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Buying dividend shares is a rapid and simple way to start earning a passive income. As with every investment, there are risks involved. But such threats can be managed through prudent decision-making and portfolio diversification. And when done well, the subsequent income stream can be quite lucrative, especially in the long run.
So let’s say an investor has £5,000 of capital sitting in a savings account. How much passive income can this money generate overnight and over the long term?
Crunching the numbers
The amount generated depends on which dividend stocks an investor decides to buy. Most tend to stick with simple index tracker funds. And right now, the FTSE 100 index offers a respectable 3.4% yield. That means, overnight, a £5,000 could generate a passive income of £170 a year. Obviously, that’s not a groundbreaking sum, especially since many savings accounts offer…
