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Anonymous101

rnj wrote: »

I've found myself in a similar position where I can retire comfortably, in my 30's and no kids, after death of my partner but I still feel I need to go to work just to be productive. I was bored watching daytime tv.

When I said "no longer work for money" I wasn't thinking of sitting in front of the TV all day. I was thinking of starting a business or perhaps doing a job part time that you think would be rewarding but on your own terms. "Work" can take many forms and when you don't necessarily need the money it could open up many opportunities.

rnj

Yea, you certainly need to do something and I was exaggerating a bit when I said watching TV all day. I've travelled a lot already (with more planned obvs) so going on a "gap" year wasn't really a consideration for me. I just found while off work my friends of the same age were all in work so I had not much to do. My work isn't particularly stressful either.

I think I read somewhere else that by retiring in your 30's you give up your biggest potential earning asset, your youth.

But I guess everyone's circumstances are different and while I can retire I didn't have £2-3m in which case I probably would stop "regular" work.

fred246

With £2 million IFAs will be all over you. They will be your best friend ever. "Got a bit of money. Let me help". So get loads of FREE initial consultations. They will quote you a percentage. eg 2%. That would work out at £40k. So insist on an hourly rate. They would like to charge more than £200 an hour but find it hard to justify. Then ask them how many hours it would cost. £40k would be 200 hours or 5 weeks. Surely they couldn't take 5 weeks to fill out a few forms. "I was staring out of the window looking for inspiration for 2 weeks." Get them to put their hourly rate and approximate time in writing. They will still make loads of profit but hopefully you could get an IFA that you trust at a price that won't break the bank.

atush

It is more than filling out a few forms.

But I agree I would not go for a % fee in 2M but instead ask for a fixed fee based on the hours work it would take.

If you go for ongoing advice, it should be 0.5% or less on that amount.

fred246

Yes £10k should be adequate to glance at it once a year. If you were on an hourly rate you could ask if it takes 50 hours to glance at it.

JoeEngland

amazon1234 wrote: »

Thanks for that. I know £2 million isn't what it used to be but I thought it would give an income of slightly more than 40k. Better not give up the day job if that's the case!

It depends on whether money or time is more important to you. Maybe you could compromise and work FT for another 5-10 years, or work PT instead.

dmelife

You will get lots of differing views here. Be carful to spot the bias and remember that whilst there are some on here who will ‘recommend’ that you do this that or the other, it’s without any comeback if it turns out to be crap advice.

There are IFAs and IFA haters, active and passive persuaders, and those who would spend the rest of their life worrying about managing this much capital without help, and those who think they are expert enough because they have read a few blogs.

Whilst I tend to agree that avoiding SJP is best, I wouldn’t worry too much about what an adviser calls themselves. I am an IFA, I could also use the title Weath Manager/Investment Manager, and I have discretionary powers, but the bottom line is being independent.

I believe we cover our fee through the value of our advice, tax efficiencies, increased performance vs their old portfolio. We run active and passive and our active consistently outperforms after taking account all fees. It’s true that many funds to not beat their benchmarks but many do. Personally I don’t think £2m belongs in an index tracker but others do.

Best thing you can do is meet with a few Independent advisers, get a feel for which ones can really add value and that you feel you can work well with. Chat to them about different ways of paying, ongoing servicing, transactional etc. Personally if they can’t cover 0.5% pa through increased performance vs what you would achieve without them, then I would question their investment management skills. Many IFAs are not experts in investment management and some outsource that and add another layer of cost. This is not likely to be to your advantage.

Also, don’t forget the value of being able to enjoy your wealth without worrying about it!

DT2001

fred246 wrote: »

Yes £10k should be adequate to glance at it once a year. If you were on an hourly rate you could ask if it takes 50 hours to glance at it.

I know my IFA does review my portfolio regularly, has an annual meeting and answers my emailed questions throughout the year. Definitely more than a glance.
I invested for myself for many years, riskily but overall successfully however I value my IFA and his investment strategy.

ukdw

steampowered wrote: »

There are two fundamental problems with your investment strategy:

- Inflation. Remember that £1 million today is worth less than £1 million next year. If your investment generates an income of 4% a year after management fees and tax, but inflation is at 2%, your "real" income is 2% - not 4%.

- Investment risk. If you try to protect your capital you will minimise your returns. As you are investing for a 40+ year period, you are probably going to be much better off taking a long term view, which means accepting that in sensible long term investments capital values are going to fluctuate up and down from time to time.

Is it really the case that you need to subtract the 2% inflation from the 4% income to get real income? - if you multiplied instead then the 2% inflation would make real income a much more healthy 3.92%

Mickey_seabright

I was puzzling over that as well, but I think that to inflation-proof the original investment, that has to increase in line with inflation each year. So 2% of £1M is income, and the other 2% maintains the real value of the £1M.