Investing a sum of £2m for the future for a novice

Chantellesquandry

I need to understand the options for investing £2m for the future living costs. The sum is to cover the care and living costs of a person from now for the next 40 years.

Although I will not be investing the sums myself I don't want to be bamboozled by an IFA, having worked for financial service providers previously (not in any financial capacity) I was often shocked at behaviours so have some trust issues!

I've looked at the excellent Which Investment Trust . com site but the learning curve is step - I'm in a creative industry so find it all a bit confusing.

Is it even possible to invest £2m and live off this for 40 years? We live offshore if that helps.

eskbanker

Chantellesquandry wrote: »

Is it even possible to invest £2m and live off this for 40 years? We live offshore if that helps.

It obviously depends on what your living costs are and how long you live for but making the assumption that you can keep pace with inflation in low-risk investment or even saving, then you'd have £50K/year or the equivalent on a straight drawdown basis, which is enough for many to live on.

Chantellesquandry wrote: »

Although I will not be investing the sums myself I don't want to be bamboozled by an IFA, having worked for financial service providers previously (not in any financial capacity) I was often shocked at behaviours so have some trust issues!

If you accept that you won't be investing the sums yourself then you presumably plan on getting some advice and/or assistance so are you anticipating overcoming your trust issues, perhaps by recommendations and/or talking to multiple IFAs? If you're offshore then this may affect your options, what is such advice like where you are?

Linton

If you won't be investing yourself who will be? For that amount of money I strongly suggest you work with a specialist regulated independent professional advisor, both as regards appropriate investments and minimising tax. Such people can reasonably readily be found in the UK, but the situation in your country of residence may be rather different. I assume the money is for someone unable to provide for themselves - in that case you not only have to do the right thing, you should be seen to be doing the right thing.

Very broadly it seems reasonable to assume that that on average, assuming you are broadly invested in equities (shares) probably through funds, you should be able to take an initial 3.5% out of the pot and increase that with inflation each year fairly safely - so £70K/year gross.

However that is assuming average conditions, and the next 40 years may not be average.

Firecalc will give you some idea of what has happened in the past. It's based on US data but the basic principles would apply and the results would be in the right ballpark.

Credit-Crunched

Would you like some potatoes with your spam sir?

colsten

I don't trust an IFA who can show me his FCA accreditation but I will trust a bunch of total strangers on the Internet. :rotfl:

Chantellesquandry wrote: »

I'm in a creative industry

creating spam?

I wonder whether Ladbrokes will take bets on how many more newbies will pop up singing the praises of a particular firm just ahead of when that firm runs an event with an investment house.

IronWolf

With this amount of money you could easily find an advisor willing to look after it for you for a fixed fee.

Or you could just stick it all in a tracker fund if the dividends will cover the costs of care per year.

Chantellesquandry

I thought that MSE forums were a place where people could come and seek advice and guidance from people who might be able to share their experiences or knowledge. I hope that is still the case and not a place where people make unfounded, rude and inappropriate comments in response to a query.

This is a genuine request - I am trying to do the best for my disabled child because one day I won't be here to support him and I am genuinely concerned about making a good investment for him so he will be well cared for in his old age.

I only mentioned the website because others on posts on this forum suggested it was a good place to get an understanding of financial investments.

This is a very stressful time for me I have to make the right decision so I would be grateful if you bullies could find some decency and stop behaving like trolls.

Chantellesquandry

Hi Linton

Thanks for constructive reply - I will of course be using a professional to invest the money I couldn't possibly do it myself. I think part of my worry is that I am unsure whether the industry is as tightly regulated here so the potential to loose money is greater, particularly mis-selling. I don't think there is (or there certainly wasn't) a requirement to be insured in case you lost everyone's money. There have been some terrible stories here and our Financial Service Commission does not have the same power as the UK one.

Thanks again.

TCA

Oops. Mis-post.

TheTracker

Such heart warming responses. What ills have become us to be so negative? Of course there is a chance a newbie is a spammer, but pre-accusing such behaviour isn't worth the risk of being wrong, as I suspect is the case here.

£2m should get you 45-80k pa, sensibly invested, before tax.

You are not alone in distrust of IFAs. Be wary.

societys_child

The only case I know of which may be similar to this, the millions were put into a trust for the ongoing needs of a child disabled from birth.

The parents had no say in how it was invested and they applied to the trust for funds to cover needs as the child grew.

Unfortunately the child passed away in it's teens and the trust was closed.
I believe remaining funds were returned to the insurance company.