Most tax efficient and low risk way to invest £1m today for an income

wmb194

Malthusian said:

wmb194 said:

What investments did the financial planner Camelot referred you to suggest for your £10k pm Set For Life win?

https://forums.moneysavingexpert.com/discussion/6399266/sfl-winner/p1

The big question there is whether they have any long term investments in the first place; saving part of a large monthly income is very different from investing a lump sum already in your hands.
(Despite the name, the Set For Life prize only pays out for 30 years, so if you want to keep your lifestyle after that, you need to save some of your prize ecah month. I'd be very intrigued as to how many SFL winners are actually doing that and what the impact on their lives will be if they don't. It seems to me that living in relative luxury for 30 years and then going back to nothing would be even harder than blowing through a seven-figure fortune in a year or two and then going back to nothing. But we'll have to wait until 2049 to find out...)

Yes, if it were me I'd continue to work, save and invest like crazy and look on it as a way to retire early. Given that it's effectively a 30 year level annuity even modest inflation over the period is going to hit you hard in the later years so you need to make the most of the early years. If the wealth manager is worth anything I'm sure it'll have tried to explain this, though.

Malthusian

TheBanker said:

Personally I'd be ok - 30 years would see me through to 70 and I'd make sure I put enough aside each month to provide the necessary income from then onwards. 

Same here, but I'll never have that problem as I don't play the lottery. Lots of otherwise financially sensible people buy a lottery ticket a week, but the people most likely to win are those with low financial capability, as they buy many more tickets. And Set For Life isn't the main draw so will have an even higher proportion of impulsive gamblers who enter every single game the Lottery thinks up. (No offence intended to GenieBoy, this is about generalities.)
It had occurred to me as well that it's one thing having to resume your trade in a couple of years after your lottery win is gone, and quite another to find yourself penniless in your 60s or 70s. To avoid this, not only do you have to save some of the winnings every month, but also resist the temptation to dip into the savings. "Just this once, there's plenty more money to come and plenty of time left to save it" - until suddenly there isn't.
You can't even "lock the money up" in a pension to any extent - or at least not without paying a large and unnecessary tax bill every year out of your own pocket for contributing more than your earned income.

EthicsGradient

To give GenieBoy his due, he's already said that, thanks to the advice, "Now I'll be able to make the money work for me to provide an income for the rest of my life well beyond the 30 years." The advice for £120k/yr will be somewhat different than for a £1m lump sum (I reckon that £120k/yr for 30 years may be roughly equivalent to a £2m lump sum, assuming average returns, but the assumption of risk is different).

For the £120k/yr, an S&S ISA would make obvious sense, and VCTs and EISs perhaps come into play too - professional advice on that would be good for most of us, I suspect. Again, the winner's house and mortgage position will be a big part - what it is now, what house (or houses) they'd like, and so on.

TheBanker

Malthusian said:

TheBanker said:

Personally I'd be ok - 30 years would see me through to 70 and I'd make sure I put enough aside each month to provide the necessary income from then onwards. 

Same here, but I'll never have that problem as I don't play the lottery. Lots of otherwise financially sensible people buy a lottery ticket a week, but the people most likely to win are those with low financial capability, as they buy many more tickets. And Set For Life isn't the main draw so will have an even higher proportion of impulsive gamblers who enter every single game the Lottery thinks up. (No offence intended to GenieBoy, this is about generalities.)
It had occurred to me as well that it's one thing having to resume your trade in a couple of years after your lottery win is gone, and quite another to find yourself penniless in your 60s or 70s. To avoid this, not only do you have to save some of the winnings every month, but also resist the temptation to dip into the savings. "Just this once, there's plenty more money to come and plenty of time left to save it" - until suddenly there isn't.
You can't even "lock the money up" in a pension to any extent - or at least not without paying a large and unnecessary tax bill every year out of your own pocket for contributing more than your earned income.

I play occasionally. I don't buy a ticket as a matter of routine but will sometimes get one at the shop if it's draw day and I feel lucky. I know it's a waste of a couple of quid, but we all have to have dreams!

I think resuming your trade after a 30 year break could be quite difficult, even if you're not in your 70s. In my industry (banking), my knowledge would be so out of date that it would be useless. 30 years ago we still have cheque guarantee cards and didn't have digital banking or Faster Payments. Who knows what things will look like in 30 years, but I know the knowledge I have now will be obsolete. So I would probably have to find work in a supermarket or something.

I'd certainly be sitting down with an IFA if I won Set for Life (all be it I don't actually play!) - in fact I think I would need advice even more than if I won the jackpot on the normal lottery because, despite the name, you're not set for life unless you plan carefully!

unitedwestand

eskbanker said:

unitedwestand said:

eskbanker said:

unitedwestand said:
The market is very jittery at the moment

Which market, and by what measure?

Equities/ Bonds. As long as you can fix above anticipated/ targeted inflation which you can just now and have your savings below the £85k protected limit cash is always the lowest risk investment to return. From Dec 21 to Oct 22 the s&p 500 fell 25% that's not low risk.

"Equities/ Bonds" aren't 'a market', they're asset classes. Was citing a 25% drop of one specific market during a period ending over six months ago meant to answer the question about quantifying 'very jittery at the moment'?

I'm sure the bond market/ stock market are classed as markets. 

Many anylists suggest were at the turning point of a historic bullrun this is the period after associated with jitters as reflected in the s&p 500 on the 12 month. 
https://www.investopedia.com/terms/m/marketjitters.asp

eskbanker

unitedwestand said:

eskbanker said:

unitedwestand said:

eskbanker said:

unitedwestand said:
The market is very jittery at the moment

Which market, and by what measure?

Equities/ Bonds. As long as you can fix above anticipated/ targeted inflation which you can just now and have your savings below the £85k protected limit cash is always the lowest risk investment to return. From Dec 21 to Oct 22 the s&p 500 fell 25% that's not low risk.

"Equities/ Bonds" aren't 'a market', they're asset classes. Was citing a 25% drop of one specific market during a period ending over six months ago meant to answer the question about quantifying 'very jittery at the moment'?

I'm sure the bond market/ stock market are classed as markets.

That was my point, there are multiple bond markets and stock markets, not just one, so it's meaningless to say "The market is very jittery at the moment", or even "The stock market is very jittery at the moment" for that matter.  If you meant "the S&P500 is jittery at the moment" then that would be different, but still not necessarily accurate, as below....

unitedwestand said:
Many anylists suggest were at the turning point of a historic bullrun this is the period after associated with jitters as reflected in the s&p 500 on the 12 month. 

https://www.investopedia.com/terms/m/marketjitters.asp

Difficult to pick out anything particularly coherent from that sentence, but if your point was that a long bull run turned in late 2021, then that really isn't news, but wouldn't actually support a claim that markets are particularly jittery 18 months later, so the question remains, i.e. by what measure are you asserting that some or all markets are jittery at the moment?

GoldenOldy

billy2shots said:

Generate more, pay some tax. 

Don't let the tax tail wag the dog. 

Max ISA

Max pension contributions 

Split the rest in GIA, fixed savings, PBs depending on risk tolerance, and emergency  fund needs. 

Pay a little in tax. The more tax you pay the better because  that means your investments are generating money. 

What is. GIA please?

eskbanker

GoldenOldy said:

billy2shots said:

Generate more, pay some tax. 

Don't let the tax tail wag the dog. 

Max ISA

Max pension contributions 

Split the rest in GIA, fixed savings, PBs depending on risk tolerance, and emergency  fund needs. 

Pay a little in tax. The more tax you pay the better because  that means your investments are generating money. 

What is. GIA please?

General Investment Account, i.e. an investment account that isn't tax-free, such as an ISA or SIPP.

unitedwestand

eskbanker said:

unitedwestand said:

eskbanker said:

unitedwestand said:

eskbanker said:

unitedwestand said:
The market is very jittery at the moment

Which market, and by what measure?

Equities/ Bonds. As long as you can fix above anticipated/ targeted inflation which you can just now and have your savings below the £85k protected limit cash is always the lowest risk investment to return. From Dec 21 to Oct 22 the s&p 500 fell 25% that's not low risk.

"Equities/ Bonds" aren't 'a market', they're asset classes. Was citing a 25% drop of one specific market during a period ending over six months ago meant to answer the question about quantifying 'very jittery at the moment'?

I'm sure the bond market/ stock market are classed as markets.

That was my point, there are multiple bond markets and stock markets, not just one, so it's meaningless to say "The market is very jittery at the moment", or even "The stock market is very jittery at the moment" for that matter.  If you meant "the S&P500 is jittery at the moment" then that would be different, but still not necessarily accurate, as below....

unitedwestand said:
Many anylists suggest were at the turning point of a historic bullrun this is the period after associated with jitters as reflected in the s&p 500 on the 12 month. 

https://www.investopedia.com/terms/m/marketjitters.asp

Difficult to pick out anything particularly coherent from that sentence, but if your point was that a long bull run turned in late 2021, then that really isn't news, but wouldn't actually support a claim that markets are particularly jittery 18 months later, so the question remains, i.e. by what measure are you asserting that some or all markets are jittery at the moment?

Thanks, I'm not sure I care enough/ think it's helpful to elaborate beyond what I've already said.

Malthusian

TheBanker said:
I'd certainly be sitting down with an IFA if I won Set for Life (all be it I don't actually play!) - in fact I think I would need advice even more than if I won the jackpot on the normal lottery because, despite the name, you're not set for life unless you plan carefully!

Yeah, the planning aspect is much more difficult than it is for a lottery win. If you win the lottery you can multiply by 3% or 4% (depending on age) and that gives you a rough idea of how much you can spend without a big risk of burning through the fund in your lifetime. With Set For Life you've got to think about how much you need at the end of the thirty years and how much you need to save along the way.
I'd probably look to spend half and save half; which is likely to be very conservative and leave you with excess savings, but you could always draw on the excess as you went along. But I keep coming back to the fact that anyone thinking along those lines is extremely unlikely to enter Set For Life, let alone win the jackpot.