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My position is simple. I am building a portfolio. FTSE 100 Stocks to create passive income for my retirement. Today’s stock market volatility seems like a good time to buy more of them.
This year has been rough for global stock markets, rather than ups and downs, particularly in the US. of S&P 500 It has fallen into bear market territory, down 23.70% year to date.
I’m buying passive income stocks.
The FTSE 100 was relatively stable, falling 6.87%, part of that fall. Half of that dip came following Chancellor Kwasi Kwarteng’s botched mini-budget. While I’m worried about the country’s financial situation at the moment, I’m not worried about buying UK passive income stocks. In fact, I think this is a good opportunity to raise more of them.
The FTSE 100 is full of strong and fragmented companies. Like inflationary rockets, these have turned into favors. Fixed stock payouts give my portfolio partial protection against inflation. Today, the average yield on the FTSE 100 is 4.19%. That’s much better than cash with any share price growth.
I am interested in buying a house maker Persimmon19.47% dizzying, and Lloyds Banking GroupIt yields 4.7%. Once in, I reinvest their shares directly back into my portfolio to generate growth. When I retire, I will use them as passive income to supplement my pension.
Passive income shares are well-valued at 13.48 times earnings relative to the FTSE 100 trading. Persimmon is cheaper, at 4.96 times earnings, and Lloyds trades at 5.57.
Another favorite collection of mine, Legal and general groupIt currently has an earnings yield of 8.54 percent and is valued at just 6.83 times earnings. All three stocks have risks, and their stocks have underperformed over the years. However, I believe the rewards should outweigh the risks.
The biggest risk in buying today is that this crisis will intensify, and the FTSE 100 could fall further. That doesn’t stop me from investing for two reasons. First, stocks can always fall at any time. As they can arise at any time. That’s what stock markets do. If that stopped me, I would never have bought it.
I buy and hold FTSE 100 shares.
The second reason I still buy passive income stocks today is because I plan to hold them for the long term. I’m talking 20 or 30 years, I think I’ll live that long. That time scale gives the index plenty of time to recover. If it dips in a short period of time, hopefully I’ll have some money to spare, and I can buy more shares.
Dividends cannot be relied upon. They can be cut at any time – Persimmon worries me on that front. I achieve that by building a balanced portfolio with at least twelve stocks, different risk profiles and different products. This will help to have a simple passive income when I retire. Fortunately today’s problem will be forgotten when I finally quit my job. But I still take advantage of today’s low entry price.