Superannuation is one of the best ways to invest for passive income, in my opinion. For working people, it gives them a lower tax rate than their 'normal' earnings. For retirees, superannuation earnings could potentially be tax-free.
If someone has significant money in superannuation, they could unlock $10,000 of monthly passive income (or even more).
I'm sure most people reading this would love for their superannuation to pay them $120,000 per year of passive income.
A key question is how much is needed in superannuation for that level of cash flow.
How much is needed to generate $10,000 monthly passive income?
It'll take a sizeable sum to make that much money, but the exact amount will depend on the size of the dividend yield. The bigger the dividend yield, the less that needs to be invested, though higher yields may not be safer and it could also mean less capital growth.
Nonetheless, there are plenty of appealing options for good dividend yields across the ASX share market, so I'd be very willing to invest in a business that has a dividend yield of 7% or more.
Let's look at three different scenarios. One where the portfolio dividend yield is 4%, one where it's 5.5% and one where it's 7%.
To make $120,000 of annual passive income from superannuation (or outside super) with a 4% dividend yield, it would require a portfolio value of $3 million.
If the portfolio has a 5.5% dividend yield, then an investor would need a portfolio value of $2.18 million.
Finally, with a dividend yield of 7%, investors would need a portfolio value of $1.71 million.
Which ASX shares I'd buy for dividend
I think there are a number of compelling options that offer different dividend yield levels.
For example, businesses like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Wesfarmers Ltd (ASX: WES) and Lovisa Holdings Ltd (ASX: LOV) offer a lower but growing dividend yield.
Businesses with a mid-range yield includes Rural Funds Group (ASX: RFF), Centuria Industrial REIT (ASX: CIP), L1 Long Short Fund Ltd (ASX: LSF) and MFF Capital Investments Ltd (ASX: MFF).
The higher-yield options I'd consider include WCM Global Growth Ltd (ASX: WQG), Hearts and Minds Investments Ltd (ASX: HM1), Charter Hall Long WALE REIT (ASX: CLW), Future Generation Australia Ltd (ASX: FGX) and Future Generation Global Ltd (ASX: FGG).
The post How much is needed in superannuation to target $10,000 of monthly passive income? appeared first on The Motley Fool Australia.
Motley Fool contributor Tristan Harrison has positions in Future Generation Australia, Future Generation Global, Hearts And Minds Investments, L1 Long Short Fund, Mff Capital Investments, Rural Funds Group, Washington H. Soul Pattinson and Company Limited, and Wcm Global Growth. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Rural Funds Group and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Lovisa, Mff Capital Investments, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2026