Question re 700K investment
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VLS60 is a fund of funds so by owning it you have a very diverse selection of funds. You could also add some other funds if you are nervous about having so much in one place, but you should be using this money to max out your pension and ISA contributions for the next few years.“So we beat on, boats against the current, borne back ceaselessly into the past.”0
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if you have the brains and the patience you should look at this thread, which is essentially a debate about 4% drawdown rates, and although mainly focused on pensions, its true for anyone who has to make a lump sum last a lifetime
https://forums.moneysavingexpert.com/showthread.php?t=5466114
jamesd (the thread author) is another very respected poster and has a lot of knowledge on investment types. you have had the a-team on this threadI think I saw you in an ice cream parlour
Drinking milk shakes, cold and long
Smiling and waving and looking so fine0 -
if you have the brains and the patience you should look at this thread, which is essentially a debate about 4% drawdown rates, and although mainly focused on pensions, its true for anyone who has to make a lump sum last a lifetime
https://forums.moneysavingexpert.com/showthread.php?t=5466114
jamesd (the thread author) is another very respected poster and has a lot of knowledge on investment types. you have had the a-team on this thread
Good link.
What it all boils down to is that most people need growth in the working years to build up a pension pot, ISA etc and need growth in drawdown to keep up with inflation. Only the very frugal who save far more than they spend and end up with a pot very large compared to their income needs can be blas! about growth. There's an argument for securing a baseline income in retirement and for having a cash/short term bond buffer to mitigate sequence of return risk and get through down markets, but I think it's best to go for total return with most of your portfolio both pre and post retirement and keep a high equity allocation.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
yeah people are quite rightly suggesting growth bc I am young (30 yrs old which is relatively young) but I have some health issues and am not sure if I can work fulltime so income seems my best bet. I guess investing is highly personal because you have to look at your personal situation and make the wisest choice based on that.
Currently I:
- own a property which I live in, mortage paid off
- have 50k in an ISA which I use to save for retirement (I have a VLS 60)
- when I recieve the 700K I want to set up a passive source of income; maybe 3-4% growth, 3-4% income per year.
My understanding is that it isn't worth me having a SIPP/retirement fund beacause I am not currently earning. I don't think I am likely to make a lot of money from a job in my life as (due to health issues) have been out of the career game for a while. My ultimate goal though is to be well enough to work at something I am passionate about.
Obviously I should funnel the 700K into the ISA over time as this is a tax free investment...0 -
And equally obviously, it would take you 35 years to do so, or even longer if investment growth outperforms ISA allowance increases over that time, so it seems unlikely that this process would form a particularly significant or useful part of your plans, especially if you're already dismissing pensions....Obviously I should funnel the 700K into the ISA over time as this is a tax free investment...0 -
I would consider speaking to a professional around structuring correctly around things like tax and when you're likely to want/need to access the money.
I see that kind of thing as something you should be able to pay for as time & materials rather than necessarily needing someone to manage you investments and have an ongoing fee.0 -
There’s no magic to income from investments. It comes from interest, dividends and growth. The way you emphasize those will depend on the income you need and the size of the pot you have.
This does not need to be complicated or expensive and if you go with an IFA you have to budget at least 0.5% of your 3 or 4% income for their fees.
People often over think things and end up with expensive solutions when something simple will work.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
bostonerimus wrote: »There’s no magic to income from investments. It comes from interest, dividends and growth. The way you emphasize those will depend on the income you need and the size of the pot you have.
This does not need to be complicated or expensive and if you go with an IFA you have to budget at least 0.5% of your 3 or 4% income for their fees.
People often over think things and end up with expensive solutions when something simple will work.
This is completely spot on. Although its very much a personal choice what the OP does depending on his/her confidence (and confidence in MSE posters!) and how he/she wants to be involved (extremes being completely passive to completely active).
I am in my mid-30s so not that far off from the OP's age and have a similar wealth amount accumulated mainly through work (outside of my own home). I take a mix between passive and active approach because i like to dabble in single shares (i have a finance background). I do not recommend this approach to everyone and if one is unsure then almost always a passive approach (perhaps including some managed funds) would be my best advice. I would also probably favour pure passive funds especially at OP's age as he/she has a very long time horizon (presumably?) so having managed funds on a buy and hold approach would increase manager risk considerably for the OP as opposed to someone closer to retirement say (who are looking to reduce equity exposure perhaps).
There are so so many ways to do this that the OP should remember the advice from Bostonerimus that it does not need to be complicated - so just keep things simple and clear.0 -
if you have the brains and the patience you should look at this thread, which is essentially a debate about 4% drawdown rates, and although mainly focused on pensions, its true for anyone who has to make a lump sum last a lifetime
https://forums.moneysavingexpert.com/showthread.php?t=5466114
jamesd (the thread author) is another very respected poster and has a lot of knowledge on investment types. you have had the a-team on this thread
Very good recommendation here and i too can highly recommend jamesd's work on this forum. I do want to point out a very important aspect to the 4% rule that may or may not have been discussed in the link. It really should be used for those people retiring at traditional retirement ages like 60 or 65. For anyone younger it really should not be used and certainly not as OP's age.
The 4% rule is based on historical returns on investments and inflation data. It says that at least 95% of the time ( using historical scenarios) that your money will not run out as long as you at most use only need 4% (inflation adjusted every year) to draw-down from investments every year. This works for say a 30 year time horizon (i.e. so those who are aged 60 expecting to live to 90). But at OP's age it certainly will not work given the much longer time horizon (presumably).0 -
plus even if you earn nothing you can still put £2880 into a pension and the government will top it up to £3600 whether or not you earn a penny
BUT IN ADDITION
Your tax rebate on money you invest in pension is paid on taxable income, not income you have actually paid £££ tax on. That is if you earn income of just under your allowance then you can pay all that income into a pension and get a 25% top up- which is fine in your case where you have the cash in the bank to do that. So don't dismiss pensions - but whether its ISA, LISA pension or otherwise what is as important is your investment strategy, which as you see depends on your needs, but unless you ill health is worse then you are willing to share its not that different from most people entering pension land.I think I saw you in an ice cream parlour
Drinking milk shakes, cold and long
Smiling and waving and looking so fine0
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