How to Make a $108K Portfolio in 10 Years With $0 in Savings

Dig into your budget and you’re sure to come up with cash. Couple that with income streams and investment returns, and you’ll create stellar passive income!

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It’s all well and good to recommend to Canadians to start investing. But these days, what cash does anyone really have just laying around doing nothing? That’s why, today, I’m going to focus on creating investments when you have $0 in savings.

Whether this means you literally don’t have a penny for investing, or you need an emergency fund set aside, this can work for you. So let’s look at how to create some cash, and turn it into more cash.

Starting from nothing

The very first thing anyone should do when it comes to creating savings of any kind is to go over your budget. Whether it’s the first time you’re creating one, or if it has been just three months, go over it again.

A great use of your time would be to find some applications or online tools that can help you assign every dollar to your items in your budget. That’s everything from the coffee you drink in the morning to your utility bills. Do this at the beginning of each month and you’ll be astounded by how much money you could start saving. That is, as long as you stick to your budget!

If you don’t find enough cash this way, consider another easy income stream. This could be renting out storage space or a parking spot. It might be data entry on the weekends. Whatever you choose, just make sure it doesn’t affect your day job.

Finally, if all else fails then you might want to consider some compromises. That could mean downsizing on the large end, or on the small end biking to work to save on gas. In any case, you’ll soon have some savings available to use to invest.

Pick a stable monthly income stock

From there, as you see the savings come in you’ll want to invest in a strong, stable passive income stock. This would mean one that’s valuable, but that looks like it will continue to pay dividends for the foreseeable future. What’s more, it’s even better if that stock offers monthly dividends.

Take SmartCentres REIT (TSX:SRU.UN), for example. SmartCentres holds a number of properties across Canada and has partnerships with major brands for its retail locations. However, it continues to create diversified income streams by investing in industrial spaces, as well as retirement and long-term care living facilities.

Yet shares are down 12% in the last year, and down 5% year to date. It trades at 14.2 times earnings, putting it in value territory as well. Further, you can bring in a dividend yield currently at 7.26% as of writing. That comes to $1.85 on an annual basis.

Create income that lasts

Now for the income stream. Let’s say you have a goal to create a passive income stream in the next decade. Using SmartCentres REIT, we can then look at the compound annual growth rate (CAGR) of its shares and dividend.

For shares, SmartCentres has grown at a CAGR of 9.6% in the last 20 years. Its dividend CAGR sits at 1.89% as well. Let’s say you then start creating $400 per month in passive income from savings and other income streams. That would add up to $4,800 per year to be used for investment. Here’s what that could look like from the beginning of this year, until the end of 10 years from now, with shares returning to 52-week highs in the first year.

YearShare PriceShares OwnedAnnual Dividend Per ShareAnnual DividendAfter DRIP ValueAnnual ContributionYear End Stock PriceNew Shares PurchasedYear End Shares OwnedNew Balance

Now you have a portfolio of $100,215.22 and annual passive income of $3,596.30. That’s monthly income of $299.69!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends SmartCentres Real Estate Investment Trust. The Motley Fool has a disclosure policy.

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