That’s below the level required for a basic ‘minimum’ lifestyle, according to the Retirement Living Standards survey. You’ll need a fair bit more to enjoy a ‘moderate’ retirement, let alone a comfortable one.

This table will make dismal reading but will hopefully inspire some to invest under their own steam.

 Source: UK Finance

A brilliant way to build retirement wealth is to invest via a Stocks and Shares ISA. This helps you harness the compounding power of the stock market. And all the share price growth and dividend income is entirely free of tax.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Just look at how stocks and shares build wealth

So how much would you need in your ISA to generate a second income of £20,153 a year? I’ve chosen that figure because once added to the state pension, it would lift a single person’s income to £32,700, producing a ‘moderate’ retirement.

The answer depends on the yield you generate from your portfolio:

• With a 4% yield, you’d need £503,825 invested.
• At 5%, the required total falls to £403,060.
• And at 6%, the figure drops to £335,883.

Those sums look scarily big but this is where the stock market comes into it. Over the last decade, the average Stocks and Shares ISA has delivered a total return of 9.64% a year, with dividends reinvested.

At that rate, if you invest £250 a month and increase that by 3% a year to keep up with inflation, you’d end up with £663,180 after 30 years, blasting through those sums.

Here’s why I like HSBC shares

One UK dividend stock I rate right now is HSBC Holdings (LSE: HSBA). Most of us know it as a UK high street bank, but it generates two-thirds of its profits from Asia, notably Hong Kong and China. That gives it a massive opportunity, as the Asia Pacific region grows in wealth and power.

HSBC already makes huge profits as a result – a staggering $32.3bn in 2024. That dipped to $29.9bn in 2025, but mostly due to one-off impairment losses and corporate structuring costs. Underlying growth remain strong. The HSBC share price is up 60% in the last 12 months, and a stunning 284% over five years.

In practice, investors have done even better, as they’re received dividends on top. The shares have yielded around 5% a year lately. The total return with dividends reinvested would be around 315%.

HSBC shares look a tad expensive after that strong run, and may be more volatile from here. And while its exposure to China is exciting, Beijing interference adds an extra layer of geopolitical risk. Also, if the global economy slows, so could profits. But every stock brings risks as well as rewards and I think HSBC shares are worth considering today. That’s why I bought them in both May and June.

Should you invest £5,000 in HSBC Holdings 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 HSBC Holdings made the list?

Harvey Jones owns shares in HSBC.

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They might be. For all I know, we could be staring a massive crash in the face. AI hyperscalers like Amazon, Google, Microsoft and Meta Platforms are investing hundreds of billions and can’t be sure they’ll get a decent return on their money.

There’s another concern. The US Federal Reserve may hike interest rates to cool things down, possibly several times. Almost every US rate-hiking cycle has been followed by an economic downturn as costlier borrowing slows business and consumer spending. So yes, the threat is real if not guaranteed.

Are shares heading for meltdown?

The thing is, there’s always somebody, somewhere, warning of a stock market crash. It was all doom and gloom when the US attacked Iran on 28 February. Markets plunged almost 10% in March. But anybody who sold up then will be kicking themselves today.

The S&P 500 just posted enjoyed its best quarter since 2020, up 15% during the three months to June 30. And what led that rally? AI and semiconductor stocks. In other words, the very things we’re supposed to be worrying about today.

So do I think there will be a stock market crash? No idea. Nobody can accurately predict these things. There are simply too many variables, so ignore those who claim they do know. Also, crashes and corrections are part and parcel of investing. It’s the price we pay for the proven superior returns from equities.

So I’m still buying shares. My most recent purchase was FTSE 100 bank HSBC Holdings (LSE: HSBA). The Asia-focused operation was on my buy list for years, and when its shares fell 5% after disappointing results on 5 May, I took the chance to bag it at a discount.

Q1 revenues had climbed another 4% to $19.1bn, but profit was flat at $10.1bn, due to a fraud-related credit impairment and Middle East uncertainty. I decided these were temporary issues. HSBC is a massively profitable operation:

• 2025 – $29.9bn
• 2024 – $2.3bn
• 2023 – $30.3bn
• 2022 – $17.1bn
• 2021 – $18.9bn

The 2025 dip was mostly due to $4.9bn of notable items, such as restructuring, legal provisions, and asset sales.

Are HSBC shares still good value?

HSBC suffered a potentially bigger blow on 4 June when Beijing cracked down on capital outflows from mainland China, threatening its Hong Kong operations. Again, the shares fell. How did I respond? I bought more.

The HSBC share price has had a terrific run. It’s up 268% over five years, and 61% in the last 12 months, with dividends on top. The forward price-to-earnings ratio is still modest at 11.9, while the shares are forecast to yield 4.32% this year. That’s expected to hit 4.83% in 2027.

HSBC has paused its generous share buybacks to fund its final stake in the Hang Seng Bank. I’m looking forward to their resumption.

The shares are likely to slow after a strong run, and if we do get a stock market crash, they won’t escape unscathed. But I still think they’re worth considering today. And if we get a crash or correction, I’ll buy even more at the reduced price.

Should you invest £5,000 in HSBC Holdings 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 HSBC Holdings made the list?

Harvey Jones owns shares in HSBC Holdings.

The post If we get a stock market crash, here’s what I’m doing appeared first on The Twelfth Magpie.

It’s been quite the spectacle. Especially as it created the world’s first trillionaire in Elon Musk, then robbed him of that status within days.

Today, SpaceX shares trade around $153. The market-cap is still a stunning $2trn but the US tech sector is on a knife edge. There’s a fresh concern about the artificial intelligence (AI) revolution, which may turn out to be inflationary, as Apple hikes prices on iPads and Macbooks by up to $300 to cover the cost.

Is now the time to be wary of big tech?

SpaceX’s own AI division, xAI, is burning through cash. While its Starlink satellite internet division generates recurring revenue, it also requires heavy investment, and its 10,000 satellites erode quickly due to their low orbit. 

SpaceX posted a $4.9bn net loss in 2025. In Q1 2026 alone it lost $4.28bn. We have no timeline for when it becomes profitable.

Musk’s venture has vast horizons and is arguably the most ambitious and exciting company on the planet. It will also benefit from a wall of money coming from index tracking funds over the next few weeks. But as always, with great opportunity comes great risks. Right now, this one’s too risky for me.

As investors get nervous about AI generally, I’m looking at companies that are making money today, and there are plenty of those on the FTSE 100. Like Asia-focused bank HSBC Holdings (LSE: HSBA). And it’s definitely making money – with profits of $29.9bn in 2025. It made another $9.38bn in Q1.

Half-decade profits have been climbing at a fair old lick too, as this list shows:

• 2025 – $29.9bn
• 2024 – $32.3bn
• 2023 – $30.3bn
• 2022 – $17.1bn
• 2021 – $18.9bn

The 2025 dip doesn’t worry me too much. That was mostly due to one-off items such as restructuring, legal provisions and asset sales.

Can HSBC shares keep climbing?

The HSBC share price has had a stellar run. It’s up 60% in the last year, and a staggering 250% over five. Frankly, if SpaceX posted that kind of growth from here, we’d all be raving about it.

HSBC may struggle to maintain that pace of growth. The Chinese economy has been shaky, with concerns about its property and shadow banking sector. The board has paused its generous share buyback programme to fund the $13.7bn acquisition of Hong Kong’s Hang Seng Bank.

Beijing has just placed curbs on wealthy mainland Chinese using Hong Kong banking services, potentially hitting demand for HSBC’s services. So there are risks here too. Yet I’ve bought its shares in both May and June.

Today, the HSBC share price looks reasonable value with a forward price-to-earnings ratio of 11.6. Unlike SpaceX, there’s income on offer too. HSBC’s forecast to yield 4.46% this year, rising to 4.98% in 2027. I’ll consider buying even more HSBC shares in the weeks ahead, but will tread carefully around SpaceX.

Should you invest £5,000 in Space Exploration Technologies Corp. - Class A 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 Space Exploration Technologies Corp. - Class A made the list?

Harvey Jones owns shares in HSBC Holdings.

The post Up 250%! Here’s why I bought HSBC shares over SpaceX stock appeared first on The Twelfth Magpie.

A total of £69.5bn was saved in these cash-based products in the 2023/2024 tax year, latest data shows. That’s more than double the £31.1bn invested in the stocks-based equivalent.

But here’s the thing: total holdings in stocks ISAs is £511bn, compared to £360bn in the Cash ISA. Why? Over time, investment in the stock market delivers significantly greater returns than simply saving.

Crunching the numbers

Over the past decade, Stocks and Shares ISA users have enjoyed an average annual return of 9.6%. That’s according to Moneyfacts data. By comparison, the Cash ISA’s return sits way back at 1.2%.

Past performance isn’t always a reliable guide to the future. But if these trends continue, a cash saver with £19,999 on account will make just £22,547 by 2036.

How would this stack up compared to the shares ISA? The difference is enormous, with this product delivering a £52,032 total return.

Sprinkle in some regular investments over the period and the gap becomes even wider. This is because each contribution made in a Stocks and Shares ISA has the opportunity to compound at that much higher rate.

If someone added an extra £500 a month on top of their initial £19,000i investment, they’d have:

• £152,141 after 10 years in a Stocks and Shares ISA.
• Or £86,262 over the same period in a Cash ISA.

So what’s the catch?

If this is the case, why don’t more of us in the UK invest in the stock market? The problem is perception compared to other countries such as the US, Canada and Australia, and especially when it comes to risk.

With a Cash ISA, it’s not possible to lose money, unless in the unlikely event your account provider goes bust. Cash products also protect individuals from market volatility. Stocks ISAs don’t offer either of those things.

Yet. as that Moneyfacts data shows, over the long term, volatility has a chance to even out and deliver stunning returns. HSBC (LSE:HSBA) is one example of the huge profits that can be made with a patient approach.

A 10.7% opportunity?

There have been some ups and downs for the bank over the last decade. For instance, HSBC’s share price — like the broader FTSE 100 — fell sharply when Covid-19 hit in 2020. Yet through a combination of capital gains and dividends, it’s provided an average annual return of 10.7%.

The reason is chiefly the bank’s rising focus on fast-growing Asian markets. It’s a strategy that’s tipped to keep delivering, even though market competition from digital banks is a growing threat. Asia Pacific’s retail banking sector is expected to swell 6%-8% a year on average between now and the mid-2030s. And areas including wealth management, where HSBC is doubling down, are tipped to rise even more strongly.

There are plenty of top stocks for investors like me to consider in an ISA and this is just one of them. It’s why I’ll never leave money stagnating in a poor-returning cash account.

Should you invest £5,000 in HSBC Holdings 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 HSBC Holdings made the list?

Royston Wild owns shares in HSBC.

The post How much might £19,999 in a Stocks & Shares ISA be worth by 2036? appeared first on The Twelfth Magpie.

But what if it could be viewed as a target instead?

After all, if an investor could build a portfolio capable of generating the same level of income, they would effectively have created a second State Pension of their own.

Replacing the State Pension

The full new State Pension currently pays £12,547 a year.

While that may not sound especially large, replacing it from an investment portfolio is more demanding than it first appears.

The chart below shows how much capital an investor would need in order to generate the same £12,547 of annual income, depending on the withdrawal rate applied in retirement. In other words, it assumes the portfolio is already built and then draws down income from it at different sustainable yield levels.

At a 4% withdrawal rate, which is often used as a conservative long-term benchmark, an investor would need just under £315,000. At 6%, the figure falls to just over £200,000.

The key point is that the required portfolio size is highly sensitive to the income rate assumed. A small change in withdrawal rate can significantly alter the level of capital needed to replicate the State Pension.

This highlights an important reality. While the State Pension is not a large income in absolute terms, it represents a guaranteed stream of income that would require a substantial portfolio to replace privately.

Chart generated by author

A real-world income building block

HSBC Holdings (LSE: HSBA) shows how an ISA income portfolio can be built in practice.

Over the past five years, the shares have delivered exceptional returns. A £5,000 investment would now be worth close to £18,000 once dividends are included, reflecting a total return of more than 200%. That level of performance has also translated into a very high effective yield based on the original purchase price.

Of course, the key question is whether that kind of return is repeatable. I doubt investors should assume it is.

What HSBC does illustrate, however, is how income portfolios are not built from a single perfect holding, but from businesses that generate strong cash flow over time.

The bank today is a more focused and efficient business than it was in the past. It has been simplifying operations, exiting lower-return areas, and improving capital efficiency. That has helped return on tangible equity rise and profits reach record levels.

Geography also matters. HSBC is increasingly exposed to faster-growing regions, particularly Asia and the Middle East, where wealth creation is supporting demand for savings and investment products. That has helped wealth revenues grow strongly in recent periods.

There are risks to consider. A slowdown in China or weaker global trade would impact earnings, and falling interest rates could pressure margins over time.

Closing remarks

Even so, HSBC shows how an income-focused ISA portfolio might be constructed in practice. Not through a single high-yield solution, but through a mix of strong, cash-generative businesses capable of compounding returns over time.

It remains a core holding in my own ISA portfolio, though it’s not the only stock I see playing that role in the years ahead.

Should you invest £5,000 in HSBC Holdings 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 HSBC Holdings made the list?

Andrew Mackie owns shares in HSBC.

The post Could a Stocks and Shares ISA eventually replace the State Pension? appeared first on The Twelfth Magpie.

Perhaps this isn’t surprising, given Lloyds’ status as the UK’s largest mortgage lender. Investors favour its perceived stability, reliable dividends, and entrenched competitive position. Fair do’s.

However, I personally find the following pair of bank stocks more attractive today. Here’s why.

FTSE 250

The first one is TBC Bank (LSE:TBCG), a leading lender in Georgia. I’m bullish on this FTSE 250 stock for a few reasons.

Firstly, TBC has high long-term growth potential due to the emerging markets in which it operates (Georgia and Uzbekistan). Unlike the UK, these economies are growing quickly but still in the earlier stages of financial services penetration.

Plus, TBC enjoys a duopolistic position within the Georgian banking system, alongside the FTSE 100‘s Lion Finance. This dynamic (37% share of both loans and deposits) has helped the bank consistently deliver a high return on equity (ROE). We’re talking about mid-20s, which is excellent.

We operate across two highly attractive and complementary markets. Georgia provides a strong, well-established platform
where we generate consistently high returns, while Uzbekistan offers significant long-term growth potential as one of Central
Asia’s most dynamic and underpenetrated banking markets.

TBC Bank

Next is the dividend yield, which currently stands at 6.8% on a forward-looking basis. That’s significantly ahead of Lloyds’ 4.5% yield, while dividend cover is also slightly higher.

Finally, the stock’s valuation is much lower, with a forward price-to-earnings (P/E) ratio of 5.3 versus 9.3 for Lloyds.

Of course, the difference in valuation and yield probably reflect the higher risk profile (particularly political risk in Georgia). And while Uzbekistan is expected to record strong GDP growth of 6%+ this year, it’s also a bit of a wildcard.

On balance though, I like TBC’s high yield, low valuation, robust profitability, and strong long-term growth prospects.

FTSE 100

The second stock I prefer is HSBC (LSE:HSBA), which is up 57% in the past year.

Unlike Lloyds, Europe’s largest lender by market-cap operates in the world’s largest and second-largest economies (US and China/Hong Kong), as well as India (which is on track to become the third-largest within the next few years).

Therefore, HSBC has a truly global presence, and should capture some of the growth of the world’s largest economies moving forward. This includes high-net-worth individuals who have complex tax planning and cross-border needs.

According to Mordor Intelligence, the Asia-Pacific wealth market is projected to reach $41.8trn by 2031, up from $27.6trn in 2025. To capture this opportunity, HSBC has set up wealth hubs in China, Hong Kong, Singapore, Taiwan and Malaysia.

Admittedly, the flip side to HSBC’s Asia-focused strategy is that new regulations can come out of left field, especially in China. This adds political and regulatory risk that Lloyds’ shareholders don’t have to worry about.

But HSBC also offers a slightly higher forward yield of 4.8%, which I find attractive. Add in the banking giant’s long-term growth prospects alongside the dividend, and I think the stock is well worth considering.

Should you invest £5,000 in HSBC Holdings 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 HSBC Holdings made the list?

Ben McPoland owns shares in HSBC and Legal & General.

The post 2 bank shares I like better than Lloyds today appeared first on The Twelfth Magpie.

These are backed by a powerful combination of the bank’s global reach, strong capital strength, and consistent profitability. And these could also lift the stock’s deeply-discounted price to its ‘fair value’ over time too, in my view.

So what sort of returns are possible?

What’s the dividend profile?

Analysts project HSBC’s dividend yield will increase to 5.6% by 2028, although such returns can vary over time.

So, another £20,000 investment by me now would make £14,968 in dividends over 10 years and £86,893 after 30 years.

The numbers factor in the use of dividend compounding, which can lead to exponential long-term growth in dividend returns.

At the end of 30 years, the holding’s total value (including the original £20,000 investment) would be £106,893.

And that would give a yearly income (from dividends alone) of £5,986!

What about price gains?

Price and value often diverge in the world of shares. Price is whatever the market happens to accept at a particular point, but value is rooted in the fundamentals of the company itself.

For long-term, savvy investors, that difference matters enormously. Markets have a habit of steering prices back towards fair value over the long run. This makes the distinction a key driver of long‑term returns.

The discounted cash flow (DCF) model determines what a stock is truly worth by projecting future cash flows for the underlying business. It then discounts these back to today to produce a per-share value.

The less certain those projections are, the greater the discount rate applied, so analysts’ DCF valuations can vary. Based on my own framework — including an 8.4% discount rate — HSBC looks 39% undervalued at its present price of £13.74.

That suggests a fair value of £22.52, nearly double the current level. If markets continue to correct this mispricing, this could be an outstanding potential buying opportunity if those DCF assumptions hold good.

What does the earnings growth look like?

Earnings growth is the engine that drives any stock’s price and dividends higher over the long run. A risk here for HSBC is a sharp fall in global interest rates that could reduce net interest income. Another is that any deterioration in China or broader Asian credit conditions could weaken loan performance.

Nevertheless, analysts forecast that HSBC’s earnings will increase by an annual average of 11.3% to end-2028 at minimum.

This looks well justified to me, given its 2025 results saw return on tangible equity (the key profit marker for banks) rise to 17.2% year on year. The bank expects 17%+ every year to end-2028.

My investment view

For income‑focused investors, that blend of strong earnings momentum, rising dividends, and a deeply undervalued share price is difficult to overlook.

HSBC’s scale, capital strength, and global reach give it the resilience to keep rewarding shareholders over the long term.

With profits still expanding and the valuation offering significant upside, the shares look an appealing option to consider for anyone aiming to build a durable second income stream.

And I for one will be adding to my existing holding very shortly.

Should you invest £5,000 in HSBC Holdings 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 HSBC Holdings made the list?

Simon Watkins owns shares in HSBC.

The post How much do I need to invest in HSBC shares to target £5,986 a year in second income? appeared first on The Twelfth Magpie.

So how much would a Stocks and Shares ISA need to be worth to bridge the gap between the State Pension and a more comfortable retirement income?

Defining a comfortable retirement

There’s no single definition of a comfortable retirement. However, estimates from retirement industry research suggest a single person may need around £43,000 a year to enjoy a comfortable lifestyle.

After deducting the full State Pension, that leaves an income gap of roughly £31,000 a year.

Assuming a Stocks and Shares ISA portfolio could generate a 7% yield, here’s how much capital would be required to bridge different retirement income gaps.

Of course, achieving that level of income requires careful stock selection. For me, two interesting examples are HSBC (LSE: HSBA) and Legal & General (LSE: LGEN), which offer very different approaches to generating shareholder returns.

Looking beyond today’s yield

At first glance, HSBC might seem an odd choice for income investors targeting a portfolio yield of 7%. The shares currently yield a little over 4%, well below that level.

However, focusing only on today’s income can be misleading. Over the past five years, HSBC shares have risen more than 200% while continuing to distribute billions of dollars to shareholders through dividends and buybacks.

What matters is that the bank continues to generate substantial surplus capital. Management remains committed to paying out 50% of earnings as dividends and is targeting a return on tangible equity of at least 17% through 2028.

The main risk is that future returns depend increasingly on earnings growth rather than special distributions. A weaker global economy, rising loan losses, or slower growth across Asia could all weigh on profitability.

A different approach

At the other end of the spectrum is Legal & General. Unlike HSBC, the shares already offer an income yield of 8%.

That means investors don’t need to rely on years of dividend growth to generate meaningful income. Instead, a large proportion of the return arrives upfront through cash distributions.

The key question is whether that income is sustainable. Encouragingly, management recently increased its dividend growth target and the company continues to benefit from strong demand for pension risk transfer transactions, where companies transfer pension liabilities to insurers.

The business also generates substantial cash from its asset management and retirement operations, helping support future shareholder payouts.

Of course, no dividend is guaranteed. A weaker economic backdrop or disruption in financial markets could affect profitability and cash generation. However, for investors seeking higher levels of income today, the insurer demonstrates that there are still attractive yields available in the FTSE 100.

Bottom line

HSBC and Legal & General highlight two different approaches to building passive income. One offers a lower starting yield backed by growing shareholder returns. The other delivers a much higher income today. For investors trying to bridge the gap between the State Pension and a comfortable retirement income, combining both approaches could be worth considering.

Should you invest £5,000 in HSBC Holdings 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 HSBC Holdings made the list?

Andrew Mackie owns shares in HSBC and Legal & General.

The post How much does an ISA need to bridge the gap between the State Pension and a comfortable retirement income? appeared first on The Twelfth Magpie.

If you want a simple target, here is one method an investor could use to aim for up to £1,000 a month over time.

Laying the groundwork

A Stocks and Shares ISA is a useful starting point because it lets you invest up to £20k a year, with income and gains sheltered from UK tax.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

The key is to keep contributing regularly, even if the first sums feel small. I would rather see someone invest £500 a month for years than wait for the ‘perfect’ moment.

If we assume a FTSE 100 total return of 9.5% a year, let’s see what £500 invested every month with dividends reinvested could grow to:

• £38,643.41 after five years.
• £96,572.26 after 10 years.
• £181,053.11 after 15 years.
• £295,091.60 after 20 years.

With £295,091, a retiree could draw down the recommended 4% a year and net themselves £11,803 — almost £1,000 a month.

That’s a decent second income, built from the kind of dedicated investing that makes a retirement much easier and more comfortable.

FTSE 100 or S&P 500?

For a second income, I would not treat the FTSE 100 or the S&P 500 as an either-or choice. The S&P 500 has historically been better for rapid growth, while the FTSE 100 has usually offered a stronger dividend profile, so a mix can make sense.

UK investors could therefore consider an S&P 500 tracker for growth, alongside selected dividend shares for income.

Here are a few names income investors often look at:

• HSBC (LSE:HSBA)
• Rio Tinto
• Unilever
• GSK
• Tesco
• AstraZeneca
• National Grid
• Lloyds
• BP
• Legal & General

Why HSBC stands out

HSBC combines a sizable income stream with global scale and a strong position in Asia. That matters because its earnings are not tied only to the UK economy, so it has more ways to grow than a purely domestic bank.

The dividend also appeals to investors who want regular cash payments rather than just share-price gains.

The bank’s 2025 results showed reported profit before tax of $29.9bn, profit before tax of $36.6bn and revenue of $68.3bn. Its board approved a fourth interim dividend of 45c per share, taking the total for 2025 to 75c per share.

CEO Georges Elhedery said HSBC is “raising our ambition” and targeting a 17% return on tangible equity (RoTE) or better for 2026 to 2028.

Final thoughts

HSBC is a well-established UK business with decades of strong performance, but banks, like stocks in any sector, are never risk-free. It can still be affected by China, Hong Kong and interest-rate swings, and its credit costs rose to $3.9bn in 2025.

Still, for income-focused investors, it offers a useful mix of yield, diversification and long-term cash-generation potential. I think it’s worth considering as one part of a broader portfolio, alongside other income names in utilities, consumer staples, retail or healthcare.

If you’re looking for other shares to fill up a second income portfolio, consider a few of the other FTSE 100 options I’ve covered recently…

Should you invest £5,000 in HSBC Holdings 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 HSBC Holdings made the list?

Mark Hartley owns shares in HSBC, Unilever, GSK, Tesco, AstraZeneca, National Grid, Lloyds, BP and Legal & General.

The post How to target almost £1,000 a month in second income with a monthly investment strategy appeared first on The Twelfth Magpie.

Yet the Asia-focused bank still offers investors a yield of more than 4%.

That might seem surprising, but it reflects just how much the bank’s earnings and shareholder payouts have grown alongside the share price. The question now is whether that momentum can continue.

Why hasn’t the yield disappeared?

Normally, when a share price rises sharply, the dividend yield falls. But the company’s recent performance has been unusual because shareholder payouts have increased alongside the share price.

Last year alone, the bank announced total dividends of $0.75 per share and $6bn of share buybacks. That followed the sale of its Canadian business, which also funded a special dividend worth $0.21 per share, in 2024.

In fact, management highlighted that dividends, buybacks and a 49% rise in the share price combined to generate a total shareholder return of more than 57% during 2025.

Put simply, HSBC hasn’t just rewarded investors through capital gains. It’s also been returning enormous amounts of cash. As a result, the dividend yield has remained surprisingly resilient despite the stock’s remarkable rise.

Can shareholder returns remain attractive?

Some of the recent cash returns won’t be repeated. The special dividend linked to the Canadian business sale was a one-off event, while buybacks have been paused temporarily as capital levels are rebuilt following the Hang Seng transaction.

I don’t think that necessarily weakens the investment case.

What matters more is whether the underlying business can keep generating enough profit to support future distributions. A return on tangible equity of at least 17% through 2028 suggests profitability should remain strong. At the same time, recent upgrades to net interest income guidance point to earnings holding up better than many investors expected.

The bank also intends to maintain a dividend payout ratio of 50%, which provides some visibility over future income.

To me, that’s the more important story. The next phase may depend less on exceptional buybacks and special dividends, and more on the ability of the core business to keep producing surplus capital year after year.

Risks to consider

The biggest risk, in my view, is that future shareholder returns may depend more heavily on earnings growth than they have in recent years.

The bank recently highlighted increased uncertainty across the global economy and raised its expected credit loss guidance for 2026. While profitability remains strong, a weaker economic backdrop could lead to higher loan losses and put pressure on earnings.

There are also broader geopolitical risks to consider. A significant portion of profits comes from Asia, meaning any prolonged slowdown in regional growth or disruption to trade flows could weigh on performance.

Finally, while the dividend currently looks well supported, the pause in buybacks is a reminder that capital returns are not guaranteed. If economic conditions deteriorate, preserving capital could take priority over returning cash to shareholders.

Nevertheless, while returns are unlikely to match the extraordinary gains of the past five years, HSBC’s financial strength suggests it can remain an attractive income stock over the longer term. For that reason, I think it remains one to consider — but not without caution.

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Andrew Mackie owns shares in HSBC.

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