surge above its true value – if only temporarily. 

Shayner explains this concept in more detail. He explains: “Investors flock to so-called meme stocks – whereby social media hype inflates the price of an asset for the wrong reasons. While some of these are coordinated attacks against hedge funds, it shows how social media contributes to inflating the price of popular stocks and ETFs.”

A good example of this happening is when retail investors piled in to purchase Gamestop shares last year in retaliation for the behaviour of a particular hedge fund that hoped to profit from the retailer’s future collapse. While Gamestop’s share price skyrocketed, it was soon followed by a sharp fall. 

Shayner highlights how retail investors can lose out when such events happen, and he warns against joining the party. He explains: “Hype makes it easy for retail traders to get sucked into a bad trade. But if you’re hearing about an ETF that has performed very well, you might have already missed the boat. Best to err on the side of caution”.

What else should beginner investors know?

As well as the above investing tips, if you’re new to investing, it’s worth familiarising yourself with the investing basics to give yourself the lowdown on the stock market. As with any investing, always remember that your portfolio can fall in value as well as rise. 

Are you planning to invest? If so, take a look at The Motley Fool’s top-rated share dealing accounts.

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About the author

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Karl Talbot

Karl is a writer specialising in investing and personal finance content. He regularly contributes articles on savings, bank accounts, mortgages, and loans. He was previously a Personal Finance Writer for MoneySavingExpert.


Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

5 exciting investment funds to keep an eye on in 2022

on January 28, 2022

Image source: Getty Images

It’s been a fairly shaky start to the year for investors. But those of you investing in a Foolish style (with a capital F!) won’t be too bothered by the latest short-term movements. If you’re looking to the future and building wealth for the years ahead, investment funds can play an important part in your plans.

So, to give you some inspiration, I’m going to share five exciting funds to keep an on this year, along with some general investing tips to help you on your journey to financial freedom.

Which investment funds should you keep an eye on in 2022?

The experts over at Hargreaves Lansdown have compiled a list of their five top investment funds to watch out for in 2022. Let’s take a look at their picks.

1. Pyrford Global Total Return

Inflation has been a major buzzword lately, both in our lives and in the world of finance. When inflation figures are high, it can have a significant impact on investment returns and the ability of companies to grow.

This total return fund contains a mix of shares, bonds, commodities and currencies. The aim of putting such a diverse selection of assets into the fund is that the overall return will outpace inflation. This fund aims to:

  • Not lose money over a 12-month period
  • Deliver inflation-beating returns over the long-term
  • Perform with low volatility

2. Artemis Global Income

Investment dividends are making a return. After a tough period during the coronavirus pandemic when many companies were forced to suspend or cut payments, shareholder rewards are back.

Global equity income investment funds like this invest in firms around the world, with the aim of paying investors a rising level of income. The fund managers often try to dive deep into the world of value investing to pick up shares neglected or out of favour with investors.

3. Trojan Ethical Income

Investment funds with a focus on rewarding you with income in the form of dividends are a popular choice right now. As the name suggests, Trojan Ethical Income also avoids companies and industries deemed unethical.

A majority of this fund, around 70%, is invested in UK companies. And the remaining 30% is deployed overseas. But this allocation is only used if the managers can’t find enough attractive and ethical opportunities in the UK.

This fund provides a decent level of diversification whilst also ticking boxes for socially responsible investors.

4. Legal & General Future World ESG Developed Index

This fund falls into the ESG investing category. It invests globally across stock markets in developed countries.

You can think of it as an ethical index fund. It tracks around 1,300 companies, although the bulk of the investment, around 63%, is in the US. The main areas of focus are tech, pharma and financials.

5. JPMorgan Emerging Markets

Many firms in emerging markets have had a really tough time throughout the pandemic. This pain wasn’t helped by China’s big tech crackdown or the bubbling Evergrande debt crisis.

However, emerging markets can provide some attractive long-term opportunities for investors who aren’t in a hurry. These areas are projected to see lots of growth over the coming years. And this fund is in a good position to take advantage.

The fund has a sensible investing strategy, but emerging markets can be a bit spicy and unpredictable. So, this could be a good adventurous option to pair alongside some more stable investments.

How do you use investment funds like these?

You don’t have to just pick a single fund to invest in. You can select a few with different goals to build yourself a diversified portfolio. Investment funds can act as a good backbone you can then add individual stocks and shares to. If you need an investing refresher, check out our complete guide to share dealing.

How you organise things will depend on your investing strategy. But whatever you decide, it’s important you have a share dealing account that gives you access to a large choice of investments. Ideally, use a brokerage platform with low fees because this will allow you a better chance of building wealth over the long term.

With the end of the tax year fast approaching, it’s also worth making sure you’re making the most of an account like the Hargreaves Lansdown Stocks and Shares ISA. Such a move can help further reduce your overall costs. Just remember that investing carries risk and you may get out less than you put in.

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George Sweeney (DipFA)

George is a freelance writer focused on educating others in personal finance, tax, and investing. He’s a qualified Financial Adviser and previously worked within property and insurance in a number of different countries…. Read More


Some offers on The Motley Fool UK site are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.

1 FTSE 100 dividend stock I’d buy right now

on January 28, 2022

Here’s why I think defence titan BAE Systems (LSE:BA) could be a great dividend stock to add to my portfolio in 2022.

An impressive history and a bright future

BAE Systems is a global leader in the aerospace, defence and security sectors. The business has a stable annual dividend distribution history that spans several decades, rewarding investors with regular income even during the worst stock market drawdowns of the 21st Century. Shareholders currently pocket a respectable dividend yield of around 4%.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Looking forwards, the recent AUKUS trilateral security pact between the American, British and Australian governments bodes well for BAE Systems longer term. Australia is the company’s fourth largest sales market and significant future growth is anticipated in the firm’s operations Down Under.

Not without risks

BAE Systems’ principal markets are the US, UK and Saudi Arabia respectively, with 77% of its sales going to these three destinations alone according to the latest annual report. For some investors, revenue concentration in a small number of geographic areas could be a cause for concern.

Historically, demand for the company’s offerings from these countries has proved robust over the years with few signs of abating. However, as the seventh largest defence contractor globally, BAE Systems faces stiff competition for market share from well-established corporations stateside, such as Lockheed Martin and Boeing. To mitigate this, BAE Systems needs to maintain its investment in R&D and improve efficiencies in a sector where competitive advantage is crucial.

The company will publish its full financial results for 2021 on 24 February. It will be critical for the defence giant to meet expectations of earnings per share growth of 3-5% compared to 2020 – a forecast that BAE Systems reasserted in guidance issued late last year.

Is it too late to buy?

BAE Systems has enjoyed a strong start to 2022. The share price has climbed nearly 9% this year to date, reaching 604p per share and trading at a current P/E ratio of 10.94. So, are shares in the UK’s largest defence business still a good bargain today?

To answer this, it is important to note the imminent security threats posed by Russian troops mobilising on the Ukrainian border and geopolitical uncertainty building in the West’s relationship with China.

These tensions could drive US and UK defence spending higher in the near term, thereby benefiting BAE Systems since 95% of its sales are related to military expenditure. Accordingly, I expect the stock’s impressive recent performance to continue in the coming months. Many analysts share my optimism, predicting further upside ahead.

Overall, BAE Systems offers investors a healthy dividend and has a solid history of performing well when the broader market is turbulent. I consider this stock a great buy for my ISA at its current price.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!


Charles Carman owns shares in BAE Systems and Boeing. The Motley Fool UK has recommended Lockheed Martin. 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.

Here’s how I’d start generating passive income today

on January 28, 2022

I first started investing in an attempt to become richer. I couldn’t exactly define what ‘richer’ meant at the time. Essentially, I knew I wanted to earn more than my annual salary. This is where passive income comes in. Once I began investing and buying quality stocks, the dividends started rolling. My portfolio value was also increasing over time so it was a win-win.

I’ve refined my investing strategy over the years from when I first started to invest. Here’s how I would start generating passive income today using what I’ve learnt.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Assets that generate passive income

The most important rule I’d follow is to buy productive assets. An asset is something I own that will generate cash flow for me in the future. I didn’t fully realise at the start, but this is exactly what I was doing when I bought stocks. If I buy shares of a company that pays a dividend, I should earn income from my investment in the future. It’s a great example of a cash-producing asset.

There are other assets I could consider. Bonds pay interest, which is another example of an asset that generates cash. Interest rates are historically very low right now though. A 10-year UK government bond only pays about 1.2% annually, so I’ve avoided buying bonds over the years. However, there’s a benefit to investing in government bonds as they’re typically less risky. For example, the UK government is almost guaranteed to pay the 1.2% interest each year, so it’s considered ‘safer’ than a dividend stock. The ‘reward’ (the interest rate) is lower, but the risk is also lower.

In addition to buying productive assets, the second most important thing I’d do is reinvest the passive income I earn. And I would reinvest any income in an ISA so it’s tax free. If I do this, then I will benefit from compounding over the years. Basically, my passive income should get bigger and bigger with time.

Dividend stocks

Now I want to explore my favoured productive assets: dividend stocks. I aim to buy shares of companies that pay out earnings to shareholders like myself. If the business does well, I will get a cut of the profits.

Luckily for me, the FTSE 100 is a great place to hunt for dividend stocks. I would buy shares of Legal & General and Aviva first, two companies in the financial services sector that have paid dependable dividends over the years.

I’d also diversify my portfolio in the mining sector. Rio Tinto and BHP Group both pay a high dividend yield today. I’d also buy National Grid. It operates in the defensive utilities sector, so it should carry on paying a respectable dividend going forward.

All of these companies have generated an average 10-year dividend yield greater than 5%.

The tricky thing with dividends is that they’re never guaranteed. I could buy these companies in my ISA today, only to find out that the dividends are being cut if earnings fall.

Final thoughts

The most important thing I’ve learnt over the years is to be patient with my investments. Investing always comes with risks, so I need to take a long-term view. But today, I aim to buy productive assets in my ISA. Dividend stocks offer me the greatest balance of risk-to-reward to generate passive income.

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Dan Appleby owns shares of Legal & General, Aviva, Rio Tinto and BHP.The Motley Fool UK has no position in any of the shares mentioned. 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. 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. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

£3k to invest? Here’s why I’d buy FTSE 100 shares in 2022

on January 28, 2022

The FTSE 100 index is among the best performing major global indices year-to-date. The top-performing stock in this large-cap index so far this year is energy giant BP, followed closely by another energy beast Shell. The BP share price has risen by 19% so far this year, and it follows a 36% gain in 2021. Both shares are being helped by rising oil prices. With energy prices showing no signs of slowing down just yet, there could be more room to grow for both of these FTSE 100 leaders.

Buy high, sell higher?

So why might I buy BP and Shell after their share prices have already moved higher this year? Well, there are several ways to make money from shares. I could try to buy low and sell high, or I could buy high and sell higher. It’s an interesting concept. I tend to use both techniques, albeit not at the same time of course.

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More often though, I look at dividend shares and I consider both companies to fit the bill. They offer me a dividend yield of around 4%. Of course, their earnings growth needs to remain at least stable to support that level of dividend payment. But overall I feel they will both be able to achieve that.

Banking on the FTSE 100

Another reason why the FTSE 100 is performing relatively well among its global peers is due to the financial sector. There are several major banks listed on the Footsie. These include the likes of Barclays, and Lloyds. Share price gains for both in 2022 have so far followed market-leading returns last year. It’s no surprise then that the financial sector is amongst the top performing areas of the market year-to-date. As an example, the Barclays share price gained an eye-opening 30% last year and the positive momentum seems to have followed through into 2022. At the time of writing, it’s currently up another 10% this year.

So what’s going on and should I buy some banks shares now? Banks thrive on economic recovery. And since the removal of the most stringent lockdown restrictions in 2020 and then the arrival of a vaccines programme, the economy has attempted to recover and return to pre-pandemic activity. It seems to be working and the recent removal of further restrictions could drive the economy higher over the coming year. I reckon this could bode well for these British banks.

Beyond tech

As ever, there are no guarantees when it comes to economic predictions. Inflation has become a common buzzword recently, and rising inflation could be a cause for concern that threatens to derail an economic recovery. That’s because the Bank of England could decide to raise interest rates to prevent prices from rising too far.

Overall, I like to have a balanced spread of quality shares in my Stocks and Shares ISA. I own several technology shares and growth stocks. But despite a positive outlook for the individual businesses, I reckon it’s prudent that I also own shares that can thrive in different market environments. So if I was investing £3,000 today, I reckon FTSE 100 energy and banking giants could play a valuable part in my long-term diversified portfolio.

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Harshil Patel has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays and Lloyds Banking Group. 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.

How I’d use these Warren Buffett techniques to buy quality UK shares

on January 28, 2022

Warren Buffett is a legendary investor with decades of investing success. He has delivered an average annual return of 20% since 1965. That’s an amazing track record and why I always listen to what he has to say.

Over the years, Buffett has provided many words of wisdom. For instance, he thinks investors should focus on high-quality companies and understand that price is different to the underlying value of the business. That’s a really important point, especially in times of stock market turbulence like we have now. His advice is to buy quality shares when they’re marked down in price.

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Warren Buffett’s signs of quality

So which shares would the Oracle of Omaha consider to be good quality? One measure of business quality is return on capital employed. Another popular investor Terry Smith also mentions this metric a lot. It’s a ratio that measures how efficiently a company reinvests its assets. High returns on capital employed can be a sign of an economic moat, another term popularised by Warren Buffett. A moat is effectively a sustainable competitive advantage. For instance, it could be a strong brand like Apple. Or it could have a dominant market position like Alphabet‘s Google that makes it difficult for competitors to take a chunk from its business.

Quality UK shares

One UK share that I’d consider to be high quality is online property portal Rightmove (LSE:RMV). It currently has a phenomenally high return on capital employed of 186%. That’s the highest figure in the FTSE 100. Usually I’d happily consider any company with over 20%. I reckon Rightmove has a strong economic moat in the form of its brand. It’s often the first place house-hunters turn to when looking for a property to buy or rent. Yes, there’s competition and a risk that other portals could offer discounts to tempt estate agents away from Rightmove. But, I reckon it will ultimately be number one. Its share price has taken a dive so far this year, tumbling by 20%. That almost reverses last year’s 23% gain, but I’d say it could be an opportunity for me to buy a quality company at a marked-down price.

In the driving seat

Another online platform that demonstrates quality characteristics and a moat is Autotrader. As the UK’s largest digital vehicle marketplace, it’s often the first place car buyers visit online. It has wonderful quality characteristics, with a return on capital employed of over 50% and operating profit margin of over 65%. Yes, competition from the likes of eBay could potentially affect sales and profits. But overall, Autotrader is a widely recognised brand and as long as it maintains visitor engagement, it should be able to stay in the driving seat for many years.

Another famous quote by Warren Buffett is, “Be fearful when others are greedy, and greedy when others are fearful”. There’s certainly some fear in the market right now. It’s difficult to tell if investors will become even more fearful and mark share prices lower. But if they do, I’ll be ready with my list of quality shares. Hopefully I’ll be greedy enough for Buffett.

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Harshil Patel owns Apple. The Motley Fool UK has recommended Apple, Auto Trader, and Rightmove. 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.

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