Many Australians dream of earning enough passive income to cover the bills, fund a holiday, or simply ease the pressure of day-to-day expenses.

Turning a modest lump sum into a reliable income stream might sound ambitious, but with discipline, time, and the power of compounding, it could be more achievable than you think.

Here’s how an investor starting with $20,000 could work towards building a portfolio capable of generating $12,000 in passive income every year.

Step one: Get growth working for you

The first $20,000 is your seed capital. To make it flourish, it is best to focus initially on growth rather than income. Quality shares on the ASX like TechnologyOne Ltd (ASX: TNE), Xero Ltd (ASX: XRO), or…