1 FTSE 100 passive income stock to help me retire early even without a state pension

Passive income could be the key to retiring early even with no state pension. Here’s one big-yielding FTSE 100 stock that might help me do that.

| More on:

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.

Smart young brown businesswoman working from home on a laptop

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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.

Work until I’m 71? With no passive income, I might have to. 

The International Longevity Centre thinks so. It just reported the retirement age for those born after 1970 will “definitely” need to go up to 71 years of age. 

Judging by the state of public finances, the goalposts could keep shifting. It might be later than 71. I might never receive a State Pension at all. 

These gloomy scenarios are one reason I work towards a passive income – a ‘hands-free’ source of cash to rely on as an income, pension or no pension. 

I’m still early in my journey, but watching my wealth grow through stocks has been encouraging. I bought Rolls-Royce shares last year and they’re up over three times in value. 

If I had to give an investing tip to my younger, more anxious self, there are three words I’d say. Oh, and I’d give him a bonus tip, too. 

Overthinking

Let’s say I was looking at finance stocks. London has a giant financial services sector with a 400-year history and bigger than the rest of Europe combined.

I might think M&G (LSE: MNG) was a good buy. This firm makes billions helping people invest their savings. Those big earnings pay for a market-leading 9% yield too.

But M&G isn’t a simple business. It manages a £200bn balance sheet. It has operations across the world. 

I might suffer from a touch of ‘analysis paralysis’. I’ve been guilty before of overthinking and not making a decision. 

In a few years time, I’d likely regret my inaction. At 4% inflation for 30 years, every £1,000 would have the buying power of just £294.

But even with a subpar investing return – say 6% yearly – my £1,000 would snowball into £5,743. 

Inflation would still eat into that, of course. But it’s at least one option to preserve and grow the money I have.

In summary, my advice to my former self would be “just get started”. I might even add a second tip to “not let perfect be the enemy of good”

There’s plenty of resources out there to help me start – The Motley Fool being one, of course. 

And on M&G, the dividend looks like one of the best of the high-yielding Footsie stocks. It might be my next buy. 

How I please

More broadly, it seems we are entering a new part of human history where people will be forced to work later than ever. 

When I’m 71, I don’t want to depend on the government for a retirement. And I doubt I’ll fancy catching the tube to work each morning.

Instead, I hope investing in top-notch stocks today – even if they’re not perfect – will hand me the financial buffer to spend my older days how I please.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Fieldsend has no position in any of the shares mentioned. The Motley Fool UK has recommended M&g Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Up 670% in 2 years! This former penny share is skyrocketing on SpaceX contracts

Shares of Filtronic (LON:FTC) were soaring to multi-year highs today after another contract win with SpaceX. Should I buy this…

Read more »

Investing Articles

Why is the Greatland Gold (GGP) share price up 10% today?

Our writer looks at the reasons why the Greatland Gold (GGP) share price is the AIM 100’s best performer today.

Read more »

Passive income text with pin graph chart on business table
Investing Articles

What do I need for a passive income of £100k a year?

How much would I need to invest to collect a very healthy yearly passive income on my retirement? Surprisingly, the…

Read more »

US Stock

£2k invested in Nvidia stock 2 years ago is now worth this boggling amount…

Jon Smith details how much unrealised profit an investor would have from buying Nvidia stock but is cautious about what…

Read more »

Investing Articles

2 value stocks that still look cheap despite the FTSE rally!

Harvey Jones picks out two UK value stocks that still look nicely priced even as the UK index climbs. He…

Read more »

Dividend Shares

I asked ChatGPT to build the perfect passive income portfolio and here’s the result

Jon Smith turns to the world of AI to try and find out whether ChatGPT could build an investor a…

Read more »

Investing Articles

£20,000 to invest? Here’s how the FTSE 100 could deliver a £2,040 passive income

Here are two ways that investors with a lump sum to spend could target a large passive income with FTSE…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Here’s how someone could start investing in 2025 with just £1,000

Planning to start investing in 2025? This writer highlights two very different stocks that might be worth considering for a…

Read more »