How to get £1,000pm from a lump sum

Audaxer

Apodemus wrote: »

Sorry Bostonerimus, but I don’t follow your point here. Both Funds and ITs are collective investments and vehicles for putting your money into a wider range of underlying assets. It’s not as if ITs are mainly invested in Funds and acting as an additional layer between me and the underlying assets, so how are they the middleman?

I agree with you. ITs are certainly not an additional layer as in many cases the ongoing costs of an IT are cheaper than a fund.

danm

Audaxer wrote: »

I agree with you. ITs are certainly not an additional layer as in many cases the ongoing costs of an IT are cheaper than a fund.

I think the point trying to be made here is that with an OEIC, the income received is a passthrough of the underlying funds.


Given an IT is a share in a company. The dividend paid is down to the directors.... they may use growth to pay dividends (i.e smooth income) or pay less in dividends than received on the underlying shares.

TBC15

dividendhero wrote: »

Easy for him to say when he's sat on £250 million in Mauritius with no mortgage

Sounds like he is doing well. Any idea what he does for a living?

A_T

steamy wrote: »

I spent the last two days reading up as much as I could on the topic and have decided to diversify by splitting the 250k - using half to get 1-2 BTL 2-bed terraces close to where I live, for income and lock away the rest in a Vanguard fund to accumulate and hopefully deliver capital growth in the long term.

I've done the numbers, looked at the local market, and even with the extra 3% stamp duty, as long as I stick to my target numbers, it should be fairly uncomplicated to get a BTL property on a mortgages returning 6.5-8% ROI, even at 35-40% equity. There's unlikely to be a lot of capital growth but it should hopefully keep up with inflation. I know the business and it should deliver a steady return over the years, at least until interest rates start to rise appreciably. 2 bed terraces in my area cost 130-150k, so I might even get two with a 35-40% deposit.

I sold the last rental because it was more than 2 hours away and I couldn't drive that far anymore during to my health issues. Travel within a 5 mile radius should be absolutely fine and I thought it would be a shame if I let all my experience of the business go to waste unused, especially when I have so much time on my hands now.

The rest can sit untouched in a low cost Vanguard lifestrategy fund, aiming for long term capital growth.

I really appreciate the discussion, it helped push me to read up on the topic.

Sounds like you know what you're doing. It's good to see you haven't made the mistake of thinking that high dividend UK-listed shares are the way to go. VLS will serve you much better.

Sign

Been reading this thread as a non member, so I decided to join today. Excellent thread, much appreciated.

Apologies for hijacking it, but as a new member I don't think I can start my own thread.

I'm 52 years old, suffering a bit with poor health as I have ran my own business for the past twenty or so years, quite a large hotel. It was stressful at times, long hours etc.

I recently managed to sell the business after it had been on the market for quite some time, dropped the price substantially.

Now I am currently renting a small town house, not really interested in buying a home, quite happy renting. I have never had a permanent job, so I have no pension provisions, no private pension at all.

I honestly cannot see myself living more than another twenty five years if I am lucky, could be a lot less if I am unlucky. I am not married, and have no children, just me, the dog, and a long term lady friend who is financially all sorted her self.

I sold my Hotel and now have £680k sat in various accounts, split into 80k lump sums. All in short term notice accounts averaging around 1.6% annual interest. So I know I am losing purchasing power.

I am not interested in using an IFA, but the Vanguard website and their products do interest me.

The money has to last me twenty five years, what products would any of you guys suggest, I don't want to lose out through too much risk. I am not a greedy person, and can comfortably live on £1600 a month, this is the amount I am currently drawing down from the capital.

Is their a better way to generate an income and not lose so much of the capital to inflation due to the 1.6% return I am currently getting.

Thanks for any feedback,

Linton

Sign wrote: »

Been reading this thread as a non member, so I decided to join today. Excellent thread, much appreciated.

Apologies for hijacking it, but as a new member I don't think I can start my own thread.

I'm 52 years old, suffering a bit with poor health as I have ran my own business for the past twenty or so years, quite a large hotel. It was stressful at times, long hours etc.

I recently managed to sell the business after it had been on the market for quite some time, dropped the price substantially.

Now I am currently renting a small town house, not really interested in buying a home, quite happy renting. I have never had a permanent job, so I have no pension provisions, no private pension at all.

I honestly cannot see myself living more than another twenty five years if I am lucky, could be a lot less if I am unlucky. I am not married, and have no children, just me, the dog, and a long term lady friend who is financially all sorted her self.

I sold my Hotel and now have £680k sat in various accounts, split into 80k lump sums. All in short term notice accounts averaging around 1.6% annual interest. So I know I am losing purchasing power.

I am not interested in using an IFA, but the Vanguard website and their products do interest me.

The money has to last me twenty five years, what products would any of you guys suggest, I don't want to lose out through too much risk. I am not a greedy person, and can comfortably live on £1600 a month, this is the amount I am currently drawing down from the capital.

Is their a better way to generate an income and not lose so much of the capital to inflation due to the 1.6% return I am currently getting.

Thanks for any feedback,

Planning to only live until you are 77 is far too short a time unless you know you have serious medical problems. From Office of National Statistics figures average life expexctancy for a male aged 52 now is about 88, so another 36 years. But that gives a 50% chance so it would be sensible to plan for say 95.


From a quick spreadsheet:
Assume:
initial capital: £680K
Income: £1600/month gross=£19200/year rising with inflation
Inflation=2.5%
Interest=1.6%
result: You run out of money at 84.

But that ignores tax and State Pension. Have you got a State Pension Forecast? If not get one from https://www.gov.uk/check-state-pension, If you havent earned the full SP yet it will be worth your while paying voluntary contributions since they pay for themselves from the extra SP in 3-4 years.

If we assume you get a full state pension at 68 you will be able to halve your drawdown frpm that age. So add that to the spreadsheeet:
Assume:
initial capital: £680K
Total income required: £1600/month gross=£19200/year rising with inflation
State pension portion: £8970/year rising with inflation from age 68
Inflation=2.5%
Interest=1.6%
result: You run out of money at 95

So I think you are taking too much risk by keeping your money in cash. Especially as inflation could easily average more than 2.5% and there has been no allowance made for large one-off expenses. If you could ensure that your capital rises with inflation any money worries would be over. The only way of a reasonable chance of achieving or exceeding inflation is through equity investments.

Although other people may disagree, I believe that Vanguard's range of funds are not the best suited to meet your need to achieve no more than inflation matching returns as you do not want to take the risks associated with higher returns. An IFA would be the appropriate person with whom to discuss this, but you have said you do not want to use one. However since you do not seem to have much investment experience I think it may not be helpful if I made specific suggestions at this stage.

Sign

Linton wrote: »

Planning to only live until you are 77 is far too short a time unless you know you have serious medical problems. From Office of National Statistics figures average life expexctancy for a male aged 52 now is about 88, so another 36 years. But that gives a 50% chance so it would be sensible to plan for say 95.


From a quick spreadsheet:
Assume:
initial capital: £680K
Income: £1600/month gross=£19200/year rising with inflation
Inflation=2.5%
Interest=1.6%
result: You run out of money at 84.

But that ignores tax and State Pension. Have you got a State Pension Forecast? If not get one from , If you havent earned the full SP yet it will be worth your while paying voluntary contributions since they pay for themselves from the extra SP in 3-4 years.

If we assume you get a full state pension at 68 you will be able to halve your drawdown frpm that age. So add that to the spreadsheeet:
Assume:
initial capital: £680K
Total income required: £1600/month gross=£19200/year rising with inflation
State pension portion: £8970/year rising with inflation from age 68
Inflation=2.5%
Interest=1.6%
result: You run out of money at 95

So I think you are taking too much risk by keeping your money in cash. Especially as inflation could easily average more than 2.5% and there has been no allowance made for large one-off expenses. If you could ensure that your capital rises with inflation any money worries would be over. The only way of a reasonable chance of achieving or exceeding inflation is through equity investments.

Although other people may disagree, I believe that Vanguard's range of funds are not the best suited to meet your need to achieve no more than inflation matching returns as you do not want to take the risks associated with higher returns. An IFA would be the appropriate person with whom to discuss this, but you have said you do not want to use one. However since you do not seem to have much investment experience I think it may not be helpful if I made specific suggestions at this stage.

Thank you very much Linton for your reply. Very much appreciated.

But sadly no, I probably will not live past 77, I have a condition with two major organs, which will not get better only worse, even with the use of medication.

Thanks again.

A_T

Sign wrote: »

Thank you very much Linton for your reply. Very much appreciated.

But sadly no, I probably will not live past 77, I have a condition with two major organs, which will not get better only worse, even with the use of medication.

Thanks again.

You may want to consider buying a home for yourself. Having to move home when you're old and unwell is not likely to be much fun.

bowlhead99

Sign wrote: »

Thank you very much Linton for your reply. Very much appreciated.

But sadly no, I probably will not live past 77, I have a condition with two major organs, which will not get better only worse, even with the use of medication.

Thanks again.

It would be frustrating if with another couple of decades of development in medicine, surgery and life sciences they come up with some reliable procedure to fix or replace those organs which the NHS is able to provide without cost to you.

Then you would be in the frustrating position of having only a few years of money left and deciding to whether to decline the life-changing surgery or accept it and then spend your last pennies on a suicide mission to avoid a couple of decades at poverty-level.

Username999

If I were "SIGN" I would look into 'Enhanced Annuities'.