Can I retire in a years time at 57??

dave_hendy

This has been useful, so far you have persuaded me to look into s&s isa's for future tax years and to look into IFA.


Anything else you can suggest, otherwise thanks for all the comments?

cfw1994

dave_hendy wrote: »

I am sure this is true. I just left it as this as I don't know enough to pick anything else that might be worse.

If you plan to take ('crystallise') that pot very soon, you may not want to move out of the default life-styling: imagine if the markets crashed 20-30%, & your theoretical 270K became closer to 200K:eek:
You could perhaps shift *some* of it to 'riskier' funds, but perhaps not all.
I did the same with ours many years ago - with Aviva, we have a choice of about 80 funds, and I've spent quite a few hours over the years, at various intervals, immersing myself in the options before tweaking my choices - but now I am approaching your stage (stepping back in the next 6-18 months), I have lowered the risks of my pots a little, to more in bonds/gilts.

Ordinarily, I am *cough* slightly sceptical of IFAs - I would expect them to be more interested in managing your entire pot, so you may have to give them that impression before deciding later whether to "take back control" - perhaps ask about that at the interview stage.

You have done well to get to the state you have options open to you, but it does sound to me like you would benefit from some IFA affirmation of your actions moving forwards.
Whether you would want to manage the funds into the future is up to you: if you have got to this stage and 'only' now started thinking about what you are investing in, I suspect you might need some help: a huge proportion of your money is in cash and will therefore have technically been losing out to many more lucrative stock investments of the past 10 years (we have been in a rising market now for some time with only a minor dip a year ago!), so you sound very risk-averse.
Good luck!

edit to add - I've sent you a pm with a spreadsheet that may help you, if you are handy (or Hendy?!) with spreadsheets!

jonnygee2

If you plan to take ('crystallise') that pot very soon, you may not want to move out of the default life-styling: imagine if the markets crashed 20-30%, & your theoretical 270K became closer to 200K

If markets go through the same patterns as they have historically, the capital amount will grow back over the following ten years or so after the crash.

A large market crash right before you take an annuity would be bad news, but the OP clearly will be working on drawdown and not buying an annuity.

Audaxer

jonnygee2 wrote: »

If markets go through the same patterns as they have historically, the capital amount will grow back over the following ten years or so after the crash.

I thought that historically most markets bounce back within a couple of years after an equity crash.

coyrls

dave_hendy wrote: »

Our savings should also last even though they won’t keep pace with inflation. I haven’t really taken inflation into account

You can't ignore inflation in your plans. Your are right that savings won't keep pace with inflation. You will need to do something about that.

yksi

Albermarle wrote: »

Lots of people are put off investing in shares due to drops in value soon after they invest . Then they panic/lose faith etc., and withdraw the money and never invest again . However it is the well known number one classic mistake made by inexperienced investors, to pull out when they are down, rather than realising that as investors it is a long term game . This is exactly what my in laws did, and the money then spent 25 years languishing in low return savings accounts and the decision probably cost them well over £100K in missed returns .

I can't stress this enough - this is a brilliant post, bang on.

FIRE devotees (financially independent early retirees) have what's called a 4% & 7% rule. That is, if your money is suitably invested in index funds, you can average a 7% return, and you can safely take out 4% of your capital every year and never use up your capital.

4% for you is £40k and you only want £30k. So the answer is that yes, you have enough. At this point you would even have a buffer on top of the usual buffer.

I realise that it's not a great time for investment earnings right now, and people think it's not good to put them into "high risk" managed funds, but they say in the past 100 years there's never been a period where the stock market has gone down overall in a 10 year period. You need to set them and not play chicken. If it makes you feel better, you could put some in world index, some in a UK index, some in an EU one, some in a US one. Or keep half in your safe pot that isn't earning much (you'd still have a buffer).

Warren Buffett, one of the wealthiest investors in the world, offered a million US dollars to anyone who thought they could outperform the general rise of the S&P index over ten years. Not one, single, talented, wealthy investor - all paid to do this for a living - managed to choose the right stocks to do this. Not one could hand pick the best performers or the least risk. Every single one of them would have been better off just shoving their money onto an index fund and leaving it alone.

dave_hendy

cfw1994 wrote: »

If you plan to take ('crystallise') that pot very soon, you may not want to move out of the default life-styling: imagine if the markets crashed 20-30%, & your theoretical 270K became closer to 200K:eek:
You could perhaps shift *some* of it to 'riskier' funds, but perhaps not all.
I did the same with ours many years ago - with Aviva, we have a choice of about 80 funds, and I've spent quite a few hours over the years, at various intervals, immersing myself in the options before tweaking my choices - but now I am approaching your stage (stepping back in the next 6-18 months), I have lowered the risks of my pots a little, to more in bonds/gilts.

Ordinarily, I am *cough* slightly sceptical of IFAs - I would expect them to be more interested in managing your entire pot, so you may have to give them that impression before deciding later whether to "take back control" - perhaps ask about that at the interview stage.

You have done well to get to the state you have options open to you, but it does sound to me like you would benefit from some IFA affirmation of your actions moving forwards.
Whether you would want to manage the funds into the future is up to you: if you have got to this stage and 'only' now started thinking about what you are investing in, I suspect you might need some help: a huge proportion of your money is in cash and will therefore have technically been losing out to many more lucrative stock investments of the past 10 years (we have been in a rising market now for some time with only a minor dip a year ago!), so you sound very risk-averse.
Good luck!

edit to add - I've sent you a pm with a spreadsheet that may help you, if you are handy (or Hendy?!) with spreadsheets!

Thanks for the information and the spreadsheet Mike

dave_hendy

yksi wrote: »

I can't stress this enough - this is a brilliant post, bang on.

FIRE devotees (financially independent early retirees) have what's called a 4% & 7% rule. That is, if your money is suitably invested in index funds, you can average a 7% return, and you can safely take out 4% of your capital every year and never use up your capital.

4% for you is £40k and you only want £30k. So the answer is that yes, you have enough. At this point you would even have a buffer on top of the usual buffer.

I realise that it's not a great time for investment earnings right now, and people think it's not good to put them into "high risk" managed funds, but they say in the past 100 years there's never been a period where the stock market has gone down overall in a 10 year period. You need to set them and not play chicken. If it makes you feel better, you could put some in world index, some in a UK index, some in an EU one, some in a US one. Or keep half in your safe pot that isn't earning much (you'd still have a buffer).

Warren Buffett, one of the wealthiest investors in the world, offered a million US dollars to anyone who thought they could outperform the general rise of the S&P index over ten years. Not one, single, talented, wealthy investor - all paid to do this for a living - managed to choose the right stocks to do this. Not one could hand pick the best performers or the least risk. Every single one of them would have been better off just shoving their money onto an index fund and leaving it alone.

Risk gets harder as you get older as you have less time to put things right. But I do take everybody’s point

ex-pat_scot

Andrew31 wrote: »

I think this forum is well suited for people who just have a simple question, but is certainly isnt designed for someone with £1m looking to find out when he can retire.

In the most basic sense taking 3% a year should last you 33 years (not taking into account SP). But it far more complex than that.

Almost everyone on here has told you to see an adviser. You seem quite set on doing it yourself, so i wish you luck. No doubt you will survive, but its likely to cost you a great deal of money.

Strongly disagree.

This forum is full of anecdotes from similar individuals at various points on the journey.
You don't (cant) get advice here. But what you can get is the accumulated anecdotes and life views of many others in a similar situation to yourself.

You might not find out what would work best for you, but you will find how things are planning and playing out for others with similar choices.


My own view is that a global diversified low cost equity portfolio (ETF) has consistently delivered 5% after accounting for inflation.

In the absence of a fixed number, the LTA gives a pretty decent starting point for a target at which retirement would be great.

I understand that sequence-of-returns risk means that I will need to keep an eye on early withdrawal strategy and adjust accordingly, and that my approach comes with a small but quantifiable risk.
I see asset volatility as the price to pay for equity market performance, as the alternative low risk approach (cash / FI) gives the certainty of loss of value over time.

cfw1994

ex-pat_scot wrote: »

Strongly disagree.

This forum is full of anecdotes from similar individuals at various points on the journey.

<more good stuff>

Just to sign off for Christmas: I agree totally!

There is a wealth of knowledge & experience in the members who frequent this sub-forum.

Sure, some 'beginner' questions which can get sorted for people, but several more complex issues that some veritable experts have helped people with.
I have learned a LOT from many here over the past couple of years. Detail behind the LTA, ideas on investment strategies etc.

I think there are a fair few on here in the 800k+ bracket who are perfectly capable of managing their wealth without the need for a wealth management company.
Equally, there are some who clearly want some help & guidance, and may well end up with an IFA. Hopefully the answers they learn from here give them the knowledge to get the most out of that relationship.

Anyway - Merry Christmas all, thanks for the content you've posted (unless I disagreed with you ), have a cool Yule & a happy, healthy & wealthy 2020 :beer: