Investment need in FTSE All World Index Fund/ETF to earn £20,000 a year

ColdIron

Alexland said:

Drawing a fixed regular income from the total return of a stock market index fund is a very poor approach because if the stock market crashes 50% at the start and takes a few years to recover you damage your asset valuation early selling high quantities of fund units at low prices.

Indeed

It would be preferable to use a multi-asset portfolio to manage the risk of needing to sell low.

Use multiple 'buckets' invested with different time frames in mind and periodically tip some of one bucket to a lower one like a waterfall when it makes sense to do so

booneruk

I plan to have a 1-2 years cash buffer to draw upon during really negative periods in the market.

It sounds as if the OP could do themself the world of good seeking out knowledgeable youtubers such as PensionCraft. They've posted up several videos of late talking about safe withdrawal rates, different strategies and back tests of them that ensure the money has the smallest risk of running out across a timeframe.

eskbanker

Tonys101 said:

How much would i need invested in a FTSE All World Index Fund/ETF to earn £20,000 a year? 

Also how much would i need to leave in my investment if I took out £20,000 a year taking into account market downturns.

Tonys101 said:

eskbanker said:

There are so many unknowns involved (duration, tax, inflation, fees, risk tolerance, etc, etc) that it's impossible to give any sort of meaningful answer but the usual 'safe withdrawal rate' quoted in the context of pensions (i.e. when gradually depleting capital) is in 3-4% territory, so that would mean a pot of circa £500-600K to generate £20K annually on average, but exactly how you choose to take market downturns into account would influence this figure too....

Lets assume  i removed nothing 

Tonys101 said:

I am simply asking , how much would I need to have  invested to earn £20,000 in a world index fund/etf 

OP - given the amount of effort posters are putting in to explaining drawdown strategies, perhaps it would be worth clarifying once and for all what you mean by 'earning' £20K from your notional pot, i.e. are you talking about average growth of that figure (keeping it in the pot) or generating annual income of that (withdrawing it)?  You still haven't given any indication of the period over which this exercise applies yet either....

edgex

eskbanker said:

Tonys101 said:

How much would i need invested in a FTSE All World Index Fund/ETF to earn £20,000 a year? 

Also how much would i need to leave in my investment if I took out £20,000 a year taking into account market downturns.

Tonys101 said:

eskbanker said:

There are so many unknowns involved (duration, tax, inflation, fees, risk tolerance, etc, etc) that it's impossible to give any sort of meaningful answer but the usual 'safe withdrawal rate' quoted in the context of pensions (i.e. when gradually depleting capital) is in 3-4% territory, so that would mean a pot of circa £500-600K to generate £20K annually on average, but exactly how you choose to take market downturns into account would influence this figure too....

Lets assume  i removed nothing 

Tonys101 said:

I am simply asking , how much would I need to have  invested to earn £20,000 in a world index fund/etf 

OP - given the amount of effort posters are putting in to explaining drawdown strategies, perhaps it would be worth clarifying once and for all what you mean by 'earning' £20K from your notional pot, i.e. are you talking about average growth of that figure (keeping it in the pot) or generating annual income of that (withdrawing it)?  You still haven't given any indication of the period over which this exercise applies yet either....

The OP apparently has "a portfolio of crypto" ...
I doubt they know what they want.

cloud_dog

I get the feeling the OP was simply after opinions or confirmation of an average return (e.g. the the previously mentioned 8.1% pa average), which they would then arbitrarily apply to calculate £20k pa / pot value.

Obviously as posters have tried to show them, this thinking is wrong and likely dangerous to their financial heath.