Inheritance - investing for income
Discussion
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hstewie said:
hstewie said: This is ten years.
Remember what look like reasonably small little dips on a graph can be seeing your million quid go down to £600K.
I don't know many people who are fine with that if all they've been used to is cash savings.
LifeStrategy 60 included as a slightly more realistic benchmark for where I expect most peoples appetite for risk to be.
I’ve seen my investments drop by several £100,000 in a few months a couple of times, doesn’t bother me in the least as every time it’s come back and stronger than before as I continue to buy regularly on the lows. As long as your in it for the long term. Remember what look like reasonably small little dips on a graph can be seeing your million quid go down to £600K.
I don't know many people who are fine with that if all they've been used to is cash savings.
LifeStrategy 60 included as a slightly more realistic benchmark for where I expect most peoples appetite for risk to be.
Sure but that's you.
A lot of people will st their pants and sell in a panic if they're not used to it.
That's arguably a lot of the value of paid advice - someone to tell you not to do it and to make it harder to do it than just logging into your Vanguard account and hitting sell
Mr Whippy the graph is just a basic example of what an amount of money would be worth now left for 10 years with any of those benchmarks to work on it.
Assumption with the fund is dividends reinvested automatically so Accumulation units.
It won't be foolproof but it gives an idea that over the long term you almost always lose out to inflation.
A lot of people will s
t their pants and sell in a panic if they're not used to it.That's arguably a lot of the value of paid advice - someone to tell you not to do it and to make it harder to do it than just logging into your Vanguard account and hitting sell
Mr Whippy the graph is just a basic example of what an amount of money would be worth now left for 10 years with any of those benchmarks to work on it.
Assumption with the fund is dividends reinvested automatically so Accumulation units.
It won't be foolproof but it gives an idea that over the long term you almost always lose out to inflation.
bhstewie said:
hstewie said: Sure but that's you.
A lot of people will st their pants and sell in a panic if they're not used to it.
That's arguably a lot of the value of paid advice - someone to tell you not to do it and to make it harder to do it than just logging into your Vanguard account and hitting sell
Mr Whippy the graph is just a basic example of what an amount of money would be worth now left for 10 years with any of those benchmarks to work on it.
Assumption with the fund is dividends reinvested automatically so Accumulation units.
It won't be foolproof but it gives an idea that over the long term you almost always lose out to inflation.
That’s all I do, low cost global tracker, but I use a IFA and pay around 1.4% all in. He’s available to me when I need him, gets back to me by the end of the day, if not before. He’s happy to spend 1 hr on the phone to me whenever I need him. But the main benefit is he’s taught me to be disciplined with my investments and got me to retirement 8 yrs before I thought I could and you can’t put a price on getting 8 yrs of freedom. A lot of people will s
t their pants and sell in a panic if they're not used to it.That's arguably a lot of the value of paid advice - someone to tell you not to do it and to make it harder to do it than just logging into your Vanguard account and hitting sell
Mr Whippy the graph is just a basic example of what an amount of money would be worth now left for 10 years with any of those benchmarks to work on it.
Assumption with the fund is dividends reinvested automatically so Accumulation units.
It won't be foolproof but it gives an idea that over the long term you almost always lose out to inflation.
YouWhat said:
That’s all I do, low cost global tracker, but I use a IFA and pay around 1.4% all in. He’s available to me when I need him, gets back to me by the end of the day, if not before. He’s happy to spend 1 hr on the phone to me whenever I need him. But the main benefit is he’s taught me to be disciplined with my investments and got me to retirement 8 yrs before I thought I could and you can’t put a price on getting 8 yrs of freedom.
To be that person, the price looks to be about 1.28% per year.TwigtheWonderkid said:
The Leaper said:
Dg504 said:
Wacky Racer said:
£1M is three weeks wages to a top premiership footballer in their early twenties.
I wonder what they do with it?
Well the best part of 50% goes in tax/NI and then what’s left I’d bet goes on their chintzy house, car(s) and lifestyle(s)…I wonder what they do with it?
R.
The rules regarding pensions are different for footballers, as they often retire around 35, so the PFA pension scheme is able to take far more than a normal mere mortal, about 35% contribution I think, before tax. The rest is taxable just like the rest of us. Car sponsorship deals are done on an individual basis so all bets are off in guessing a hard and fast rule for those.
Sometimes the club have a car sponsorship deal, which gives cars to all first teamers, but only senior players tend to get the good models. I know Man U had a deal with Cheverolet but you had to be over 35 to get a Corvette. Ryan Giggs had one.
R.
xeny said:
Mr Whippy said:
Where is inflation?
Just to check you've seen CPI and RPI at the bottom?Probably easiest to see dividends vs total return on the live site, where you can toggle dividends reinvested on and off.
You’d just want to see ‘real’ or net growth after inflation, and then the ‘income’ as dividends… ie, spending money vs principal growth.
In the case of the OPs requirements at least… if they stick £1m somewhere, how much spending money can they get and retain their principal (which I’d argue is the sensible advice as you don’t want to “spend” that money at 40yrs old ish as it’ll all be gone by retirement)
Mr Whippy said:
In 20yrs with VWRL you can get £400k into ISA wrappers. Or near half. There is CGT but only at 20pc… and you can sell up a bit at a time (increasingly almost zero as CGT allowance drops to zero, who knows how long that’ll last?) to optimise things.
I’m pretty sure there’s no CGT to pay on gains within an ISAEdited by Mr Whippy on Saturday 4th May 09:01
Double Fault said:
I’m pretty sure there’s no CGT to pay on gains within an ISA
There isn’t, but you can’t put 1m in an isa overnight, you can drip it in at a max of 20k/year, which is exactly his point.Every year sell just over 20k of the remaining 1m, pay any cgt due, then put the 20k in an isa that year and for eternity going forward there will be no future cgt on that 20k element,
Do that every year and over time you’ve shuffled a LOT into the isa wrapper where you have no tax.
xeny said:
YouWhat said:
Low cost global tracker. I use a IFA and pay around 1.4% all in. He’s available to me when I need him, gets back to me by the end of the day, if not before.
To be that person, the price looks to be about 1.28% per year."Ah, but it's only 1% a year."
Yes, but after 25 years a quarter of your money has disappeared into the IFA's pocket!
By all means stick with an IFA if you feel you're getting good value somewhere - say, for overall financial planning - but the costs really do mount up as the years go by.
Mr Whippy said:
Yes it’s a bit of a dogs dinner showing info like that.
You’d just want to see ‘real’ or net growth after inflation, and then the ‘income’ as dividends… ie, spending money vs principal growth.
In the case of the OPs requirements at least… if they stick £1m somewhere, how much spending money can they get and retain their principal (which I’d argue is the sensible advice as you don’t want to “spend” that money at 40yrs old ish as it’ll all be gone by retirement)
This is the bit that professionals and people way smarter than me don’t agree on. You’d just want to see ‘real’ or net growth after inflation, and then the ‘income’ as dividends… ie, spending money vs principal growth.
In the case of the OPs requirements at least… if they stick £1m somewhere, how much spending money can they get and retain their principal (which I’d argue is the sensible advice as you don’t want to “spend” that money at 40yrs old ish as it’ll all be gone by retirement)
Put the lot in zero risk savings and you won’t make much but you won’t lose any either EXCEPT to inflation.
Put it in something paying a decent dividend and you get a regular “salary” but your principal probably won’t grow much.
Or invest at a suitable risk appetite for total growth don’t worry about yield and sell some when you need to.
That’s what the example above illustrates.
They global tracker pays a pretty miserly yield but if you simply reinvested automatically and sold some whenever you needed it you’d be miles ahead of many specific dividend or income approaches.
Mr Whippy said:
Yes it’s a bit of a dogs dinner showing info like that.
You’d just want to see ‘real’ or net growth after inflation, and then the ‘income’ as dividends… ie, spending money vs principal growth.
In the case of the OPs requirements at least… if they stick £1m somewhere, how much spending money can they get and retain their principal (which I’d argue is the sensible advice as you don’t want to “spend” that money at 40yrs old ish as it’ll all be gone by retirement)
I posted earlier... the dividend yield of VWRL is 1.5-2% over the last 5 years.You’d just want to see ‘real’ or net growth after inflation, and then the ‘income’ as dividends… ie, spending money vs principal growth.
In the case of the OPs requirements at least… if they stick £1m somewhere, how much spending money can they get and retain their principal (which I’d argue is the sensible advice as you don’t want to “spend” that money at 40yrs old ish as it’ll all be gone by retirement)
xeny said:
YouWhat said:
That’s all I do, low cost global tracker, but I use a IFA and pay around 1.4% all in. He’s available to me when I need him, gets back to me by the end of the day, if not before. He’s happy to spend 1 hr on the phone to me whenever I need him. But the main benefit is he’s taught me to be disciplined with my investments and got me to retirement 8 yrs before I thought I could and you can’t put a price on getting 8 yrs of freedom.
To be that person, the price looks to be about 1.28% per year.What's the IFA fee and the platform fee to end up at 1.4% all in on a "low cost global tracker"?
Totally take YouWhat's point that if advice gets you 8 years doing what you want rather than working it may be "cheap" but looking at the raw numbers it does look a bit pricey assuming a six figure sum under management.
The Leaper said:
I did not say that footballers' income is not taxable. What I was told was that the tax etc is paid by their club/employer
It's entirely possible that a club might offer a player £100k/week take home pay, and pay him £200K a week or whatever to make that happen. But then you'd normally hear that the player was on £200K/week. The figures that are usually quoted in the press is the pre tax figure, because the whole point of the story is to give the highest possible figure, to get the maximum "£350K a week to kick a fking ball about" reaction. Mr Whippy said:
In the case of the OPs requirements at least… if they stick £1m somewhere, how much spending money can they get and retain their principal (which I’d argue is the sensible advice as you don’t want to “spend” that money at 40yrs old ish as it’ll all be gone by retirement)
Have a play with https://engaging-data.com/will-money-last-retire-e...The answer seems to be about £31,000 before tax. I'm simply treating £ as a straight swap for $. Obviously any pension, state or otherwise lets you spend more early on if you want to.
The relatively low % is why I (and I'd presume 'stewie) have such a beef about fees - they quickly start being a large part of the actual return.
popeyewhite said:
£1 million in stocks and shares will generate about £27k pa in a medium risk portfolio. Of course the fund will grow by the year, last year was 3.4%.
CPI last year was 3.9%, so I'm not sure it is safe to say growth is "of course".Trouble with all this stuff is it is very noisy year to year and the decisions and events near the beginning have an outsize impact if you are making withdrawals.
xeny said:
CPI last year was 3.9%, so I'm not sure it is safe to say growth is "of course".
Trouble with all this stuff is it is very noisy year to year and the decisions and events near the beginning have an outsize impact if you are making withdrawals.
OP has stated a stable income for 30 years is planned. Withdrawals are not mentioned. Unless something spectacular happens then there will be growth. Mind you another pandemic, Ukraine etcTrouble with all this stuff is it is very noisy year to year and the decisions and events near the beginning have an outsize impact if you are making withdrawals.
popeyewhite said:
OP has stated a stable income for 30 years is planned. Withdrawals are not mentioned. Unless something spectacular happens then there will be growth. Mind you another pandemic, Ukraine etc
I'd treat the £27K you call "generated" as a "withdrawal". Depending on exact asset mix, I think I've seen net negative growth (including "generated" returns reinvested) for the year in 2008, 2011, 2016, 2022, and that is neglecting the impact of inflation, which I think would make 2023 also negative.
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