Retirement savings

Matt_22

How much would one need in the stock market to try and get an annual income of 30k from it. I know it would be dependent on returns. But just trying to get a rough idea.

wmb194

Matt_22 said:

How much would one need in the stock market to try and get an annual income of 30k from it. I know it would be dependent on returns. But just trying to get a rough idea.

If you invested it in something yielding 5%, £600,000. You can play with your calculator for other scenarios.

coyrls

wmb194 said:

Matt_22 said:

How much would one need in the stock market to try and get an annual income of 30k from it. I know it would be dependent on returns. But just trying to get a rough idea.

If you invested it in something yielding 5%, £600,000. You can play with your calculator for other scenarios.

Any suggestion for what that might be?  The 4% "rule" would suggest £750,000 and 3% £1M, so I would suggest somewhere between £750,00 and £1M.

billy2shots

Matt_22 said:

How much would one need in the stock market to try and get an annual income of 30k from it. I know it would be dependent on returns. But just trying to get a rough idea.

It very much depends on what the investments are in and the ratios of those investment. 

Very general rule of thumb based on holding global equities and some bonds (0% - 40%) is that a safe withdrawal rate is between 2% and 4% rising with inflation each year. 

So if we choose a safe withdrawal rate of 3% then we would need £1m invested to return £30k before taxes. 

Matt_22

Thanks more then I possibly thought.  I was thinking the sp500 grows at an average rate of 10%. So 300k may do it. Guessing I was wrong. I'm just starting to look in to investing 

ColdIron

There are many ways to skin a cat. Do you want to preserve your capital (and maybe leave something to your heirs)? Are you happy to deplete it down to £0 (and hope your last cheque bounces)? Are you starting at 45, 55 or 65?

MarcoM

Would putting the whole amount of 1million into something like City of london it get the OP his 30k per year? 

Stubod

Matt_22 said:

Thanks more then I possibly thought.  I was thinking the sp500 grows at an average rate of 10%. So 300k may do it. Guessing I was wrong. I'm just starting to look in to investing 

???????????????????/....I should be so lucky, lucky lucky lucky..... ????????????????

masonic

Matt_22 said:

Thanks more then I possibly thought.  I was thinking the sp500 grows at an average rate of 10%. So 300k may do it. Guessing I was wrong. I'm just starting to look in to investing 

An average rate implies a distribution of outcomes some higher, some lower. Most people don't want to risk being unlucky and running out of money. You could use something like https://www.cfiresim.com/ to get a better guide to what might be sustainable.

Prism

Matt_22 said:

Thanks more then I possibly thought.  I was thinking the sp500 grows at an average rate of 10%. So 300k may do it. Guessing I was wrong. I'm just starting to look in to investing 

The problem is that it takes many years to build that average and that 10% doesn't include inflation. If you took £30k from a £300k pot and increased with inflation you could be out of cash in less than 10 years if you were unlucky.

Prism

MarcoM said:

Would putting the whole amount of 1million into something like City of london it get the OP his 30k per year? 

There are no guarantees on that dividend and certainly none that it will match inflation. The last time it reset its dividend was during the last really difficult time for pension withdrawals in the 1970's - so when the going got tough it failed.