How I’d earn passive income with £10 a week

It can be hard to find passive income ideas that don’t take a lot of time or money. Here is how I would use just £10 a week to start generating passive income.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Hand holding pound notes

Image source: Getty Images.

Passive income is money one receives without having to work for it. The idea was popularised by the book The Four-Hour Workweek. But the wealthy have earned passive income such as rent and dividends for centuries. A lot of people would like to receive passive income. But it can be hard to come up with good passive income ideas that require just a little bit of money up front.

I think one can set up a lifelong passive income stream with as little as £10 a week. Here’s how.

Inflation Is Coming

Inflation is out of control, and people are running scared. But right now there’s one thing we believe Investors should avoid doing at all costs… and that’s doing nothing. That’s why we’ve put together a special report that uncovers 3 of our top UK and US share ideas to try and best hedge against inflation… and better still, we’re giving it away completely FREE today!

Click here to claim your copy now!

Focus on quality shares

It’s easy to be attracted to get rich quick schemes. But with a limited amount of hard-earned cash to use for any passive income ideas, my number one priority would be capital retention. Rather than hunt out eye-popping yields or speculative penny shares, I’d research shares in well-known names I expect to be around decades from now.

For example, drinks maker Diageo is an old, established company with iconic brands like Guinness and Johnnie Walker. While alcohol consumption is declining in some markets, I expect the company to continue to adapt. It has been raising its dividend for decades, based on a strongly cash generative collection of drink assets.

In the same vein, I think Unilever is the sort of well-run company that could stick around for a long time. The consumer goods giant has a portfolio that appeals across a wide range of markets and price points. That gives it resilience.

Passive income ideas that yield

But deciding to own blue-chip shares on its own isn’t enough for a passive income. For example, some such shares have suspended their dividends this year.

So I would focus on quality shares that also have a consistent history of paying out juicy dividends. Diageo and Unilever both meet that criteria. But other shares offer better dividend yields at their current prices. For example, Imperial Brands and British American Tobacco both offer high single-digit yields. Similarly, financial services provider Standard Life Aberdeen has been yielding over 7% recently.

These might not sound like exciting choices. That’s exactly why I like them as passive income ideas! Instead of a racy startup with unproven business prospects, I’d focus on generating passive income from companies with strong track records. £10 a week would soon add up. I’d have £520 in my first year of putting it aside each week. Investing that into a share with a 7% or 8% yield would mean I could expect around £40 of dividend income per year in future. If I didn’t spend all that income, but reinvested some of it, my future passive income stream could grow even faster.

British American Tobacco has a long history of raising its dividend. It has done so every year for over two decades. So, not only would I generate passive income, hopefully I could expect more each year. Meanwhile, if I continued to put aside £10 a week, my passive income generating investments would grow over time.

Lots of passive income ideas actually require a lot of set-up capital or time. Investing in well-established, high-yielding shares doesn’t. I’d look for passive income by finding out more about the right shares, and starting a weekly savings habit, today.

More on Investing Articles

Twenty pound notes in back pocket of jeans
Investing Articles

Should I buy tobacco shares now for big dividends?

After a possible setback for electronic cigarettes, our writer explains why he would still buy tobacco shares for his income…

Read more »

a couple embrace in front of their new home
Investing Articles

3 FTSE shares I’m buying with the Help to Build scheme!

Last week, the government launched a new, Help to Build scheme. So, here are three FTSE shares that could benefit…

Read more »

Stack of one pound coins falling over
Investing Articles

Should I bite on these 4 double-digit dividends?

Our writer considers whether these four double-digit dividends look sustainable and what that means for his portfolio.

Read more »

Close-up of British bank notes
Investing Articles

Can the Rolls-Royce share price get any cheaper than 80p?

The Rolls-Royce share price was edging back towards £1 and maybe above penny share levels. But then new troubles sent…

Read more »

Senior woman wearing glasses using laptop at home
Investing Articles

2 value stocks with high dividend yields to buy in July

Our writer examines two value stocks for his portfolio that marry low price-to-earnings ratios with high dividend yields.

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Could I double my money buying at today’s Scottish Mortgage share price?

The Scottish Mortgage share price has crashed. Does that mean now could be a rewarding moment for our writer to…

Read more »

Hand holding pound notes
Investing Articles

Will the Lloyds dividend yield top 5%?

Our writer considers the outlook for the Lloyds dividend -- and what he should do about it.

Read more »

Middle-aged white man pulling an aggrieved face while looking at a screen
Investing Articles

3 ways I’m protecting my FTSE 100 stock portfolio right now

Jon Smith writes about several different ways he's trying to plan for the future to try to make his FTSE…

Read more »