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What would you do if you had £1m and you wanted to setup income generating asset(s)?
pizza_lord
Posts: 48 Forumite
What is a realistic return?
6 percent pa?
8 percent?
What would you invest it in
Mutual funds?
Property (if so then in what country)?
Bitcoin?
Peer to peer lending (as a lender)?
Find an investment fund?
I am looking for a steady monthly return here. What would you do?
6 percent pa?
8 percent?
What would you invest it in
Mutual funds?
Property (if so then in what country)?
Bitcoin?
Peer to peer lending (as a lender)?
Find an investment fund?
I am looking for a steady monthly return here. What would you do?
0
Comments
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How long does it have to last?
Do you want to preserve any capital by the time of death?
4% is a rule of thumb for a safe withdrawal rate. Take away 0.3-0.5% for fund fees and that's 3.5%. Many people feel 4% too adventurous particularly for early retirement. I'm planning about 3.3% for now.0 -
£1m to invest - a nice problem to have!
I would avoid higher risk unregulated investments such as bitcoin and peer to peer. Yes you might turn your £1m into £2m but you might end up losing a huge amount!
With a diversified equity portfolio you should be able to generate £40,000 - £50,000 income a year.
There is an interesting calculator on http://www.firecalc.com/ where you can input your portfolio value, annual income you want to generate and time period in years. It then shows a graph of how your income would have grown on the US stockmarket over every starting point since 1871
Over every time period you could take 4% income a year for 30 years without your money running out. But over several time periods you could take 8% income a year but this is obviously more risky!0 -
Has to last at least 30 to 40 years
Yes I want capital at time of death0 -
How do I put together this diversified portfolio?
I dont want to manage a portfolio myself. My attemts at investing in the stock market in the past were horrible (dotcom bubble etc) and I would like someone to manage it for me
Perhaps a mutual fund or just invest in something that tracks the S+P 500 perhaps0 -
pizza_lord wrote: »How do I put together this diversified portfolio?
I dont want to manage a portfolio myself. My attemts at investing in the stock market in the past were horrible (dotcom bubble etc) and I would like someone to manage it for me
Perhaps a mutual fund or just invest in something that tracks the S+P 500 perhaps
See a few local IFAs found through unbiased.com, come to this forum to share the quotes, there will be a range.
And/or throw it into a well balanced multi-asset fund like Vanguard LifeStrategy 60 while you make up your mind which is diversified across most of the world. The S+P 500 is just a portion of the world, albeit a significant one.
How old are you?
How healthy are you?
What other pensions do you have?
What other savings do you have? Cash? ISAs?
Do you own your house?
Are you still working?
Does this money have to cover other people? Wife, kids, ...
How many years NI do you have for state pension?
Are you a troll?
£1m is a very round sum of money, and a first poster at that ...
Finally, £1m isn't a massive amount of money to retire on. It'll do most people nicely, but it is not a fortune.0 -
TheTracker wrote: »How old are you?
I am in my 40sTheTracker wrote: »How healthy are you?
In have no health problemsTheTracker wrote: »What other pensions do you have?
Nothing significant.TheTracker wrote: »What other savings do you have? Cash? ISAs?
A small endowmentTheTracker wrote: »Do you own your house?
Just sold it. That's where I got the money from.TheTracker wrote: »Are you still working?
I have a small business but it's not generating any significant income right now. Hopefully that will change over the coming years but in the meantime I need to use this pot of cash to invest in cash generating investment(s).TheTracker wrote: »Does this money have to cover other people? Wife, kids, ...
NoTheTracker wrote: »How many years NI do you have for state pension?
Not planning to take state pension.TheTracker wrote: »Are you a troll? £1m is a very round sum of money, and a first poster at that ...
It's actually less than a million but with the endowment it's not far off so I thought I may as well round it up.TheTracker wrote: »Finally, £1m isn't a massive amount of money to retire on. It'll do most people nicely, but it is not a fortune.
I know hence the need to use the asset to invest in something that will grow and yet still generate enough for me to live off.0 -
When you mentioned setting up income generating assets I was assuming you were closer to retirement age and looking at a safe level of retirement income to generate.
Obviously with a longer time horizon and wanting the investment to grow over time ( £1m when you reach retirement age isn't going to have the same spending power as it does now) you would need the capital to grow and so I would restrict any income withdrawals to less than 4%
A diversified tracker fund works just as well for larger amounts but I would agree with a previous comment that it is at least worth speaking to a few IFA's to see what they suggest.0 -
Question also asked elsewhere, and one wrinkle is that OP is an ex pat.I am not a financial adviser and neither do I play one on television. I might occasionally give bad advice but at least it's free.
Like all religions, the Faith of the Invisible Pink Unicorns is based upon both logic and faith. We have faith that they are pink; we logically know that they are invisible because we can't see them.0 -
Assuming you are going to be investing long term my strategy would be to split the £1M into two portfolios, one for income generation and another for long term growth. Specifiy how much income you need per year and multiply that by 25 to determine the size of the income portfolio. The rest goes into the growth portfolio.
Now it's "simply" a matter of defining appropriate and probably very different strategies for the two portfolios.
For the income portfolio you should identify as many types of income producing asset as you can. These could be individual share holdings, a range of funds covering as much of the globe as possible, bonds, P2P lending and anything else you can think of. Then it's a matter of choosing the appropriate specific assets.
The long term growth portfolio should again be highly divversified but can be overweight in riskier areas. Perhaps more small companies and niche sectors than you would be happy with if you did not have the income portfolio.
Over time the % allocated to your two portfolios will change so you can switch more money into income prioduction when the growth portfolio is high and vice versa when prices are cheap.0 -
Superscrooge wrote: ȣ1m to invest - a nice problem to have!
I would avoid higher risk unregulated investments such as bitcoin and peer to peer. Yes you might turn your £1m into £2m but you might end up losing a huge amount!
P2P is regulated by the FCA. Like S&S it isn't subject to the FSCS.0
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