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

 

[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.

 

[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.

 

[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.

 

[dougs]

more

Following on from Edwin

Debt investing secured against property on things like lendinvest

Doug

 

[markb]

Thanks for the responses guys. The peer to peer sites and landinvest look like good rates but obviously they are very risky. Has anyone used a decent wealth management company like coutts or similar, and what kind of interest rates can they get over the standard savings accounts?

I was thinking about investing in physical things like property, artwork, gold etc... but it would all be very time consuming and risky.

 

[markb]

Are there websites out there where you can invest in start ups and actually own a share of the company, rather than the usual peer to peer lending sites where you do not own a share of the company.

 

[Edwin]

I would also suggest that, before you invest in property "for other people", you consider investing in property for yourself. In other words, if you have a good feel for where you'd like to live for the next few years, why not invest some of the money into buying a property outright.

That makes everything else "safer" because your largest monthly expense is normally going to be a mortgage payment or rent payment, so if neither apply any more then you "need" much less to keep the lights on.

So even if you spent 1/4-1/3 of that theoretical £3 million on a super property (or something small if in London) you might be more secure than if you kept it all producing "income" but had a large outgoing for property each month.