Could anyone tell me..

wooder

could anyone tell me...

if I have 77000 shares and the price rises at an annual compounded rate of 5% - if I wanted to sell all the shares over the next 25 years but keep the amount I receive each year the same how would I work that out?

The criteria is

77000 shares
sold once annually for the next 25 years
share price increasing at exactly 5% compounded every year

If I just divide the 77000 by 25 then I would sell 3080 every year - but if the share price is increasing every year then I would be receiving more funds at the end than at the beginning, which I don't want, so how do I work out how many to sell each year to keep the amount the same? Is there a formula I can put into Excel?

thanks

ischofie1

If we assume the shares are £1 each, IE £77K in total, then withdrawing £448.7 PM would mean you'd have the grand total of £8 ish left after 25 years.
You need to pro-rata your actual withdrawal relative to your actual total share holding.

Google "compound interest calculation" and go to the calculator site then you can play around. Select the following:-

Currency - £
Base amount -

ischofie1

Sorry didn't finish off.

Currency - £
Base amount -£77000
Annual interest - 5%
Calc period - 25 years.
Reg monthly withdrawal - £448.7
Compound interest - Daily.

Regards.

mgdavid

wooder wrote: »

could anyone tell me...

if I have 77000 shares and the price rises at an annual compounded rate of 5% - if I wanted to sell all the shares over the next 25 years but keep the amount I receive each year the same how would I work that out?

by 'amount' do you mean number or value?
If you mean number then it will give you less each year due to inflation.
Also have you taken dividend income into account?

wooder

mgdavid wrote: »

by 'amount' do you mean number or value?
If you mean number then it will give you less each year due to inflation.
Also have you taken dividend income into account?

I meant actual number - I've not forgotten to factor in inflation, and I'm also aware that I'll probably want to front load the withdrawals as I imagine I won't need as much when I'm in my eighties (assuming I get there of course) as I will when in my sixties. Dividend income is already built into the fund price

cheers

ischofie1

Expressed as an annual %.
With 5% returns you could draw down at a rate of 6.993% to fully exhaust the pot after 25 years.
The means if the investment was worth say £100K, you could draw £6,996 PA or £582.75 PM.