Retirement savings

Matt_22

With the sp500 doing a lot more then the 10% average over the last 10 years. Could now be a bad time to invest?  

Albermarle

Matt_22 said:

With the sp500 doing a lot more then the 10% average over the last 10 years. Could now be a bad time to invest?  

You seem a bit overfocused on the S&P 500. If you invest in it 100%, then this is pretty risky as you investing in only one country and vulnerable to exchange rate variation. For example if in the next 12 months the S&P 500 goes up 5%, but the Pound improves against the Dollar by 10% , you will be 5 % down.
If you are happy to invest at 100% equity level ( and have the stomach to stand the volatility that will bring) then normally a global index fund would be the usual investment. Still about 60/65% in the US but with some diversification in other areas.

If you are looking for retirement income, then nearly always best to invest via a pension, for the tax benefits.

dunstonh

Matt_22 said:

With the sp500 doing a lot more then the 10% average over the last 10 years. Could now be a bad time to invest?  

Why the focus on S&P500?    
Historically, global equities and US equities tend to cycle differently.  i.e. in a cycle, one will be better than the other and then vice versa in the nest.   US equity lost money in the 10 year period from 2000 to 2009 but was the best area from 2010 to 2019.  

Are you taking into account currency fluctuations?    UK investors use the Sterling.  Not dollars.  So, there is a currency exchange.  Exchange rates have boosted US equities in the last cycle.   However, when exchange rates go the other way (which they have been of late) then that will create a drag on the returns on US equity.     Recent performances have US equity as one of the worst areas for UK investors.

If you are 100% into the S&P500 then you will suffer that drag on all of your investment.  It is poor quality investing to go 100% into any market.  It doesnt matter what that market is.

coyrls

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 

Imagine if you retired at the begining of 2022, with this strategy.  The S&P 500 lost about 8% in sterling terms in 2022, it would have been more if you had invested in dollars.  At the start of 2023, your fund would be down to under £250,000 and with inflation at around 10%  you would be taking out £33,000 in 2023 to maintain your pension in real terms.  How would you feel?  If the same conditions persisted for a couple more years, your fund would be down to under £150,000.

dunstonh

coyrls said:

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 

Imagine if you retired at the begining of 2022, with this strategy.  The S&P 500 lost about 8% in sterling terms in 2022, it would have been more if you had invested in dollars.  At the start of 2023, your fund would be down to under £250,000 and with inflation at around 10%  you would be taking out £33,000 in 2023 to maintain your pension in real terms.  How would you feel?  If the same conditions persisted for a couple more years, your fund would be down to under £150,000.

And mirror that over the period from 2000 to 2009.   That S&P500 fund would be in a negative at 2009 but had 10 years of withdrawals, starting at £33k  but rising due to inflation.    That period would have been catastrophic for someone 100% in US equity drawing money like that.

Matt_22

Thanks it's not totally us equilty. It would be the hsbc ftse all world index

OAP1952

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.

I can give you a "real world" example:  last September my partner calculated all the dividend income credited to two S&S ISAs: the aggregate dividend income was £31.7k over the previous 12 months.  The aggregate capital value of the two accounts was then £961k.  The portfolio of investments in the ISAs was a mixture of generalist growth&income and income investment trusts.

The answer to your original question is therefore: £900k - £1million.