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As of April 2025, the average annual wage for full-time workers in the UK is £766.60 per week, according to the Office for National Statistics (ONS). That’s a good enough salary to live on but what if you could earn it as an income?
Let’s calculate what it would take to say goodbye to that office job forever.
It works out to £766.60 per week
Based on that figure, the investor would need to deliver a return of around £39,863.20 per year. Over the past decade, the UK stock market has returned an average of 8.2% per year (based on data from Curvo.eu).
FTSE 100 average annual return:
- Last five years: 12.3% (78.3% overall).
- Last 10 years: 8.2% (118.9% total).
- Last 20 years: 5.2% (176.5% total).
Experts recommend that retirees only withdraw 4% per year from their assets to avoid depleting them too quickly. That means the pot would need to be worth around £996,580 (4% of 996,580 = 39,863).
Let’s say an investor starts with a sum of £20,000 and contributes £500 a month to an ISA portfolio. Using the 8.2% rate, it will take about 30 years to reach that goal.
For investors already in their 40s, that’s probably too long. So how can investors aim to reduce that time?
Identifying high-yielding stocks
Apart from increasing monthly contributions, the only way to grow the pot quickly would be to earn high returns. Another way to try to do this is with a high yield portfolio of stocks.
Take the City of London Investment Group (LSE: CLIG), for example. It currently has a high yield of 7.67% and has a respectable 12-year unbroken track record.
But it’s not just a strong dividend payer. Unlike many top brands, it is also backed by excellent growth credentials. The share price has risen 123% over the past 20 years, including equities, giving you a 20-year annualized return of 12.11% per annum.
That’s a return that exceeds the market and can significantly increase the average total return on the portfolio. But does the company have what it takes to keep doing that for the next 20 years?
Looking closely
City of London Investment Group is a well-established asset manager operating since 1991. With an enterprise value of just £187.4m, it is a small but reliable asset in the fund management sector.
But like any business, it faces risks. With a heavy bias towards emerging markets (EMs) and global closed-end funds (CEFs), it is sensitive to volatility in EM and CEF sentiment. Not to mention any shrinkage or tightening in the closed-end fund space, which could limit profitability and risk a reduction in profits.
It is encouraging that funds under management (FuM) have been growing steadily. They have risen from around £7bn in June 2023 to £7.55bn in 2024 and £8bn in 2025.
Total revenue (income) is estimated at £57.2m and net profit before tax is just over £20m. Also, with a quick ratio of 4.97, its balance sheet is more than healthy and may be worth a look.
An important point
Building an income stream that is profitable enough to quit will not happen overnight. However, by starting early and targeting high-yielding stocks, it can be a realistic goal – even for those already in their 40s. And that’s one of the many high-yielding stocks I’ve invested in recently.
