Building a meaningful second income no longer requires a winning performance at Wimbledon or a City bonus cheque.
The FTSE 100 has delivered an average annualised total return of around 6.9% since its inception in 1984, with dividends reinvested throughout.
Investing just £100 a month at that rate over three decades can grow into a portfolio worth approximately £119,617 in total value.
What makes that figure striking is that only £36,000 of it represents actual contributions, with the remaining balance generated through dividends and capital appreciation.
The third decade of compounding adds more value than the first two decades combined, illustrating how patience is arguably the most powerful tool available to ordinary investors.
UK shares currently look unusually attractive by global standards, with the FTSE 100 trading at a forward price-to-earnings ratio of approximately 13.4 even after its run past 10,000.
That compares with a forward P/E ratio of around 20 for the S&P 500, which prices in years of uninterrupted earnings growth that the UK index does not.
The US market carries a heavier technology focus than its UK counterpart, but the underlying principle remains that money generates returns regardless of which business it originates from.
One UK-listed stock that illustrates the value on offer is Croda International (LSE: CRDA), a speciality chemicals firm with a strong record of dividend growth.
The current dividend yield on Croda sits close to 3.7%, which is significantly above the 10-year average yield of approximately 1.5% for the company.
Long-term earnings protection comes from the fact that Croda’s products are specified directly into customer formulations, meaning switching suppliers requires costly re-testing and re-approval processes.
The lipids business remains a source of uncertainty, with the US regulatory environment presenting a near-term risk that investors should factor into any assessment of the company.
However, the latest results have shown encouraging signs of recovery, with strong growth across several divisions including ceramides and fragrances suggesting the cyclical lows may be behind the business.
The stock is down approximately 70% from its 2021 highs, which many value-focused investors will view as a potential entry point rather than a reason for concern.
A dividend yield sitting well above its historical average is not only a passive income signal but also a strong indicator that the shares are trading at an unusually low valuation.
For investors looking to build a second income by committing a modest £100 a month to the stock market, the combination of a cheap UK market and stocks like Croda makes this an interesting moment to act.