How would you plan to create a 'passive income'?

Malthusian

This is where it gets complicated. Therefore I would be subject to CGT from the day  I would own those shares.

You'd be doing exceptionally well to pay CGT if your only unwrapped investment was a £100k inheritance, bearing in mind the annual CGT allowance, and that you can move £20,000 each year into an ISA. (Double if you have a spouse.)

Thrugelmir

bostonerimus said:

Thrugelmir said:

In 10 years time , annuities may well (again) provide a solid foundation to underpin a guaranteed income. Rates have recently started to edge upwards. 

Yes, guaranteeing a certain minimum income with an annuity is a good idea, it's just that annuities are such bad value right now. I would set up a short term bond or saving account ladder right now rather than an annuity and hope for rates to increase in 5 or 10 years time and then do a partial annuitization.

Current Government bond yields are extremely low. 10 year Gilts are only offering around a 0.77% redemption yield if held to maturity. 

bostonerimus

Thrugelmir said:

bostonerimus said:

Thrugelmir said:

In 10 years time , annuities may well (again) provide a solid foundation to underpin a guaranteed income. Rates have recently started to edge upwards. 

Yes, guaranteeing a certain minimum income with an annuity is a good idea, it's just that annuities are such bad value right now. I would set up a short term bond or saving account ladder right now rather than an annuity and hope for rates to increase in 5 or 10 years time and then do a partial annuitization.

Current Government bond yields are extremely low. 10 year Gilts are only offering around a 0.77% redemption yield if held to maturity. 

Yes they are low, but it you want very low risk and to put some money away while you wait for annuity rates to increase you might think about a 5 or 10 year bond ladder or it's saving account equivalent to give you a little bit of return. However, many people just won't be able to afford to be that conservative.

Thrugelmir

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Thrugelmir said:

In 10 years time , annuities may well (again) provide a solid foundation to underpin a guaranteed income. Rates have recently started to edge upwards. 

Yes, guaranteeing a certain minimum income with an annuity is a good idea, it's just that annuities are such bad value right now. I would set up a short term bond or saving account ladder right now rather than an annuity and hope for rates to increase in 5 or 10 years time and then do a partial annuitization.

Current Government bond yields are extremely low. 10 year Gilts are only offering around a 0.77% redemption yield if held to maturity. 

Yes they are low, but it you want very low risk and to put some money away while you wait for annuity rates to increase you might think about a 5 or 10 year bond ladder or it's saving account equivalent to give you a little bit of return. However, many people just won't be able to afford to be that conservative.

A bond ladder consisting of what assets? Deposit account rates are on the floor currently.  

bostonerimus

Thrugelmir said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Thrugelmir said:

In 10 years time , annuities may well (again) provide a solid foundation to underpin a guaranteed income. Rates have recently started to edge upwards. 

Yes, guaranteeing a certain minimum income with an annuity is a good idea, it's just that annuities are such bad value right now. I would set up a short term bond or saving account ladder right now rather than an annuity and hope for rates to increase in 5 or 10 years time and then do a partial annuitization.

Current Government bond yields are extremely low. 10 year Gilts are only offering around a 0.77% redemption yield if held to maturity. 

Yes they are low, but it you want very low risk and to put some money away while you wait for annuity rates to increase you might think about a 5 or 10 year bond ladder or it's saving account equivalent to give you a little bit of return. However, many people just won't be able to afford to be that conservative.

A bond ladder consisting of what assets? Deposit account rates are on the floor currently.  

The bond ladder would have bonds held to maturity. In the US you can actually buy investment grade bond funds that all mature in a particular year. Yes deposit rates are on the floor, but if you lock the money up for 5 years you'll squeeze a bit more out of it. I wouldn't do either myself or buy an annuity, but if rates go up they might interest some people.

Thrugelmir

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Thrugelmir said:

In 10 years time , annuities may well (again) provide a solid foundation to underpin a guaranteed income. Rates have recently started to edge upwards. 

Yes, guaranteeing a certain minimum income with an annuity is a good idea, it's just that annuities are such bad value right now. I would set up a short term bond or saving account ladder right now rather than an annuity and hope for rates to increase in 5 or 10 years time and then do a partial annuitization.

Current Government bond yields are extremely low. 10 year Gilts are only offering around a 0.77% redemption yield if held to maturity. 

Yes they are low, but it you want very low risk and to put some money away while you wait for annuity rates to increase you might think about a 5 or 10 year bond ladder or it's saving account equivalent to give you a little bit of return. However, many people just won't be able to afford to be that conservative.

A bond ladder consisting of what assets? Deposit account rates are on the floor currently.  

The bond ladder would have bonds held to maturity. In the US you can actually buy investment grade bond funds that all mature in a particular year. 

The short answer is no then. You haven't any recommendations for UK investors that are suitable at the current time. 

bostonerimus

Thrugelmir said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Thrugelmir said:

In 10 years time , annuities may well (again) provide a solid foundation to underpin a guaranteed income. Rates have recently started to edge upwards. 

Yes, guaranteeing a certain minimum income with an annuity is a good idea, it's just that annuities are such bad value right now. I would set up a short term bond or saving account ladder right now rather than an annuity and hope for rates to increase in 5 or 10 years time and then do a partial annuitization.

Current Government bond yields are extremely low. 10 year Gilts are only offering around a 0.77% redemption yield if held to maturity. 

Yes they are low, but it you want very low risk and to put some money away while you wait for annuity rates to increase you might think about a 5 or 10 year bond ladder or it's saving account equivalent to give you a little bit of return. However, many people just won't be able to afford to be that conservative.

A bond ladder consisting of what assets? Deposit account rates are on the floor currently.  

The bond ladder would have bonds held to maturity. In the US you can actually buy investment grade bond funds that all mature in a particular year. 

The short answer is no then. You haven't any recommendations for UK investors that are suitable at the current time. 

I wrote a long post with how I produce income that is equally applicable to UK residents. My problem is I usually have too much to say. The bond ladder or saving ladder might work for some wealthy, conservative people while they wait for your suggestion about future annuities...if it's difficult to set up the bond ladder, just go with savings bonds of 1 to 5 year lengths, you'll get slightly better interest than by just leaving it in a simple saving account.

coyrls

JamesRobinson48 said:

'Bond ladder' of 1 - 10 years:  out to five years, of course it's easy; I myself generally hold a series of fixed rate deposits maturing monthly (more or less) for the next 60 months, generating a stable cash flow sufficient to live on if necessary.  It's the five to ten years bucket that's less simple. For example, one could purchase three UK gilts, trading around or below par, maturing in 2026, 2028 and 2029 respectively. But the yield to maturity on those would be well below 1%, and might be further diminished by transaction costs.  Only gilts maturing from 2035 are yielding (slightly) over 1%. Quite unattractiv

Generally you’ll get better interest rates on retail fixed term accounts than with gilts.  I set up a 10 year ladder some time ago, when interest rates were more favourable.  To cover the 5-10 year period, I just put double the amount in 1-5 year fixed term accounts and then put half the proceeds at maturity into new 5 year fixed term accounts.

JohnWinder

Thrugelmir said:

Current Government bond yields are extremely low. 10 year Gilts are only offering around a 0.77% redemption yield if held to maturity. 

JamesRobinson48 said:

'Bond ladder' of 1 - 10 years:  .. It's the five to ten years bucket that's less simple. For example, one could purchase three UK gilts, trading around or below par, maturing in 2026, 2028 and 2029 respectively. But the yield to maturity on those would be well below 1%, ...

It seems like those figures are referring to nominal bonds for a bond ladder extending to ten years, as a way of providing a fund to purchase an annuity in ten years (if rates are favourable for annuities then). Not sure it would be wise to expose oneself to unexpected inflation during the holding period of those bonds, when there is a better option of inflation linked bonds. Although we're only contemplating 5-8 or so years of troublesome inflation, that could be enough to skittle your plans for an annuity. Stick to linkers to dodge that bullet.

coyrls

JohnWinder said:

Thrugelmir said:

Current Government bond yields are extremely low. 10 year Gilts are only offering around a 0.77% redemption yield if held to maturity. 

JamesRobinson48 said:

'Bond ladder' of 1 - 10 years:  .. It's the five to ten years bucket that's less simple. For example, one could purchase three UK gilts, trading around or below par, maturing in 2026, 2028 and 2029 respectively. But the yield to maturity on those would be well below 1%, ...

It seems like those figures are referring to nominal bonds for a bond ladder extending to ten years, as a way of providing a fund to purchase an annuity in ten years (if rates are favourable for annuities then). Not sure it would be wise to expose oneself to unexpected inflation during the holding period of those bonds, when there is a better option of inflation linked bonds. Although we're only contemplating 5-8 or so years of troublesome inflation, that could be enough to skittle your plans for an annuity. Stick to linkers to dodge that bullet.

In my case, it's providing an income over 10 years as an alternative to a annuity, not as a way of purchasing an annuity.