How much savings would i need for this intrest

rictus123

If i wanted to eventually live off of savings, how much savings would i need for say £1800 a month intrest?

Lokolo

Assuming 4% interest; £540,000

However this would have less spending power each year due to inflation.

Don't forget, by the time you could live off savings, you won't spend as much (mortgage etc.)

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I have not taken tax into account in this. 20% tax means £675,000 before.

rictus123

Would you have to pay tax though? If you didnt work?

Is there anyone on here who does this? Lokolo sorry i hope you dont mind me asking, pm me back if you dont want to say on here but what sort of financal position are you in? I take it you are a student(whats your job if you have one)from your sig as it says by graduation. Where do you put all your money and is there anything in perticular you will be saving for(besides the car)?

JoeCrystal

Well... if the bank withheld 20% tax on your interest and yield £1,800 per month, then you would need on

0.5% interest rate = £5,400,000
1% interest rate = £2,700,000
2% interest rate = £1,350,000
3% interest rate = £900,000
4% interest rate = £675,000
5% interest rate = £540,000

:beer:

EDIT: I am too late...

amcluesent

I did some back of an envelope calculation that, having paid off the mortgage, I could get by on £12,000 unearned income. Retiring at 50 looks possible

Lokolo

rictus123 wrote: »

Would you have to pay tax though? If you didnt work?

Is there anyone on here who does this? Lokolo sorry i hope you dont mind me asking, pm me back if you dont want to say on here but what sort of financal position are you in? I take it you are a student(whats your job if you have one)from your sig as it says by graduation. Where do you put all your money and is there anything in perticular you will be saving for(besides the car)?

Yep. Have you got a job yet? Everyone gets an allowance where they can earn some money before they pay tax, currently its £6,475. Anything over this is taxed at 20%.

Savings interest is a little different, but its always good to consider tax.

- Financially I am lucky but also good I get given gifts by grandparents for living costs, plus I take out student loan.
At university I worked for them as a student ambassador, plus summer work at Dominos (woo). Currently I am working at a company for my industrial placement year for my degree, which I am earning £17k.
All my money goes in ISA accounts.

My main aim is to save £80-100k by the time I am 26/27. This is so I can own my own business.

noh

amcluesent wrote: »

I did some back of an envelope calculation that, having paid off the mortgage, I could get by on £12,000 unearned income. Retiring at 50 looks possible

I'm 53 have an "unearned income" that would be about 1200 a month after tax.
Tried the retirement thing for 6 months but found with that level of income I didn't have enough income to enjoy the time I had spare.
So got another job currently 3 days a week.

Lokolo said:-
Assuming 4% interest; £540,000

However this would have less spending power each year due to inflation.

Don't forget, by the time you could live off savings, you won't spend as much (mortgage etc.)

I found I needed more money when not working simply because I had more time to spend it!