Forget Cash ISAs and Premium Bonds: I’d buy the FTSE 100 for a passive income

first_img Image source: Getty Images Forget Cash ISAs and Premium Bonds: I’d buy the FTSE 100 for a passive income Simply click below to discover how you can take advantage of this. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Enter Your Email Address Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. See all posts by Rupert Hargreavescenter_img Our 6 ‘Best Buys Now’ Shares Rupert Hargreaves | Saturday, 18th April, 2020 Cash ISAs and Premium Bonds are a great way to save money for a rainy day. However, over the past few years, the interest rates on these products have plunged.Indeed, at the time of writing, the best flexible Cash ISA rate on the market is just 1.25%. Meanwhile, the annual prize rate for Premium Bonds is only 1.4%. It’s hardly worth getting excited about these minuscule rates of interest.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…And, with that being the case, owning the FTSE 100 could be a better option for your money over the long term.Buying the FTSE 100 for incomeThere are three main reasons why the index might be a better investment than Cash ISAs and Premium Bonds over the long run.First off, FTSE 100 stocks currently support a higher level of income. The UK’s leading blue-chip stock index has a dividend yield of 5.3% right now. That’s several times higher than the rate offered by the best Cash ISA on the market.In addition to this higher level of income, the FTSE 100’s dividend yield has more growth potential over the long term. The Bank of England base rate determines interest rates for Cash ISAs and Premium Bonds.On the other hand, company profits determine the index’s dividend yield. These tend to rise over the long term. As we’ve seen over the past 10 years, the same isn’t true of interest rates.A third reason why the FTSE 100 could be a better income investment than Cash ISAs and Premium Bonds is capital growth. As well as the income stream from the index, investors may also see the value of their investments rise.It’s not very easy to tell what sort of return the FTSE 100 could produce over the long term. However, as a guide, over the past 35 years, the FTSE 100 has returned around 7% per annum. That rate of return would be enough to double your investment every decade.The better buy Those are the reasons why the FTSE 100 could be a better investment for a passive income than Cash ISAs and Premium Bonds. While these two cash products have their uses, for investors who’re serious about generating a passive income, the FTSE 100 has much better income credentials. The potential for capital gains is also highly appealing.It’s quite simple to track the performance of the FTSE 100. All you need to do is buy a low-cost tracker fund, sit back, and relax. The fund’s managers will then do all the hard work for you.Investors can also own a tracker fund in a Stocks and Shares ISA. This means there’ll be no further tax to pay on income or capital gains earned from the FTSE 100 tracker investment.So, if you’re serious about generating a passive income, it’s worth taking a closer look at the FTSE 100. “This Stock Could Be Like Buying Amazon in 1997” I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. 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