first_img Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Simply click below to discover how you can take advantage of this. “This Stock Could Be Like Buying Amazon in 1997” Enter Your Email Address While many UK shares have made strong gains in recent months, a number of companies continue to offer good value for money. Investing in them, and holding them, over the long run could produce a sizeable nest egg. From this a passive income can be drawn.Furthermore, building a diverse portfolio and reinvesting dividends could be a means of reducing risk and increasing potential returns. Over time, this may produce a portfolio capable of sustaining an income significantly higher than the State Pension.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…Investing in undervalued UK shares for the long runAt the moment many UK shares appear to be unpopular among investors. For example, sectors such as travel and leisure, consumer goods and financial services contain companies that trade on low valuations versus their historic levels. Such companies could deliver high returns relative to the wider stock market. Amd that could help an investor to obtain a larger passive income in the long run.The track record of the stock market shows that buying undervalued shares and holding them through a stock market recovery can be a logical approach to capitalising on the ups and downs of equity markets.Reinvesting dividends to make a passive incomeReinvesting dividends received from investments is a sound means of building a larger nest egg in the long run. Certainly, it is tempting to boost an income in the short run via dividends received. However, this could be detrimental to the level of passive income received in future.The past performance of the stock market shows that a large proportion of its total returns have been generated by the reinvestment of dividends. Therefore, anyone who is aiming to obtain a generous income return in the long run may wish to sacrifice short-term spending where possible to build their portfolio value.Diversifying to reduce riskAnother simple step to make a worthwhile passive income in the long term is to diversify among a range of companies and sectors. At the present time, the world economy is experiencing one of its most challenging periods for many years. Therefore, it is difficult to know which sectors will be beneficiaries of likely shifts in spending habits, and which ones will struggle to adapt.As such, it is logical to own a mix of businesses in a portfolio. Over time, they could offer more resilient performance than a concentrated portfolio, as well as higher returns.Generating a £25,000 passive incomeFollowing the above three steps could help an investor to earn a generous passive income in the coming years.The stock market has historically been a sound means through which to build a nest egg. For example, the FTSE 250 has produced 9% annual total returns in the past 20 years. By investing £350 per month at the same rate of return would produce a portfolio valued at £645,000 after 30 years. From this, a 4% annual withdrawal means an income of over £25,000 per year. This is more than double the current State Pension, and could lead to increased financial freedom in the long term. 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. Peter Stephens | Wednesday, 13th January, 2021 Image source: Getty Images. 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. Our 6 ‘Best Buys Now’ Shares 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. I’d follow these 3 steps to make a passive income of £25,000 a year from UK shares See all posts by Peter Stephenslast_img