If you’re like me, these rising interest rates and inflation have seriously given a beating to your investment portfolio. I used to be able to put a lot more cash aside, but right now, it’s a struggle. This is why I’ve been both a lot more stingy about the cash I’m putting aside as well as more careful about where I’m putting it.
Today, we’re going to see how much passive income can be made by putting just $100 aside each month. That’s not nothing, and $100 can still create a lot of cash through passive income. So, let’s see what you can consider and what you can earn in 2024.
First, what exactly is passive income
Here’s the thing: a lot of investors tend to believe that passive income from investing comes from dividends. And they’re right … to an extent.
But passive income doesn’t only come from dividends. In fact, investors looking at only a dividend yield need to be quite careful. If a dividend yield looks ultra high, that’s usually because the share price has come down. This is why it’s important to look at the average dividend yield over the last five years to see if it matches up.
Also, a dividend can be cut if the dividend stock needs the cash to support its balance sheet. This is why returns should also be considered when looking at a dividend stock. Returns, too, are passive income. When combined, these can make a major impact on your overall portfolio.
The best bang for your $100
Again, I’ve been a lot more cautious when it comes to investing. And that means I’ve been considering fewer individual stocks and more exchange-traded funds (ETF). But that doesn’t mean I’m ignoring dividends or growth in the process.
Instead, I’m considering ETFs that provide me with a large portfolio that suits my risk-management style. In my case, I have a long time to earn income before I need it. But I still want passive income that can be used to reinvest or in the case of an emergency.
This is why I’ve been quite happy with Vanguard FTSE Global All Cap Ex Canada Index ETF (TSX:VXC). This ETF focuses on all market capitalization on a global scale, excluding Canada. This provides me with exposure to the growth from emerging markets, as well as a dividend yield of 1.55% as of writing. Meanwhile, shares are up 21% in the last year alone! So, let’s see what could happen if this happens all over again.
Bottom line
If you were to put $100 towards VXC ETF, in that time you can collect returns and dividends for your passive income. In total, you would have saved $1,200. If shares climbed another 21%, here is what that could look like for investors.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | PORTFOLIO TOTAL |
| VXC – now | $57 | 21 | $0.56 | $11.79 | quarterly | $1,200 |
| VXC – 21% increase | $69 | 21 | $0.56 | $11.79 | quarterly | $1,449 |
In 2024, you could create $11.79 in dividend income and $249 in returns. That’s not nothing! In total, you’ll have passive income of $260.79 in just one year. Imagine what that could do over time.
