Building Your Financial Home: How £10,000 Can Generate £870 in Passive Income

Got £10,000 sitting idle? Imagine turning that cash into an £870 second income within just one year without constantly watching the markets or chasing risky stocks. The secret? Smart diversification across just three powerful investments: a UK share, an investment trust, and an ETF. Together, they unlock exposure to hundreds of companies worldwide while delivering dividend yields well above the FTSE 100 average.

First up is Target Healthcare REIT, a hidden gem in the UK’s booming care home sector. Owning 94 care homes, this trust pays out most of its rental income as dividends thanks to tax rules that reward steady income streams. With the UK’s ageing population driving demand, and inflation-linked leases protecting earnings, this REIT offers a blend of safety and growth that’s hard to beat.

Next, meet the iShares World Equity High Income ETF, your global income powerhouse. From tech giants like Microsoft and Nvidia to banks and insurers, this ETF holds 344 companies across the globe plus cash and US Treasuries to smooth out market bumps. Its 5%+ dividend yield means you get regular payouts while spreading your risk far and wide.

Rounding out the trio is Phoenix Group, a financial heavyweight delivering one of the highest dividend yields on the FTSE 100. Specializing in retirement and savings products, Phoenix generates strong cash flow and is well-positioned to ride the wave of Britain’s ageing population. Its impressive cash reserves give it the flexibility to maintain dividends, even if profits wobble.

Split your £10,000 evenly among these three, and you’re looking at an eye-catching combined yield of nearly 9%. That means £870 in potential income this year from a portfolio that spans 346 companies and multiple sectors. It’s a smart, simple way to turn your savings into steady, growing income.