Using the stock market to earn a second income is a powerful wealth-building tactic. And despite popular belief, investors don’t need to be rich to leverage this tool.

In fact, investing just £100 a month over the long run can make an enormous difference – that’s less than the median £180 monthly savings of British households. But how big of a second income could investors unlock with this modest monthly capital?

Over the period of 10 years, putting aside £100 each month builds to £12,000 in total savings. However, the stock market also offers compounding returns from both dividends and capital gains. On average, UK shares have delivered a long-term average annualised gain of around 10% when looking at the FTSE 250. For reference, this figure’s closer to 8% for the FTSE 100.

At a 10% annual return, investing £100 every month for a decade yields a portfolio worth £20,485 when starting from scratch. Following the 4% rule, that translates into a second income of £820.

Obviously, that’s not a life-changing sum. But patience can go a long way along an investing journey. What if an investor continues to invest for 20 years? Well, then the portfolio grows to £75,940, or £3,038 passive income.

What about 30 years? That translates into a £226,050 portfolio from just £36,000 of savings, generating an extra £9,042 passive income each year. And for those able to wait a full 40 years, an investor’s nest egg could reach £632,408, generating a retirement income of £25,296 that would continue to grow, year after year.

Index funds are a terrific way to grow a portfolio on autopilot. However lately, the FTSE 250 hasn’t been keeping up with its historical average. In fact, over the last 15 years, returns have been lagging even the FTSE 100 at just shy of 6%. For reference, 40 years of compounding at 6% only yields a £200,000 portfolio – a third of what an extra 4% in annual gains can deliver over the long run.

This is where stock picking offers a solution. Building a custom portfolio comes with greater risk and involvement. But it opens the door to higher, potentially market-beating gains.

Take Future (LSE:FUTR) as an example. The media giant has had some rocky times of late with an initially underperforming expansion into the US market. Nevertheless, despite its recent woes, the value creation for shareholders has been exquisite, with an average total annualised gain of 17% over the last decade.

Given that its market capitalisation is only slightly over £700m, there’s still ample room for growth. And this is also backed up by management’s ambitions to capture more market share in America, which could see its audience sizes for its Fashion & Beauty, Homes, and Wealth verticles surge.

Of course, there are never any guarantees. And as shareholders have recently seen, a failure to deliver on ambitious targets is a big reason why the Future share price is still down over 80% from its 2021 highs. This goes to show that even with a strong business, investments can underperform if bought at the wrong price. As such, stock picking may fail to deliver the expected results.

Nevertheless, the business does appear to be getting on track to hit its 2026 organic growth targets. Although with a recent change in leadership, Future might be best left on an investor’s watchlist. At least for now.

Regardless, with prudent decision-making, robust diversification, and consistent monthly saving, even a small investor can potentially earn a substantial second income in the long run.