3 steps to earning $100s in monthly passive income with ASX shares

These are three steps that every investor should take to bank hundreds of dollars a month in passive income from ASX shares.

| More on:
A man walks up three brick pillars to a dollar sign.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Banking hundreds of dollars in monthly passive income from ASX shares isn't just something for expert investors.

Almost anyone can achieve this goal if they follow some simple steps.

Below we look at three key steps investors should take to bank hundreds of dollars a month (thousand a year) in passive income from ASX shares.

Save where and when you can to invest in ASX shares

There's no way around it. Some bills just have to be paid.

But you'd be surprised how much money you can set aside each month by scaling back on some of those discretionary purchases.

Even if you can put away just a little over $3 each day, that will see you with $100 every month to build a portfolio of ASX shares.

Now, this won't see you earning hundreds of dollars a month in passive income overnight. But that's alright.

Investing is a long game. Keep saving. Keep researching top stocks to invest in. And eventually, you'll reach your goal.

Find those top ASX dividend shares to build that passive income stream

Once you've got some money saved up to invest, it's time to start buying those ASX dividend shares.

Pay special attention to stocks offering full franking credits. Those can offer some significant tax benefits that could see you holding onto more of that passive income at the end of the financial year.

Now bear in mind the old investor adage, "Don't put all your eggs in one basket."

Meaning, make sure to diversify your portfolio of ASX shares by investing in a range of companies operating across different sectors. That will reduce the risk of a negative swing in any one sector severely impacting your passive income stream.

Harvey Norman Holdings Ltd (ASX: HVN), for example, is a retail stock. Harvey Norman shares trade on a fully franked trailing yield of 8.8%.

Woodside Energy Group Ltd (ASX: WDS), as another example, is an oil and gas share. Woodside trades on a trailing, fully franked yield of 11.0%.

And for a third example, Australia and New Zealand Banking Group Ltd (ASX: ANZ) is a bank share. ANZ trades on a fully franked yield of 6.6%.

Whichever ASX shares you decide are best for building your passive income portfolio, just remember to diversify.

Stick with it

As mentioned up top, you're unlikely to reach your hundreds of dollars a month in passive income overnight.

Or even within the first year.

But stick with it.

Keep saving that investment money every day, and put it somewhere you won't be tempted to spend it on anything but stocks.

Then just keep an eye out for those next promising ASX dividend shares that you want to add to your holdings.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Harvey Norman. The Motley Fool Australia has positions in and has recommended Harvey Norman. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Blue chip in a trolley with a man pushing it.
Dividend Investing

3 blue-chip alternatives to CBA shares for MORE passive income

These blue-chip stocks look like appealing dividend picks.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Energy Shares

Dividend investors: Top ASX energy shares for November

These are the energy stocks I would buy for dividend income.

Read more »

Excited woman holding out $100 notes, symbolising dividends.
Dividend Investing

Buy these excellent ASX dividend stocks for 6% to 7% yields

Analysts at Bell Potter think these stocks could be buys for income investors.

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Dividend Investing

Analysts say these ASX dividend shares are buys this month

Here's what analysts are predicting for these income options.

Read more »

Dividend Investing

2 ASX 200 dividend stocks that could be strong buys

Bell Potter is saying good things about these buy-rated income stocks.

Read more »

a woman wearing fashionable clothes and jewellery checks her phone with a satisfied smile on her face in a luxurous home setting.
Dividend Investing

3 ASX dividend shares to buy instead of the big four banks

Analysts think these dividend shares could be top picks instead of the banks.

Read more »

A woman blows what looks like colourful dust at the camera, indicating a positive or magic situation.
Index investing

Does the Vanguard Australian Shares ETF (VAS) pay fully franked dividends?

This index fund can boost your returns with franking credits...

Read more »

A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall
Energy Shares

Is Woodside stock a buy for its 8% dividend yield?

Woodside's dividends look fat, but proceed with caution...

Read more »