If you are wearing my shoes. (Redux)

RickyB2000

QrizB said:

Thumbs_Up said:

QrizB said:

Thumbs_Up said:

I am a single man with no children, currently not in a relationship, unemployed and living with a relation. Claiming no state benefits soon to be 55 years of age and frugal.... will be looking for a home to purchase some time in the future.

Your assets & pensions could (if invested carefully) yield you something like £24k pa indefinitely, but if you spend £200k on a home that number is going to be more like £15k. Which might still be OK for a frugal single man.

Please tell me you overlooked the state pension in your £15k calculation? Regarding the home i'm open to anywhere in this country, where the homes are cheap, the people are nice (that rules out the southeast) and the weather is mild in the winter.

No, I did not overlook the state pension, although I was somewhat pessimistic with £24k/15k. It's £26k/£20k.

You have £500k of assets plus pensions and are 55 years old.

• 55 to 60 - 5 years @ £26k from assets - £130k
• 60 to 67 - 7 years @ £23k from assets - £161k plus (£3k pension pa)

So at 67 you'll have spent £291k from your £500k and have £209k left, plus £98k from your DC pension. That's £307k. Safe drawdown rates are much discussed but if we go with 4%, £307k will yield £12k pa. Plus state & £3k pensions makes £25k pa for the rest of your life.

If you spend £200k on a home, you're only starting with £300k.

• 55 to 60 - 5 years @ £20k from assets - £100k
• 60 to 67 - 7 years @ £17k from assets - £119k plus (£3k pension pa)

At 67 you'll have spent £219k and have £81k left, plus £98k DC - total £179k. 4% drawdown will yield £7k, Plus state & £3k pensions makes £20k pa for the rest of your life.

My model isn't very complicated but you can see how I got those numbers.

Aren’t safe drawdown numbers based on a certain rate of return after inflation? And aimed to not deplete the capital? In this case, sitting in cash, there is basically no return so you would deplete the money by age 90 (using your 179 left at 67) which doesn’t sound too bad. But that assumes you never need to increase how much you withdraw, so every year you would be living on less and less in real terms as cash is negative return after inflation. Partly depends on what the DC pension is invested in.....

usually these calculators work in today’s money and assume your investments and withdrawals both increases by at least inflation so that can basically be ignored allowing everything to be talked about in today’s money. I don’t think that is a valid assumption here. Chuck inflation increases on the 26k/20k for 5 years and then 23k/17k for 7 years and then on the post pension age withdrawals and I bet the picture looks a lot less rosey

barnstar2077

RickyB2000 said:

Thumbs_Up said:

You are not wrong, it all depends on risk and appetite. You may want a world cruise, i don't. You my want a new car, i don't. I have some leeway, you probably don’t. But i say again you are not wrong.  

This doesn’t make much sense imho. People take high risk for the chance of high reward. Investing in individual companies is high risk. Yet you say you are not looking for high reward. So why are you taking a high risk approach vs the more balanced approach of investing in say a broad index fund?

Maybe I am wrong but it sounds like getting your fingers burnt on these individual shares by taking a very high risk approach has now made you super wary of investing at all and wanting to take the super low risk but at the moment negative reward of sitting in cash. You need to reset your risk / reward attitude and look for the right investments that will deliver the steady growth for manageable risk (or as above volatility).

I don't see the original posters chosen shares returning anything worthwhile in the long run.  They are taking a lot of risk for the potential of very little reward.  Hanging on to them is just good money after bad (you are throwing away money you could be making with the same investment of money elsewhere.)  Transferring those funds to a globally diversified tracker like the offerings from Vanguard, HSBC etc, is lower risk with the potential of a greater reward thrown in as a bonus.

QrizB

RickyB2000 said:

QrizB said:

...

My model isn't very complicated but you can see how I got those numbers.

Aren’t safe drawdown numbers based on a certain rate of return after inflation?

I've assumed the OP sees the light and abandons his current investment strategy in favour of a more prudent one.

Safe withdrawal rates can/do deplete the original capital; there's a great big thread here talking about them. Or, if you want something more hands-on, try https://www.cfiresim.com/

Thumbs_Up

atush said:

If you are unemployed, why are you not claiming Job seekers allowance, and looking for work?

Are you paying rent to the relative you live with?

6 weeks is all you can claim when you have £500k in assets. Currently not looking for work, but if i relocate somewhere else in the country i won't rule it out. Open to be character assassinated here but no real outgoing cost.

Thumbs_Up

Can some one answer this please.

I won't rule out work - Infact i did some Christmas causal work earning £2,900 gross.

I am living the life of Riley at the moment no real outgoing cost, but ofcourse this can change. Home to buy cost? Below £280,000 - maybe.

Question - I have already contributed £2,800 in this tax year to my vanguard sipp lifestrategy 60. If i am correct with the gross earnings above can i contribute another £2,825 and the tax man will add £725?

Thumbs_Up

QrizB said:

Thumbs_Up said:

QrizB said:

Thumbs_Up said:

I am a single man with no children, currently not in a relationship, unemployed and living with a relation. Claiming no state benefits soon to be 55 years of age and frugal.... will be looking for a home to purchase some time in the future.

Your assets & pensions could (if invested carefully) yield you something like £24k pa indefinitely, but if you spend £200k on a home that number is going to be more like £15k. Which might still be OK for a frugal single man.

Please tell me you overlooked the state pension in your £15k calculation? Regarding the home i'm open to anywhere in this country, where the homes are cheap, the people are nice (that rules out the southeast) and the weather is mild in the winter.

No, I did not overlook the state pension, although I was somewhat pessimistic with £24k/15k. It's £26k/£20k.

You have £500k of assets plus pensions and are 55 years old.

• 55 to 60 - 5 years @ £26k from assets - £130k
• 60 to 67 - 7 years @ £23k from assets - £161k plus (£3k pension pa)

So at 67 you'll have spent £291k from your £500k and have £209k left, plus £98k from your DC pension. That's £307k. Safe drawdown rates are much discussed but if we go with 4%, £307k will yield £12k pa. Plus state & £3k pensions makes £25k pa for the rest of your life.

If you spend £200k on a home, you're only starting with £300k.

• 55 to 60 - 5 years @ £20k from assets - £100k
• 60 to 67 - 7 years @ £17k from assets - £119k plus (£3k pension pa)

At 67 you'll have spent £219k and have £81k left, plus £98k DC - total £179k. 4% drawdown will yield £7k, Plus state & £3k pensions makes £20k pa for the rest of your life.

My model isn't very complicated but you can see how I got those numbers.

Thank you . But if i was to say i can live off £12,500 a year what inpact would this have on the calculations you have put up.

Thumbs_Up

eskbanker said:

eskbanker said:

Thumbs_Up said:

I’m not dreaming for the Porsche on the drive, just slow steady growth. I will be out of the game when I 65, so I have 10 years...

If you're looking for slow steady growth over ten years, then there are many collective investments that will achieve this objective way more successfully than punting on individual shares!

Thumbs_Up said:

You are not wrong, it all depends on risk and appetite. You may want a world cruise, i don't. You my want a new car, i don't. I have some leeway, you probably don’t. But i say again you are not wrong.

That's not really the point though - you're talking there about investment objectives, which are of course personal.

My post was referring to the fact that (sufficiently diversified) collective investments are inherently less volatile than individual shares, and are therefore intrinsically more suited to a stated objective of steady growth (although neither can really guarantee this).

Re-reading my remarks here it seems I was a bit combative with you. Please don’t take offence, writing is a art form and I didn't express myself to well.

RickyB2000

QrizB said:

RickyB2000 said:

QrizB said:

...

My model isn't very complicated but you can see how I got those numbers.

Aren’t safe drawdown numbers based on a certain rate of return after inflation?

I've assumed the OP sees the light and abandons his current investment strategy in favour of a more prudent one.

Safe withdrawal rates can/do deplete the original capital; there's a great big thread here talking about them. Or, if you want something more hands-on, try https://www.cfiresim.com/

Ah yes, I remember now, safe withdrawal is about not running out of money over a certain period of time with a degree of certainty (likelihood of failure based on historic scenarios). Anyway, this was not to derail the thread into safe withdrawal rates but more to make sure the OP is clear your calculations are based on investing in higher risk assets than cash as I am not sure they are hearing that (I read your calculation in context of their current investing approach) and the outcome will likely be significantly worse if they stick to cash (which may or may not be an issue).

eskbanker

Thumbs_Up said:

Re-reading my remarks here it seems I was a bit combative with you. Please don’t take offence, writing is a art form and I didn't express myself to well.

To be honest, it just seems like typical healthy debate to me rather than anything untoward, so no offence taken!

Thumbs_Up

QrizB said:

RickyB2000 said:

QrizB said:

...

My model isn't very complicated but you can see how I got those numbers.

Aren’t safe drawdown numbers based on a certain rate of return after inflation?

I've assumed the OP sees the light and abandons his current investment strategy in favour of a more prudent one.

Safe withdrawal rates can/do deplete the original capital; there's a great big thread here talking about them. Or, if you want something more hands-on,

I put my hands up I did have a blinkered laissez-faire attitude towards investing. But please remember as a single man with no debts or reasonability’s with spare money in the bank doing sweet faff all, I though I could take some  liberties which as you all have pointed out went pear shaped. I haven’t mentioned  this but I was paying 42% salary  towards my works pension so give me credit here.