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Building a second income stream is a great idea for 2026 and there are lots of ways to do it. Starting a business is one way, buying a property to rent out is another.
The downside to both of these, though, is that they involve a lot of work. But there are ways of aiming for a second income without a second job.
The stock market
Instead of starting a business, one way to earn extra income is by investing in someone else’s. There are lots of ways to do this, but the easiest is through the stock market.
A lot of people think of the stock market as a place to buy shares with a view to selling them at higher prices. And while that does happen a lot, it’s not the only thing it can be used for.
Buying shares isn’t just about betting on a share price – it’s a way of becoming a business owner. And it has two big advantages over setting one up yourself.
One is that size brings certain advantages. Another is that you have to do a lot less work compared to building your own operation from scratch.
No money? No problem!
A lot of people think you can only invest in stocks if you have a lot of money. But this isn’t strictly true – you can start buying shares in companies with as little as £1.
Making £3,253 a month (what the Office for National Statistics says is the median UK salary) does take a big investment. But you can definitely start small and aim to reach that level.
Ultimately, you’ll need a portfolio worth somewhere around £546,504. But by investing £600 a month and achieving an 8.5% annual return, it’s possible to get there within 25 years.
Is 8.5% an achievable average? It’s what the FTSE 100 has returned over the last 10 years, but the challenge is to work out which stocks might offer that return going forward.
Investment ideas
For investors focused on income, stocks like Primary Health Properties (LSE:PHP) might be worth considering. The stock comes with a 7.25% dividend yield, which is very high.
The company owns and leases a portfolio of GP surgeries, mostly to the NHS. That means its rent collection metrics are some of the most reliable in the industry, which is very positive.
It’s always worth thinking about the risks in this kind of situation. And with Primary Health Properties, a change in UK healthcare policy could impact a huge amount of its income.
The firm’s average tenancy agreement, though, has another decade until it expires. So I expect investors who buy the stock today to get a lot of their money back even if things do go wrong.
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Stash it in an ISA?
Earning a £3,253 monthly income might take time. But for anyone who can get there by investing regularly using a Stocks and Shares ISA, there’s a big benefit.
Income tax and National Insurance bring a worker’s take-home pay down from £3,253 to £2,700 a month. But dividends from an ISA are exempt from dividends.
That makes earning £3,253 from investing very different to getting it as a salary. So even if it takes time, I think it’s a worthwhile ambition.
