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  • FIRST POST
    • britishboy
    • By britishboy 12th Feb 18, 6:07 PM
    • 2,522Posts
    • 297Thanks
    britishboy
    What return could you expect on 100k per year?
    • #1
    • 12th Feb 18, 6:07 PM
    What return could you expect on 100k per year? 12th Feb 18 at 6:07 PM
    Just out of interest really, what sort of return could you expect on 100k per year, and where would you invest it?

    Would, say... 10% be achievable?
Page 1
    • Aegis
    • By Aegis 12th Feb 18, 6:18 PM
    • 4,866 Posts
    • 3,058 Thanks
    Aegis
    • #2
    • 12th Feb 18, 6:18 PM
    • #2
    • 12th Feb 18, 6:18 PM
    Just out of interest really, what sort of return could you expect on 100k per year, and where would you invest it?

    Would, say... 10% be achievable?
    Originally posted by britishboy
    10% average returns would represent a very high risk investment. Bear in mind that a diversified portfolio of equities has historically generated returns of about 5% over inflation, so if you assume inflation at about 3% a high risk portfolio (i.e. only equities) would be averaging about 8% a year. For lower levels of risk, the return would need to come down from that point, sometimes significantly.

    If you need consistency (e.g. income paid yearly) then you need to aim lower than this figure.
    I am an Independent Financial Adviser
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
    • Audaxer
    • By Audaxer 12th Feb 18, 6:35 PM
    • 1,019 Posts
    • 590 Thanks
    Audaxer
    • #3
    • 12th Feb 18, 6:35 PM
    • #3
    • 12th Feb 18, 6:35 PM
    Just out of interest really, what sort of return could you expect on 100k per year, and where would you invest it?

    Would, say... 10% be achievable?
    Originally posted by britishboy
    Maybe it would have been achievable on some portfolios over the last 5 years, but very unlikely over the next 5 years.

    To have a good chance of an average return above inflation, it needs to be invested long term for at the very least 10 years, and be invested in a diversified global portfolio of funds. The higher percentage of equities will most likely provide better returns long term, but will be more volatile than a balanced portfolio of equities and bonds. If you invested in 100% equities, then you must be prepared for the value of your investments to fall by up to 50% when there is an equity crash, so you need to establish your capacity for risk before you invest, because the worst thing you can do is panic and sell your investment when prices do drop 40% or 50%.

    I would recommend learning as much as you can on this forum and sites like Monevator before starting to invest.
    • Prism
    • By Prism 12th Feb 18, 7:04 PM
    • 291 Posts
    • 208 Thanks
    Prism
    • #4
    • 12th Feb 18, 7:04 PM
    • #4
    • 12th Feb 18, 7:04 PM
    Just out of interest really, what sort of return could you expect on 100k per year, and where would you invest it?

    Would, say... 10% be achievable?
    Originally posted by britishboy
    Achievable? Of course. If you had invested that 100,000 totally in Amazon shares just 3 years ago they would today be worth almost 400,000. Basically a 300% rise.

    Likely? had you diluted that investment with a fund holding many other shares you would be only looking at a small proportion of that gain. If you were looking at a longer term, lets say the last 20 years from Feb 1998, then an index fund that invested in the US stock market S&P 500 would have returned about 7% - not bad considering that dotcom bubble and financial crisis happened throughout that period.

    Thats the problem though. How to not invest just before a crash and not want your returns just after one. Had you invested that 100k in february 2000 and needed your money back in february 2009 you would be down over 30k.
    • BananaRepublic
    • By BananaRepublic 12th Feb 18, 8:12 PM
    • 1,191 Posts
    • 871 Thanks
    BananaRepublic
    • #5
    • 12th Feb 18, 8:12 PM
    • #5
    • 12th Feb 18, 8:12 PM
    The nature of equities is that you cannot be certain of anything. Generally to get higher returns you need to take higher risk, and by definition that means that you could end up in clover, or poop. As said above, diversification is a good way to reduce that risk, which in simple terms is the avoidance of betting the farm on one horse. You diversify over many countries, and over many sectors such as small companies, large cap and so on. Another way to reduce risk is to invest for the long term.

    Investing in equities is not gambling, but there are no certainties. As said above, it would have been better to have started five years ago. I have done quite well over the last 20 years, having taken the view that equities would be a good long term punt, and that the markets would behave according to past macro trends ie lots of wobbles, some crashes and overall growth.

    How much can one expect to gain? Well you could for example look at historical data for returns from index funds in the S&P, the FTSE 100 and 250, the Nikkei etc. Tho data in the investors key information includes charges in the returns. 20 year data will include the GFC so it is probably the most interesting. When I look at my own investments, UK index funds were mediocre, a European index fund was okay, European active funds were good to excellent, and a Japanese active fund was execrable, losing money over 15 years despite numerous predictions of a recovery, which did eventually take hold. So to answer your question, I have no expected percentage gain, just a belief that wise investing will provide me with a comfortable retirement, and thus far the gods are obliging.
    • Thrugelmir
    • By Thrugelmir 12th Feb 18, 10:17 PM
    • 58,203 Posts
    • 51,575 Thanks
    Thrugelmir
    • #6
    • 12th Feb 18, 10:17 PM
    • #6
    • 12th Feb 18, 10:17 PM
    Just out of interest really, what sort of return could you expect on 100k per year, and where would you invest it?

    Would, say... 10% be achievable?
    Originally posted by britishboy
    How much are prepared to lose? Plenty of speculative investments available.
    Last edited by Thrugelmir; 12-02-2018 at 10:30 PM.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • thenewcomer
    • By thenewcomer 12th Feb 18, 11:13 PM
    • 82 Posts
    • 15 Thanks
    thenewcomer
    • #7
    • 12th Feb 18, 11:13 PM
    • #7
    • 12th Feb 18, 11:13 PM
    10%.. maybe in ISA.
    • thenewcomer
    • By thenewcomer 12th Feb 18, 11:17 PM
    • 82 Posts
    • 15 Thanks
    thenewcomer
    • #8
    • 12th Feb 18, 11:17 PM
    • #8
    • 12th Feb 18, 11:17 PM
    10% returns on 100k will give you 1000 quids a month.

    you can actually live on that amount. FINANCIAL INDEPENDENCE achieved
    • Thrugelmir
    • By Thrugelmir 12th Feb 18, 11:22 PM
    • 58,203 Posts
    • 51,575 Thanks
    Thrugelmir
    • #9
    • 12th Feb 18, 11:22 PM
    • #9
    • 12th Feb 18, 11:22 PM
    Achievable? Of course. If you had invested that 100,000 totally in Amazon shares just 3 years ago they would today be worth almost 400,000. Basically a 300% rise.
    Originally posted by Prism
    Easy to use hindsight to substantiate a view. UK investors could have bought into Fevertree. Alternatively bought Apple at $2.40 in 2004.......
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • eskbanker
    • By eskbanker 12th Feb 18, 11:50 PM
    • 6,838 Posts
    • 7,089 Thanks
    eskbanker
    10%.. maybe in ISA.
    Originally posted by thenewcomer
    Since ISA is just a wrapper, within which a vast array of investments of many different risks and returns can be held (all of which can be held outside an ISA too), that is a nonsensical comment. Not to mention the fact that the annual limit means that it would take five years to get 100K into ISA sheltering....

    10% returns on 100k will give you 1000 quids a month.
    Originally posted by thenewcomer
    What about the other two months of the year though?

    you can actually live on that amount. FINANCIAL INDEPENDENCE achieved
    Originally posted by thenewcomer
    Sub minimum wage breadline poverty achieved....
    • dunstonh
    • By dunstonh 12th Feb 18, 11:59 PM
    • 92,188 Posts
    • 59,353 Thanks
    dunstonh
    10%.. maybe in ISA.
    Originally posted by thenewcomer
    If you are only prepared to accept a 10% loss then you are only looking at around 3-4%ish p.a.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • ColdIron
    • By ColdIron 13th Feb 18, 9:10 AM
    • 4,042 Posts
    • 4,992 Thanks
    ColdIron
    10% returns on 100k will give you 1000 quids a month.
    Originally posted by thenewcomer
    Suggest you try plugging the numbers into a calculator
    • Linton
    • By Linton 13th Feb 18, 9:28 AM
    • 9,333 Posts
    • 9,460 Thanks
    Linton
    Over the long term assuming a broadly based balanced portfolio and based on my experience over the past 20 years which included 2 major crashes: 5.5-7.5%/year. But you must be prepared for a range of say -25% to +25% in particular years.

    By focusing on growth you should increase the long term average a bit, but with falls in the meantime of say 40%.
    • AlanP
    • By AlanP 13th Feb 18, 1:03 PM
    • 1,170 Posts
    • 842 Thanks
    AlanP
    Over the long term assuming a broadly based balanced portfolio and based on my experience over the past 20 years which included 2 major crashes: 5.5-7.5%/year. But you must be prepared for a range of say -25% to +25% in particular years.

    By focusing on growth you should increase the long term average a bit, but with falls in the meantime of say 40%.
    Originally posted by Linton
    Is your 5.5 to 7.5% before or after inflation Linton. I guess before, but just so all readers are clear.....
    • TBC15
    • By TBC15 13th Feb 18, 1:36 PM
    • 449 Posts
    • 211 Thanks
    TBC15
    10% returns on 100k will give you 1000 quids a month.

    you can actually live on that amount. FINANCIAL INDEPENDENCE achieved
    Originally posted by thenewcomer

    The Romulan calendar will play havoc with your retirement plans.
    • thenewcomer
    • By thenewcomer 14th Feb 18, 11:31 PM
    • 82 Posts
    • 15 Thanks
    thenewcomer
    haha guys! yes, i got the calculation wrong.

    but, one should be able to survive on 1000 quids a month...
    • Bravepants
    • By Bravepants 15th Feb 18, 12:29 AM
    • 399 Posts
    • 433 Thanks
    Bravepants
    haha guys! yes, i got the calculation wrong.

    but, one should be able to survive on 1000 quids a month...
    Originally posted by thenewcomer
    My partner's and I's bills (absolute necessities) are 1000 a month, food, gas, electricity, phone, broadband, car tax, car insurance, car maintenance budget, water, petrol budget, coal, TV (minimal), council tax, and we don't have a mortgage or pay rent!
    • thenewcomer
    • By thenewcomer 15th Feb 18, 7:20 AM
    • 82 Posts
    • 15 Thanks
    thenewcomer
    bravepants- that is two people's monthly living expenses!!!
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