Could you retire on £1m

[scowy68]

Here's how i'd do it,jack the current job in,take time out to travel a bit,say 5 years or so,then go back to work,but not full time.

 

[JoeMercer'sWay]

if i won £1m I put a couple of grand aside for less fortunate BMers ie. Billy_Big_Spuds for donations to them as and when they need help.

I'd also hire Sweep to make sure my money was safe and well looked after.

I'd give to my family on a "as needed" basis rather than give them a wad of cash to waste.

I'd then live normally and keep plenty safe so that I always had to plenty to fall back on.

Would you spoil me JMW? Paris, maybe Rome?

maybe ;).

and my fees and stuff can be paid off as they normally would be, there'd be no pressure to find a job but if and when I found something I enjoyed doing I can pay it back then.

 

[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.

My point was that DLBH suggested something that wasn't really the way to maximise potential income - and you came back with something that wouldn't be best advice either. I'm pretty sure you wouldn't advise someone to invest 100% of their capital in one type of bond either with various risk funds within it or with different companies - and I did originally say one typeof investment not a single bond. I am well aware of the fact that you can have multi fund investments.

You said "The question was "can one retire on £1m", not what is the best advice for someone that has £1M in liquid assets mate". I don't see your point with that statement. What are you taking the 'on £1m' to mean? I was assuming that they would be getting their income from a best advice portfolio designed around their circumstaces. Were you saying that there is a bond available that would give £50k (based on 5% p.a. potentially tax free withdrawals) even though in reality you wouldn't actually put eveything into it?

Depending on spending habits someone comfortably retire on DLBH's 3% gross income and another would be dipping into their capital within a few months with your more generous potentially tax free 5%.

I just though you were quick to ridicule his suggestion especially as it wasn't wrong - unlike the 250k a year suggestion - I hope that was just an accidental additional zero rather than a pre LAUTRO/FSA type of quote.



I hope this makes sense as I'm trying to entertain a three year old and make our tea at the same time.

My suggestion is still the best from the thread in the long term. Nothing risky in only having one type of investment, given a good fund spread.

5% with no tax is fantastic and there's no way your capital would be eroded over a 20 year timescale. There would be bad years for sure, but so long as society survives, the good years would outweigh them.

I will ridicule anyone who suggests a deposit based solution for £1,000,000. It would be crazy. Less return and more tax. Not exactly what one would define as best advice.<br /><br />-- Fri Dec 02, 2011 8:17 pm --<br /><br />Edit: what's wrong with investing in one type of bond Dave? Nothing in the fsa rulebook that suggests it can't be classed as best advice.

 

[gaudinho's stolen car]

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.

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.




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.


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.

My point was that DLBH suggested something that wasn't really the way to maximise potential income - and you came back with something that wouldn't be best advice either. I'm pretty sure you wouldn't advise someone to invest 100% of their capital in one type of bond either with various risk funds within it or with different companies - and I did originally say one typeof investment not a single bond. I am well aware of the fact that you can have multi fund investments.

You said "The question was "can one retire on £1m", not what is the best advice for someone that has £1M in liquid assets mate". I don't see your point with that statement. What are you taking the 'on £1m' to mean? I was assuming that they would be getting their income from a best advice portfolio designed around their circumstaces. Were you saying that there is a bond available that would give £50k (based on 5% p.a. potentially tax free withdrawals) even though in reality you wouldn't actually put eveything into it?

Depending on spending habits someone comfortably retire on DLBH's 3% gross income and another would be dipping into their capital within a few months with your more generous potentially tax free 5%.

I just though you were quick to ridicule his suggestion especially as it wasn't wrong - unlike the 250k a year suggestion - I hope that was just an accidental additional zero rather than a pre LAUTRO/FSA type of quote.



I hope this makes sense as I'm trying to entertain a three year old and make our tea at the same time.

My suggestion is still the best from the thread in the long term. Nothing risky in only having one type of investment, given a good fund spread.

5% with no tax is fantastic and there's no way your capital would be eroded over a 20 year timescale. There would be bad years for sure, but so long as society survives, the good years would outweigh them.

I will ridicule anyone who suggests a deposit based solution for £1,000,000. It would be crazy. Less return and more tax. Not exactly what one would define as best advice.

-- Fri Dec 02, 2011 8:17 pm --

Edit: what's wrong with investing in one type of bond Dave? Nothing in the fsa rulebook that suggests it can't be classed as best advice.

I reckon you might have it wrong here.

 

[SWP's back]

Well seeing as it's my job and I'm certified, diplolma'd and chartered, I'm not.

I deal with real people wanting to invest and maximise income for these amounts on a regular basis.

 

[Blue Maverick]

I think you can retire on £1million if invested properly however I don't think you can live the lifestyle of a millionaire that you think you could, for that you would need a few million.

 

[mcfc_nick]

course you can, but stick it all on black and live on £2 mil instead!

 

[Jackson-ctid]

I know what you mean GSC, but I think i could eaisly retire on £1m.

I have been thinking about it.

I would buy a nice £500k gaff somewhere in Worsley, but I would get it on a Mortgage over say 15years. The intrest alone would pay the monthy payments. then in 15 years I would still have a large lump sum + a £500k house paid for.

pay off the mortgages for my 2 sisters and mam and dad, and throw a few quid their way.

I would also by myself a nice little villa in Spain or the Canaries and spend my time taking Ryan air flights between them.

add a couple of nice cars (again on finance) Range Rover and Golf R32 for over here and a nice 3 series BMW at the villa.

a couple of corperate season tickets at City

and I think I would open a couple of small businesses maybe car valleting, outside catering, contract cleaning, landscape gardening etc. Just to keep busy. and put a couple of close friends / family in charge of them.

One thing is for certain, I certainly wouldnt be working again!


thats my little dream!

Not a hope in hell of doing all of that on a million. You're looking at around 700k for the property and cars. Pay off the mortgages of your friends and family, that at least takes that to 800k. Then your businesses would cost you a packet. Not to mention that you want to buy all of this in a way that will cost you more money in the long term.

It's a myth that a million pound will give you untold riches in interest.

 

[LoveCity]

I reckon I could. I live a very inexpensive lifestyle besides City. I don't drive, drink, or smoke which helps but I also never buy things like DVDs and CDs anymore and just treat myself to a PC game and book every now and again. No interest in living in a huge house either, I'd rent an inner city pad for £600/month or so.

 

[crizack]

yes. id just pay for lots of prostitutes, one every week.