Passive income and long-term wealth creation are two of the most powerful reasons to invest in the stock market. And the good news is that you don’t need a vast sum to get started.

Even a modest £5,000 ISA can quietly snowball into something genuinely impressive over time. Here’s how.

Investing with index funds

For most investors, an index fund is the natural starting point. At the long-run average return of around 8% annually, a £5,000 ISA could grow to around £11,098.20 over 10 years when piggybacking the FTSE 100.

Following the 4% withdrawal rule, that pot’s enough to generate a monthly passive income of just £36.99.

Having almost £40 turn up in a bank account each month isn’t life-changing, but it’s still a pretty handy sum to help tackle the rising cost of living.

Yet for investors willing to do the work and pick individual stocks carefully, the numbers can look very different indeed.

Can smart stock-picking change everything?

Premier Foods (LSE:PFD) is a solid example of when prudent stock-picking can deliver substantial results.

Over the last decade, the owner of household brands including Mr Kipling, Bisto, and Ambrosia has delivered a staggering 560% total return. That’s the equivalent of earning 18.8% a year – more than double the UK stock market average.

In terms of money, an investor who put £5,000 into Premier Foods shares 10 years ago is now sitting on roughly £32,293.41 today – almost three times what index investors have enjoyed over the same period. And when applying the same 4% withdrawal rule, that translates into a monthly passive income of £107.65.

This transformational performance didn’t happen by accident. Premier Foods spent years cutting debt, reinvesting in its core branded portfolio, and began expanding its reach into international markets including North America and Australia to enthusiastic new audiences.

The result? Premier Foods went from a heavily indebted turnaround story to a cash-generative, dividend-paying compounder. And the market has rewarded that journey handsomely.

So can that momentum continue from here?

Is it still worth considering today?

The bull case behind Premier Food shares remains credible. The company continues to grow its international revenues at a double-digit rate, its branded portfolio commands genuine pricing power, and its balance sheet is now in far better shape than it was a decade ago. And with international expansion still in an early innings, the growth story looks far from over.

There are risks to weigh though. The UK grocery market’s fiercely competitive, and cost inflation across ingredients and packaging has been squeezing margins throughout the sector.

Any meaningful softening in consumer spending on branded food products could slow the top-line growth. And following a decade of exceptional returns, investor expectations are higher, leaving less room for error.

Nevertheless, for long-term investors seeking to build a sustainable income inside an ISA, Premier Foods strikes me as a genuinely promising opportunity even after its impressive run. That’s why I’m already considering this business for my own passive income portfolio.

Should you invest £5,000 in Premier Foods Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Premier Foods Plc made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.