How to get to £1M in ten years?

coastline

itwasntme001 said:

Audaxer said:

DireEmblem said:

Global equities have returned what 8-10% on average a year, gets you close...

Problem being by the time you get to 1m(if you do), you probably haven't factored in inflation.

If you were to get from £250k to £1m in 10 years, I think that would have covered inflation okay,

So IF inflation ran at 2% for 10 years, as is roughly expected, your £1m would be worth £800k roughly in real terms in 10 years.  Yeh I would probably be ok with that but its still not really £1m is it?

What if inflation ran at 5% for 10 years?  The £1m would be worth less than half that in real terms in 10 years.  I am not so sure I would be happy with that...

Put it this way . If somebody said to me there's £1m pack your job in I'd be off like a shot. It's makes me wonder when people get concerned about SWRates in pension pots when they are loaded. Millions of older people are very happy on limited savings and the state pension. I was more concerned about my feet being cold in bed last night than my savings. Just wait until you get a bit older and I've got a few years for the state pension yet.

itwasntme001

coastline said:

itwasntme001 said:

Audaxer said:

DireEmblem said:

Global equities have returned what 8-10% on average a year, gets you close...

Problem being by the time you get to 1m(if you do), you probably haven't factored in inflation.

If you were to get from £250k to £1m in 10 years, I think that would have covered inflation okay,

So IF inflation ran at 2% for 10 years, as is roughly expected, your £1m would be worth £800k roughly in real terms in 10 years.  Yeh I would probably be ok with that but its still not really £1m is it?

What if inflation ran at 5% for 10 years?  The £1m would be worth less than half that in real terms in 10 years.  I am not so sure I would be happy with that...

Put it this way . If somebody said to me there's £1m pack your job in I'd be off like a shot. It's makes me wonder when people get concerned about SWRates in pension pots when they are loaded. Millions of older people are very happy on limited savings and the state pension. I was more concerned about my feet being cold in bed last night than my savings. Just wait until you get a bit older and I've got a few years for the state pension yet.

But the question was not about having £1m now (which by the way you would need to invest wisely to maintain the real purchasing power), but about having £100k now and growing it to £1m in 10 years.  If inflation runs at 5% a year for the next 10 years, that £1m would not even be worth half that in real terms in 10 years.

Audaxer

itwasntme001 said:

Audaxer said:

DireEmblem said:

Global equities have returned what 8-10% on average a year, gets you close...

Problem being by the time you get to 1m(if you do), you probably haven't factored in inflation.

If you were to get from £250k to £1m in 10 years, I think that would have covered inflation okay,

So IF inflation ran at 2% for 10 years, as is roughly expected, your £1m would be worth £800k roughly in real terms in 10 years.  Yeh I would probably be ok with that but its still not really £1m is it?

I think if inflation rose at an average of 2% over 10 years, most investors would be happy to see their £250k portfolio to grow to £800k in real terms.

If the £250k grew to say, £1.3m after 10 years, would you say as that £1.3m would only be worth around £1m in real terms in 10 years, that it still doesn't take inflation into account?

baza52

lets say you bought a scratch card for £1 and won a million. you would be sorted.

dean350

If you won 1 million you would still need some good self discipline to make that last. Most studies show you would have to invest it in globally diversified stocks and bonds and then you can take out about 40K per year (4% of 1 million) and be reasonably sure that it wont run out. You can increase that 40K withdrawal by the prevailing rate of inflation each year and you would still likely be OK. Don't forget you still have to pay tax on that.

If you want to treat yourself to a Ferrari at the start then that million drops to about 850K and therefore you now only have 34K a year left - a large part of which will now be going on petrol, tax insurance etc etc. A million ain't what it used to be!

Apodemus

Retireby40 said:

Start tonight by investing in Spurs to beat Brentford in the Caraboa Cup. 250k at 2/5 returns 100k profit. So you'll have 350k sitting there in an hour and a halfs work.

Na I'm only joking. You could just throw the money in something like Vanguard s&p 500 close the account and look at it in 10 years. You might not have a million but should have a nice enough return. 

Both of these options are perhaps taking an unnecessary risk on a single "team". While the S&P has a good history and relies on 500 players rather than Spurs' 11, it rather assumes that the US will remain the best team for the next decade. I'd be looking for some global diversification.

Retireby40

Apodemus said:

Retireby40 said:

Start tonight by investing in Spurs to beat Brentford in the Caraboa Cup. 250k at 2/5 returns 100k profit. So you'll have 350k sitting there in an hour and a halfs work.

Na I'm only joking. You could just throw the money in something like Vanguard s&p 500 close the account and look at it in 10 years. You might not have a million but should have a nice enough return. 

Both of these options are perhaps taking an unnecessary risk on a single "team". While the S&P has a good history and relies on 500 players rather than Spurs' 11, it rather assumes that the US will remain the best team for the next decade. I'd be looking for some global diversification.

They won 2-0. He would have made 100k and reduced his time to make a million. 

There's risk with every investment. You just have to calculate it and hope that lady luck is on your side.

onthebench

Great, now with 350k he only needs a 2/1 shot to come in this weekend and he's home and dry in a week.

Alexland

dean350 said:

If you won 1 million you would still need some good self discipline to make that last. Most studies show you would have to invest it in globally diversified stocks and bonds and then you can take out about 40K per year (4% of 1 million) and be reasonably sure that it wont run out. You can increase that 40K withdrawal by the prevailing rate of inflation each year and you would still likely be OK. Don't forget you still have to pay tax on that.

The 4% drawdown 'rule' was published (and has since been a matter of much debate) some time ago and was based on someone retiring and slowly burning their capital while drawing income increasing with inflation so it really depends on your age at the point you start drawing (and fundamental asset valuations at the time, and future market returns) on if it will be sustainable.

dean350 said:

A million ain't what it used to be!

It certainly isn't and I remember when our earned (not won or inherited) net worth first hit a million a few years ago (it happened a few times due to stock market volatility) realising I still had a further 15-20 years work ahead to achieve our objectives. The problem is such a high proportion of the money is tied up in the house which while useful is not going to pay us an income. Not bought a Ferrari just some old Hyundais on the drive. Now if someone gave us another million then I would retire tomorrow.

coastline

itwasntme001 said:

coastline said:

itwasntme001 said:

Audaxer said:

DireEmblem said:

Global equities have returned what 8-10% on average a year, gets you close...

Problem being by the time you get to 1m(if you do), you probably haven't factored in inflation.

If you were to get from £250k to £1m in 10 years, I think that would have covered inflation okay,

So IF inflation ran at 2% for 10 years, as is roughly expected, your £1m would be worth £800k roughly in real terms in 10 years.  Yeh I would probably be ok with that but its still not really £1m is it?

What if inflation ran at 5% for 10 years?  The £1m would be worth less than half that in real terms in 10 years.  I am not so sure I would be happy with that...

Put it this way . If somebody said to me there's £1m pack your job in I'd be off like a shot. It's makes me wonder when people get concerned about SWRates in pension pots when they are loaded. Millions of older people are very happy on limited savings and the state pension. I was more concerned about my feet being cold in bed last night than my savings. Just wait until you get a bit older and I've got a few years for the state pension yet.

But the question was not about having £1m now (which by the way you would need to invest wisely to maintain the real purchasing power), but about having £100k now and growing it to £1m in 10 years.  If inflation runs at 5% a year for the next 10 years, that £1m would not even be worth half that in real terms in 10 years.

OP mentions £250k now and additional payments of £2k every month which I think makes £1m within reach . Global Indices aren't too far away although you'll probably need some winning funds or single stocks to get there. Most investors will be somewhere between the two in the link.
Chart Tool | Trustnet
Regarding £1m lets say you start a pension at £300 a month which is more than 10% of the average UK salary. £3600 yearly at 6% return over 40 years gives £550K. With a bit luck your employer adds to your pot and you add more as you go which should cover your inflation concerns. Well short of £1m and most people would be very happy. 
Never had 500K when I left and I'm still doing fine. Bumped into two friends from work a couple of years ago and both had left in their 50's with near £500K transfer values. Both over the moon. One was off to book a cheap holiday which you can when not working. Also said he'd never get through his pot. Saw the same fella recently and his pot was up. Still smiling.