How to make a yearly income of $60,000 from ASX shares

It is possible to create a yearly income of $60,000 of dividends from ASX shares, if compound interest can be utilised.

How compounding can help

Albert Einstein once supposedly said about compound interest: “Compound interest is the eight wonder of the world. He who understands it, earns it, he who doesn’t, pays it.”

Compounding in financial terms means when your money earns interest and then that interest earns interest. It builds like a snowball.

With a 5% interest rate, a single $100 investment will only make $5 over one year. But if that $100 is given 10 years to grow at a 5% interest rate, and the money is re-invested each year, then it grows to $163. It takes less than 15 years for the $100 to double to be $200.

Over…