£10k hidden away? I can use it to start a second income of £2,620 monthly

I like the idea of ​​earning a second income on top of my main job, but I can't spend a lot of time on it. Fortunately, I've found a way to produce it with precious little effort, through investing that pays dividends FTSE 100 shares.

There is some effort required. It takes a little time to set up a Stocks and Dividends ISA, but then I can invest up to £20,000 a year tax-free, and trading takes just seconds.

Please note that tax treatment depends on the individual circumstances of each client and may change in the future. The content of this article is provided for informational purposes only. It is not intended to be, and does not constitute, any form of tax advice. Students are responsible for conducting their own due diligence and obtaining professional advice before making any investment decisions.

If I wanted to do the absolute minimum, I would just put my money in a low-cost exchange-traded fund (ETF) like iShares Core FTSE 100 UCITS ETF. Buying individual stocks is a lot of fun, though, and picking them doesn't feel like work at all.

Enjoy FTSE 100 income

Once I've bought them, the dividends and any share price goes into my account, while I get on with other things.

If I had the £10,000 you have today and no shares, I would spread my risk. I would do this by dividing the money evenly between five blue chips with a strong track record of paying dividends and offering share price growth.

One FTSE 100 stock I would like to buy right now is insurance Aviva (LSE: AV). It is an established UK company, rather than a growth of light shooting stock. Yet shares are still up 25.32% over the past 12 months.

The real attraction is the dividend. paid a dividend of 6.92 %. However Aviva looks a good value trading at just 12.68 earnings per share.

Stock performance is cyclical. Good years can follow bad, and vice versa. Aviva's share price had been flat before the recent rise. It can also be static. Given that I'm investing over a 25-year period, I'm happy to take the risk.

Income opportunity

Things are going well today. First-quarter general insurance premiums jumped 16% year-on-year to £2.7bn, while protection and health sales rose 5% as more Britons took out private medical insurance to bypass NHS waiting lists. Its wealth arm is up, with net flows up 15% to £2.7bn.

Sales of private pensions have increased due to today's high interest rates, but that could reverse if bankers start cutting back.

While I wouldn't put all my £10k into Aviva, let's use that 6.92% yield as a benchmark. It would pay me an income of £692 in the first year. If I reinvested all my earnings, I would have £53,269 after 25 years. Any increase in the share price is more than that, so I could end up with a lot more. On the other hand, the shares can be terminated. Stocks may fall. That is an investment.

Let's say I reinvested £500 a month over that 25 year period. In that case I would end up with £454,394, assuming a similar return of 6.92%. When I started drawing my dividends I was getting a second income of £31,444 a year. Which works out to be £2,620 per month.

Obviously, returns are not guaranteed and all this takes time. But it takes surprisingly little effort for the huge income I can get.