Could you retire on £1m

[bernabias home shirt]

Yes you could
.

Thats all i need to know!

 

[SWP's back]

Yes you could, if you are happy to rent and live off £50k per year tax free (Equivalent to earning arounf £80-90k).

You would just invest it into a Income Distribution Bond (simple Capital Investment Bond with option to take yearly, bi-annual, quaterly or monthly distributions), you are allowed to take 5% per year (monthly if you wish) tax "free" as it is deemed a return of capital. Historical returns see 7-9% pa, so your capital is not eroded, over the long term and the money would easily outlast you so long as you stick to 5% pa.

-- Fri Dec 02, 2011 11:42 am --

No bro the only reason you are able to "live" on what you earn is because you never got it all in one lump sum.

£1000000 is easy to spend you would buy family gifts, spend on things you would never have bought before. Its not suprising that lottery winners spend it all because they get it all in one go

Now if its a million over 30 years at 30 odd thousand a year then sure I can live on it but not retire on it and id be in my late 50s when it finished so id keep working.

But they don't though. Most look after it very wisely after taking advice. Only twats spend it all and have none left.

-- Fri Dec 02, 2011 11:43 am --

For it to last you and your family would have to live on about £25 000 a year for the next 40 years.

You're figures are wrong "bro".

-- Fri Dec 02, 2011 11:44 am --

Not a dream
a delusion

Invested a million would bring in £30K before tax as already said.
Take the £30K as income and your million is deteriorating in value at (currently) over 5% a year.

What? Absolute and utter bollocks. Complete horse shit mate.

Re the income bond. Assuming that the bond did manage a return of 7%, you take 5% of that leaving a growth of 2% on the initial capital invested.

What would that make the bond worth in, say, twenty years? Would 5% of that value buy you the same as it would today. Would your initial investment in 2031 be able to buy you what a million would today? This is assuming that returns have exceeded withdrawals - historically has this always happened?

What has the average investment bond returned the last five years? Would you advise that someone invest 100% of their capital in one type of risk based investment - nothing in no risk savings accounts?

Surely it'd be better to spread the capital into various risk categories and investment types rather than all the eggs in one basket?

About to go into a meeting, so I'm my car on my phone but I can answer each of your points very satisfactorily and will do in a couple of hours.<br /><br />-- Fri Dec 02, 2011 12:43 pm --<br /><br />

Yes you could, if you are happy to rent and live off £50k per year tax free (Equivalent to earning arounf £80-90k).

You would just invest it into a Income Distribution Bond (simple Capital Investment Bond with option to take yearly, bi-annual, quaterly or monthly distributions), you are allowed to take 5% per year (monthly if you wish) tax "free" as it is deemed a return of capital. Historical returns see 7-9% pa, so your capital is not eroded, over the long term and the money would easily outlast you so long as you stick to 5% pa.

-- Fri Dec 02, 2011 11:42 am --

No bro the only reason you are able to "live" on what you earn is because you never got it all in one lump sum.

£1000000 is easy to spend you would buy family gifts, spend on things you would never have bought before. Its not suprising that lottery winners spend it all because they get it all in one go

Now if its a million over 30 years at 30 odd thousand a year then sure I can live on it but not retire on it and id be in my late 50s when it finished so id keep working.

But they don't though. Most look after it very wisely after taking advice. Only twats spend it all and have none left.

-- Fri Dec 02, 2011 11:43 am --

For it to last you and your family would have to live on about £25 000 a year for the next 40 years.

You're figures are wrong "bro".

-- Fri Dec 02, 2011 11:44 am --

Not a dream
a delusion

Invested a million would bring in £30K before tax as already said.
Take the £30K as income and your million is deteriorating in value at (currently) over 5% a year.

What? Absolute and utter bollocks. Complete horse shit mate.

Re the income bond. Assuming that the bond did manage a return of 7%, you take 5% of that leaving a growth of 2% on the initial capital invested.

What would that make the bond worth in, say, twenty years? Would 5% of that value buy you the same as it would today. Would your initial investment in 2031 be able to buy you what a million would today? This is assuming that returns have exceeded withdrawals - historically has this always happened?

What has the average investment bond returned the last five years? Would you advise that someone invest 100% of their capital in one type of risk based investment - nothing in no risk savings accounts?

Surely it'd be better to spread the capital into various risk categories and investment types rather than all the eggs in one basket?

About to go into a meeting, so I'm my car on my phone but I can answer each of your points very satisfactorily and will do in a couple of hours.

 

[cynghordy]

yes and when i win the lottery tomorrow I will prove it

 

[ChesterRdBlue]

My plan would be to pay the remainder of mortgage off and rent the house, buy a new house for about 300-400k, then buy some more properties and rent them out, living off the rents and still have a million in property. If that is possible, god knows, but the chance of me ever getting a million is virtually non existent, so not an idea I am ever likely to explore.

 

[BimboBob]

moving on from the $165m lotto win thread, could you retire off £1m?

I think i quite eaisily could and i'm only in my 20's

what about anyone else?

i reckon i could, but apparently to be classed as a millionaire (without having to work again) you've gotta have £4million now because of the current financial climate

There was a survey done by Camelot about 5 years ago.They reckoned £8m was the threshold for a millionaire lifestyle and the means to maintain said lifestyle.
Roughly broken down.....
2m on houses
1/2 m on cars
1m on financial and charitable gifts
1/2m Holidays and presents etc etc
4m with interest to maintain the above

Charity? 1/2m on cars? 2m on a house? Fucking hell. It's all those desperate scousewives...the orange slags.

 

[Mayor West]

Easily! I'm 27, have no mortgage and we live off £18.5k a year now, saving about £4k a year! Im a minimalist you see and HATe frittering money away on absolute shite, every purchase is really thought about. £1m may as well be a billion to me!

 

[markyboyblue]

I would do it on 1/2 million, just buy another house to live in for say £200k then rent my current one out. Buy a decent car, nothing fancy though. Then i'd be around to help out with the kids more. Seriously too we would consider fostering children which would be extra income and a really good way of giving something back. We wouldnt live in luxury for all our lives but it would be a very good contented life where you werent worrying about meaningless things like you do in work

 

[Ronnie the Rep]

Easily! I'm 27, have no mortgage and we live off £18.5k a year now, saving about £4k a year! Im a minimalist you see and HATe frittering money away on absolute shite, every purchase is really thought about. £1m may as well be a billion to me!

We! you mean more than one of you? how do you manage? are you homeless? :-)

 

[BlueMoonWalker]

Should be quite easy if you put the money into a savings account that paid monthly interest, at about 5% annual then your looking at £50000 a year to live off minus tax of course.

 

[SWP's back]

Re the income bond. Assuming that the bond did manage a return of 7%, you take 5% of that leaving a growth of 2% on the initial capital invested.

What would that make the bond worth in, say, twenty years? Would 5% of that value buy you the same as it would today. Would your initial investment in 2031 be able to buy you what a million would today? This is assuming that returns have exceeded withdrawals - historically has this always happened?

Ok here goes. Assuming the bond out grows the withdrawls by 2% pa, in twenty years the original £1000,000 would be worth £1,491,800. That may or may not worth more than it is now in terms of real value but it would be close either way and certainly have avoided the vast majority of any capital erosion, especially when compared with deposit based accounts which never will.

What has the average investment bond returned the last five years?

The "average" bond has returned just over 6% pa over the last 20 years. THSP managed fund has averaged 9.7% over the last 20 years (a period more tumultuous than any other in history, including black wednesday, dot com bubble burst, 9/11, Iraq/Afghanistan and the credit crunch), so it would be fair to say that similar returns (if not possibly greater) could be forecast going forward.

A 20 year time period is far more reliable to look at than 5 years as the investment would be for a minimum of 20 years to make best use of the annual 5% allowance and allows for good years with 30% growth and bad years with up to 15% loss.

Would you advise that someone invest 100% of their capital in one type of risk based investment - nothing in no risk savings accounts?

The question was "can one retire on £1m", not what is the best advice for someone that has £1M in liquid assets mate.

The FSA best advice is to keep 3x months expenditure in very liquid emergency funds to cover unexpected expenses.

Surely it'd be better to spread the capital into various risk categories and investment types rather than all the eggs in one basket?

A capital investment bond of £1M could, in theory be invested into 200 different funds, and cover a veritable smörgåsbord of risk and investment strategies. Just because it is all ring fenced under the same policy number does not affect that. You could have funds that invest in cash, derivatives, bonds, gilts, equities, property etc (ie all the asset classes) and one would obviously pick the funds to match the investors unique risk profile, goals and aspirations.