Investing large sum for income

[markb]

if you had £3million, how much do you think you could get if you invested it for income? If you didn't want the hassle and risk of investing it yourself and went through a wealth management company or elsewhere, would the interest rates be much higher than standard savings and investment accounts? I'm just trying to work out if you could retire with £3m and live off the interest.

What would you do with this amount of money?

 

[ian]

Well, I'd imagine even on 1.5% interest, £3mil would net you a tidy £45,000 to live off. Wealth managers don't offer much better rates without investing the money in risk based options, plus your money isn't protected against loss because of the £75k limits per banking institution. Aside from money in the bank, investing in houses, rentals and classic cars is the safer route than others I guess.

 

[Murray]

investing in houses, rentals and classic cars

How dare you not mention domains

 

[DomainAngel]

I used to buy houses for investors with decent lump sums and even though the returns were not huge they were safe and regular.

3m buys you 37 decent houses costing 80k after refurb and buyers fee.

Letting them all out to young family with local connections and on housing benefit that gives you after letting and management fees 4K income per property.

So almost £150k income with portfolio equal or greater than your investment.

Income could be higher due to some areas demanding more than the 375 a week but using this figure allows for any un letted periods and extraordinary costs.

Still lots of these properties available up north.

Only down side is the couple of months it takes to liquidate but plenty of people out there who buy multi million pound property portfolios.

I'm more of a minimum 2k investor but still get emails from Barclays stockbrokers offering deals like one a year or so ago. Tesco bond 2k to 2m I think. 5% guaranteed over 8.5 years it was, interest payable twice a year.

If you could live off 150k there are lots of investments out there. Less and your laughing.

Best of luck.

 

[philiporchard]

3% stamp duty now on second properties, and you can't offset interest against income so not quite as attractive as it used to be.

 

[ian]

How dare you not mention domains

You know I flip them, not invest in them

 

[martin-s]

Crowdfunding?

 

[scottmccloud]

How dare you not mention domains

60,000 Domainlore EMDs?

 

[Murray]

60,000 Domainlore EMDs?

They might cost £60 each to get them away from Doug

 

[Edwin]

I would have thought you could stagger your investment into tiers of different "risk levels" to secure an average return more in the 3-4% range by putting some in savings, stocks, peer to peer lending, etc. Split the money into say 30 chunks of £100,000 each and that should give you plenty of diversity.

At 3% you'd be making £90k a year before tax which should be enough to live on quite comfortably! And doing it that way would be near zero effort after the initial investment decisions...

Also worth bearing in mind that you could gradually eat into the capital if you don't care about eroding it... So that could be used to boost your annual take further.

 

[DomainAngel]

3% stamp duty now on second properties, and you can't offset interest against income so not quite as attractive as it used to be.

True but you can offset that when you sell against cgt so not as bad and at low purchase levels it's only like double purchase costs.

Oh to have 3m to worry about.

 

[pberry4032]

3% stamp duty now on second properties, and you can't offset interest against income so not quite as attractive as it used to be.

Go Ltd. Still get Stamp Duty but believe you can still offset interest in full.

 

[CatchDrop]

If you bought the houses with cash there wouldnt be any interest to offset

 

[DLOE]

I would have thought you could stagger your investment into tiers of different "risk levels" to secure an average return more in the 3-4% range by putting some in savings, stocks, peer to peer lending, etc. Split the money into say 30 chunks of £100,000 each and that should give you plenty of diversity.

At 3% you'd be making £90k a year before tax which should be enough to live on quite comfortably! And doing it that way would be near zero effort after the initial investment decisions...

Also worth bearing in mind that you could gradually eat into the capital if you don't care about eroding it... So that could be used to boost your annual take further.

Exactly what I was about to post.

What I do with my ´spare money´ is divide it into different groups, some solid, some risky and some very risky. You just have to make sure that the potential loss of the risky ones is pretty much covered by the solid on.

 

[dougs]

I posted this

http://www.droug.co.uk/invest-in-loads-of-startups-simple-maths/

Leveraging low risk mortgage money can make a return with minimal risk
Property held within a company still gets full relief and will continue or the gov will kill off major builders

 

[murph]

3% stamp duty now on second properties, and you can't offset interest against income so not quite as attractive as it used to be.

Buy through a company to help with the latter.

 

[dougs]

I also wrote this

http://www.droug.co.uk/investment-strategy-to-think-about/

Which is my model

Doug

 

[Edwin]

For starters I would put the protected maximum into each of the 2 year and longer fixed savings accounts listed here...
http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

That covers about £500k of the £3 million. Then put £1 million split across the top 3 peer to peer lenders, and split the rest between index tracker funds and funds specialising in high dividend stocks (you want income, after all). Should give you plenty to live on no matter what happens!

 

[Edwin]

For starters I would put the protected maximum into each of the 2 year and longer fixed savings accounts listed here...
http://www.moneysavingexpert.com/savings/savings-accounts-best-interest

That covers about £500k of the £3 million. Then put £1 million split across the top 3 peer to peer lenders, and split the rest between index tracker funds and funds specialising in high dividend stocks (you want income, after all). Should give you plenty to live on no matter what happens!

And of course if you have a partner then split everything and use their bank protection too, plus each of you will pay less tax than if one of you earned all the income.

 

[Edwin]

Doug's advice is great, but it sounds too much like "work" - I assume from the original post you're effectively looking for an instant retirement solution.