How I’d start earning passive income from £100 a month

first_img Image source: Getty Images. Our 6 ‘Best Buys Now’ Shares Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Simply click below to discover how you can take advantage of this. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Christopher Ruane | Monday, 23rd November, 2020 chris231 owns shares of British American Tobacco. The Motley Fool UK has no position in any of the shares mentioned. 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. Adventurous investors like you won’t want to miss out on what could be a truly astonishing opportunity…You see, over the past three years, this AIM-listed company has been quietly powering ahead… rewarding its shareholders with generous share price growth thanks to a carefully orchestrated ‘buy and build’ strategy.And with a first-class management team at the helm, a proven, well-executed business model, plus market-leading positions in high-margin, niche products… our analysts believe there’s still plenty more potential growth in the pipeline.Here’s your chance to discover exactly what has got our Motley Fool UK investment team all hot-under-the-collar about this tiny £350+ million enterprise… inside a specially prepared free investment report.But here’s the really exciting part… right now, we believe many UK investors have quite simply never heard of this company before!center_img Enter Your Email Address Passive income is money someone earns without having to work at it. That could be anything from rental income to dividends. The attraction is obvious: money comes in without having to lift a finger. That makes life less difficult and more affordable.One myth is that one can’t earn such income it unless one has a lot of capital. In fact, it is possible to start earning with even small savings. Below, I explain how I would start earning passive income by putting aside just £100 a month.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…I’d make a habit of regular savingOne thing a lot of investment veterans agree on is the power of habit. Some people spend their lives waiting for some future moment when they have spare money in the bank. Instead, I would make a start now with a regular habit of saving money. I’d make a habit of saving a minimum set amount each month, starting now. No matter what other expenses come up, if I could stick to that target I would be less likely to miss that money from my wallet each month.To put the money to work as fast as possible earning passive income, I’d regularly invest it into a Stocks and Shares ISA. Then as the funds grow, I’d start to buy shares in a range of companies.I’d buy shares that meet certain criteriaNot all shares are attractive if one’s objective is income. Many companies do not pay out dividends, as they prefer to retain the money inside the company to fund growth. Instead of those growth names, I’d go for income shares. Those pay out dividends.For me there are three key criteria to consider when investing for passive income. First I’d look to see how often a share pays out. Some shares only send a dividend cheque once a year. I’d rather have a frequent payer like British American Tobacco, which makes quarterly payouts.Secondly, I would look to see how sustainable a company’s dividend is. Some companies offer high dividend yields by paying out more than they earn. I don’t see that as sustainable long term. Instead, I’d want a company that has stable or growing earnings and rarely if ever pays out more than it earns. For example, Morrison’s yields over 3% yet earnings still covered its dividend almost two and a half times last year.Finally, I would look for a company which tends to pay dividends through thick and thin. During economic downturns, a lot of companies reduce or suspend their dividend payments. I’d prefer to choose a stock that keeps on paying, such as Spirax-Sarco Engineering. It has increased dividends each year for five decades.I’d reinvest my dividends to increase my passive incomeIn the beginning, the dividends might look small. But as the monthly contributions pile up and the dividends roll in, I would expect my earnings from this approach to become more substantial.Instead of withdrawing the dividend income on a regular basis, I would prefer to take the next step and reinvest the dividends into more shares. That way, the value would compound. Click here to claim your copy of this special investment report — and we’ll tell you the name of this Top Small-Cap Stock… free of charge! The high-calibre small-cap stock flying under the City’s radar How I’d start earning passive income from £100 a month See all posts by Christopher Ruanelast_img read more