Building a second income from scratch sounds like a long game. But with the right approach and the tax-efficient benefits of an ISA, a brand-new portfolio could unlock up to £6,210 in annual passive income in as little as three years. Here’s how.
Starting with the basics
For investors who prefer a hands-off approach, a simple index tracker fund lets anyone instantly mirror the performance of the entire market.
Historically, the FTSE 100 has delivered an average total return of around 8% a year over the long run. Obviously, there’s no guarantee that will continue over the next three years. But let’s assume it does.
An investor maxing out their ISA by contributing £1,667 each month would accumulate a portfolio worth around £67,572.77 by this time in June 2029. Following the widely used 4% withdrawal rule, that’s enough to generate a modest but meaningful £2,702.91 in annual second income.
Not bad for three years of disciplined saving. But with the right stock picks, the numbers can look dramatically different.
What successful stock picking can unlock
Keller Group‘s (LSE:KLR) a prime example of what’s possible with successful stock-picking.
The world’s largest geotechnical specialist contractor has generated a staggering 297.4% total return over the last three years. That translates into an average annualised return of 58.4% – 7.3 times more than the stock market average!
In terms of money, anyone drip feeding £1,667 each month into the stock at that rate’s now sitting on a portfolio worth £155,265.55. And following the same 4% rule, that translates into a £6,210.62 annual second income.
To be fair, Keller’s an exceptional case rather than the norm. But it nonetheless demonstrates the enormous power of successful stock picking when things go right.
So what drove this performance? And does the growth story still have legs?
Is the best already behind it?
Keller’s outperformance has been built on a genuine operational transformation. A sharp recovery in its North American foundations business, improving project execution, and strong infrastructure spending tailwinds across its key markets all combined to deliver record 2025 results.
Skip ahead to 2026 and trading in the first four months is once again “strong compared with the prior year”. The order book has grown to £1.7bn, and the company remains resilient to rising input costs by capturing price increases across new contracts.
Of course, there are still risks for investors to consider. As a project-based contractor operating across dozens of countries, the group is inherently exposed to the risk of contract delays, cost overruns, and unexpected site conditions that can quickly erode margins.
With the conflict in the Middle East disrupting order timelines in certain regions, and rising labour and material costs compressing profitability across the wider construction sector, any deterioration in project execution could quickly dent the impressive earnings momentum built up over the last three years.
Worth a closer look?
Keller Group likely won’t deliver another 297% return over the next three years, at least not without a major surprise growth catalyst. But it still seems to be a genuinely high-quality compounder with a fortress balance sheet.
So for an investor seeking to build a meaningful custom portfolio that can generate a chunky second income, Keller shares could be a good place to start investigating.
Should you invest £5,000 in Keller Group Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Keller Group Plc made the list?
Zaven Boyrazian does not hold any positions in the companies mentioned.
