Growing wealth

Mad_maxx · 28-09-2019 5:14pm #1

Let's say a great aunt died and left you a million euro, could you retire and having put the money to work, live off it?

If so, what would you do with the money - where would you invest it?

Idea stems from stories you read about people who either build up enough of a nest egg to retire early, replace great aunt with won it on the 3.10 @ Cheltenham if you prefer.

BeerWolf · 28-09-2019 5:22pm

Agricola · 28-09-2019 5:26pm

I'd contact Jacob Rees Mogg and ask him for advice on extremely short term investment opportunities..........

Professor Genius · 28-09-2019 5:28pm

Mad_maxx wrote: »

Let's say a great aunt died and left you a million euro, could you retire and having put the money to work, live off it?

If so, what would you do with the money - where would you invest it?

Idea stems from stories you read about people who either build up enough of a nest egg to retire early, replace great aunt with won it on the 3.10 @ Cheltenham if you prefer.

A diverse fund portfolio with interest, rental and dividend income would do me

ytpe2r5bxkn0c1 · 28-09-2019 5:45pm

It's not hard, once you've built up decent capital, to find a range of options delivering a decent return and a steady income.

Aint Eazy Being Cheezy · 28-09-2019 5:47pm

Kyrie Tinkling Reimbursement wrote: »

It's not hard, once you've built up decent capital, to find a range of options delivering a decent return and a steady income.

What’s one of them?

valoren · 28-09-2019 5:49pm

Blue chip dividends. You'd get circa 3% average after tax so 30k a year. The dividend kings and aristocrats raise their dividends annually so the 30k would grow every year as well. Let's take an annual increase of 10% on that 30k every year. If you reinvested the 30k dividends and added more of your own cash to buy more stock then you accelerate the compounding process every quarter.

Quick example. Take 10k of the million. Buy something like Altria (aka the old Phillip Morris) and you get 8.3% dividend or $830 before paying 15% withholding tax. When you get the dividend, buy more Altria. Wash rinse repeat with a diversified portfolio of blue chip legends.

Upforthematch · 28-09-2019 5:57pm

Mad_maxx wrote: »

Let's say a great aunt died and left you a million euro, could you retire and having put the money to work, live off it?

I dunno could someone in their twenties based in Dublin without their own home actually live off that million for the rest of their life with investment returns as they are.

Sure they wouldn't starve but I don't think they'd have the "millionaire lifestyle" as they say.

Junkyard Tom · 28-09-2019 6:04pm

Buy some land over in the West Indies and work some slaves on it.

Conall Cernach · 28-09-2019 6:05pm

Upforthematch wrote: »

I dunno could someone in their twenties based in Dublin without their own home actually live off that million for the rest of their life with investment returns as they are.

Sure they wouldn't starve but I don't think they'd have the "millionaire lifestyle" as they say.

If they had a million in the bank they could afford to move elsewhere and then use the remainder to do as Valoren has suggested.

Mad_maxx · 28-09-2019 6:14pm

You keep hearing about how the first million is the hardest, perhaps that relates to self made business men?

I'd have thought simply borrowing another million and buying two million worth of prime location property was the least complicated?

dxhound2005 · 28-09-2019 6:17pm

Plenty of people these days will have taken home well over a million in wages during their working lifetime. The best advice I would offer in this case is to find out how the aunt accumulated her wealth, and replicate that.

pearcider · 28-09-2019 6:18pm

valoren wrote: »

Blue chip dividends. You'd get circa 3% average after tax so 30k a year. The dividend kings and aristocrats raise their dividends annually so the 30k would grow every year as well. Let's take an annual increase of 10% on that 30k every year. If you reinvested the 30k dividends and added more of your own cash to buy more stock then you accelerate the compounding process every quarter.

Quick example. Take 10k of the million. Buy something like Altria (aka the old Phillip Morris) and you get 8.3% dividend or $830 before paying 15% withholding tax. When you get the dividend, buy more Altria. Wash rinse repeat with a diversified portfolio of blue chip legends.

Unless of course you bought Altria in 2017 in which case you’ve lost half your investment.

mikemac2 · 28-09-2019 6:20pm

Purchase buy to let property

When it works you are a canny genius and all success is down to your smarts and when it doesn't work you get to shout it is fault of someone else and where is the bailout for the little people

Accomadation forum over the years confirmed this :rolleyes:

nkl12xtw5goz70 · 28-09-2019 7:01pm

If your great-aunt left you the money, the first €32,500 would be tax-free, and then you would pay Capital Acquisitions Tax of 33% on the remainder. So your million euro would be down to €680,725 straightaway.

One of the implications of the current Irish taxation system.

BDI · 28-09-2019 7:07pm

Buy good property during the recession and sell it during the boom. Rent it out in between. That’s how old money works.

New money buys gold chains during the boom and sells them when they broke during a recession to old money types in cash for gold shops.

Leg End Reject · 28-09-2019 7:10pm

You'd need more than a million to stop working.

nkl12xtw5goz70 · 28-09-2019 7:12pm

BDI wrote: »

Buy good property during the recession and sell it during the boom. Rent it out in between. That’s how old money works.

New money buys gold chains during the boom and sells them when they broke during a recession to old money types in cash for gold shops.

"Be fearful when others are greedy. Be greedy when others are fearful." -- Warren Buffett

Rows Grower · 28-09-2019 7:27pm

Leg End Reject wrote: »

You'd need more than a million to stop working.

I know one particular chap who never did an honest days work in his life even though there is nothing physically wrong with him. He qualified for the pension recently which is an actual increase in state benefits every week for him.

He has his own council house, free medical care and every other hand out you can think of. The council totally renovated the house as well about three years ago.

Sunny Disposition · 28-09-2019 7:29pm

Rows Grower wrote: »

I know one particular chap who never did an honest days work in his life even though there is nothing physically wrong with him. He qualified for the pension recently which is an actual increase in state benefits every week for him.

He has his own council house, free medical care and every other hand out you can think of. The council totally renovated the house as well about three years ago.

This is one messed up place. Ridiculous cases like this up and down the country.

Leg End Reject · 28-09-2019 7:30pm

Rows Grower wrote: »

I know one particular chap who never did an honest days work in his life even though there is nothing physically wrong with him. He qualified for the pension recently which is an actual increase in state benefits every week for him.

He has his own council house, free medical care and every other hand out you can think of. The council totally renovated the house as well about three years ago.

Unfortunately I work, so don't get any of that. By the time I'd pay off debts and pay CGT I'd have a nice nest egg, not enough to live off for the rest of my life.

Hobosan · 28-09-2019 7:37pm

Set 900k on fire. The remaining 100k will rise in value.

Strumms · 28-09-2019 7:40pm

Santino Chubby Munchies wrote: »

If your great-aunt left you the money, the first €32,500 would be tax-free, and then you would pay Capital Acquisitions Tax of 33% on the remainder. So your million euro would be down to €680,725 straightaway.

One of the implications of the current Irish taxation system.

How will the state ‘know’ of your windfall ? Genuine question.

marieholmfan · 28-09-2019 7:43pm

Rows Grower wrote: »

I know one particular chap who never did an honest days work in his life even though there is nothing physically wrong with him. He qualified for the pension recently which is an actual increase in state benefits every week for him.

He has his own council house, free medical care and every other hand out you can think of. The council totally renovated the house as well about three years ago.

Fair play to him. Sounds like he has it sussed. No point not taking what you're owed.

Leg End Reject · 28-09-2019 7:43pm

Strumms wrote: »

How will the state ‘know’ of your windfall ? Genuine question.

Solicitor and probate. You wouldn't just be handed an envelope of cash.

Ginger83 · 28-09-2019 7:49pm

Leg End Reject wrote: »

Solicitor and probate. You wouldn't just be handed an envelope of cash.

biscuit tin

Strumms · 28-09-2019 7:54pm

Leg End Reject wrote: »

Solicitor and probate. You wouldn't just be handed an envelope of cash.

Sounds like a complete rip off on the behalf of the state. Majority of that money earned by the deceased will be what they earned after tax, now its being taxed again...

If I had a relative who pulled me aside and said.... “ look, you know I’ve not been in brilliant health, well things are going to get worse and I’ve been given 6-9 months... I’ve no kids, here is a cheque, dosh is yours 50,000, going to keep a few grand back for incidentals here and what’s left of that I’ll give to charity...

Could the state come after you for their claim of the 50,000, is there a legal onus on you or your solicitor to disclose ?

Leg End Reject · 28-09-2019 7:56pm

Strumms wrote: »

Sounds like a complete rip off on the behalf of the state. Majority of that money earned by the deceased will be what they earned after tax, now its being taxed again...

If I had a relative who pulled me aside and said.... “ look, you know I’ve not been in brilliant health, well things are going to get worse and I’ve been given 6-9 months... I’ve no kids, here is a cheque, dosh is yours 50,000, going to keep a few grand back for incidentals here and what’s left of that I’ll give to charity...

Could the state come after you for their claim of the 50,000 or how would they know ?

You'll have to lodge that cheque and the bank will ask questions and alert revenue.

Edit: Yes, the solicitor must disclose the transfer of assets to revenue. One of the first things you'll be asked for is proof of identity and PPS number.

dxhound2005 · 28-09-2019 7:58pm

Rows Grower wrote: »

I know one particular chap who never did an honest days work in his life even though there is nothing physically wrong with him. He qualified for the pension recently which is an actual increase in state benefits every week for him.

He has his own council house, free medical care and every other hand out you can think of. The council totally renovated the house as well about three years ago.

He must be a close friend. I wouldn't tell that sort of information to strangers.

Strumms · 28-09-2019 8:02pm

Leg End Reject wrote: »

You'll have to lodge that cheque and the bank will ask questions and alert revenue.

That’s mad, so if I go to my bank on Monday, a cheque for 50,000 to be lodged they are entitled to ask where I came by the dosh and if not altogether satisfied then go and ring the revenue ?

Mad_maxx · 28-09-2019 8:03pm

Santino Chubby Munchies wrote: »

If your great-aunt left you the money, the first €32,500 would be tax-free, and then you would pay Capital Acquisitions Tax of 33% on the remainder. So your million euro would be down to €680,725 straightaway.

One of the implications of the current Irish taxation system.

My aunt hasn't left me anything, I was just posing a question about the best way to put money to work should someone ever come into it but thanks for the info

kneemos · 28-09-2019 8:03pm

Rows Grower wrote: »

I know one particular chap who never did an honest days work in his life even though there is nothing physically wrong with him. He qualified for the pension recently which is an actual increase in state benefits every week for him.

He has his own council house, free medical care and every other hand out you can think of. The council totally renovated the house as well about three years ago.

He pays rent,plus living expenses out of his dole or pension.
It's not an extravagant life.

valoren · 28-09-2019 8:04pm

pearcider wrote: »

valoren wrote: »

Blue chip dividends. You'd get circa 3% average after tax so 30k a year. The dividend kings and aristocrats raise their dividends annually so the 30k would grow every year as well. Let's take an annual increase of 10% on that 30k every year. If you reinvested the 30k dividends and added more of your own cash to buy more stock then you accelerate the compounding process every quarter.

Quick example. Take 10k of the million. Buy something like Altria (aka the old Phillip Morris) and you get 8.3% dividend or $830 before paying 15% withholding tax. When you get the dividend, buy more Altria. Wash rinse repeat with a diversified portfolio of blue chip legends.

Unless of course you bought Altria in 2017 in which case you’ve lost half your investment.

Obviously, not all of it would be invested in Altria. It would be stupid to risk the capital on a single stock. The Altria dividend would be buying the stock on the cheap considering it has fallen ie more shares bought at depressed prices. The 10k invested today could drop 50% in a year but you'd still have the $830 locked in so long as the company remained committed to paying out. You'd be looking at buying income not selling for a capital gain. If you had an investment property that you bought for 200k that gives you a practically guaranteed annual rental income of 12k but its market value dropped to 100k then once your aim is to elicit income then the fluctuating market value becomes irrelevant.

Focus would be on generating dividend income and not capital gain. Any portfolio, no matter how conservative will at some points lose its paper value but the dividend would still be getting paid out. Long term, meaning decades, then investing a million in blue chip dividend paying (and increasing) stocks is a no brainer.

30 to 50 blue chips (google the dividend kings) with a million equals financial freedom, sleeping easy every night and dividend cash flowing in without lifting a finger. Given the power of compounding then the ultimate aim would be to receive in income the same as what you initially invested ie 10k invested in a stock decades ago that is now paying you 10k in income. A 100% yield on cost.

dxhound2005 · 28-09-2019 8:10pm

Mad_maxx wrote: »

My aunt hasn't left me anything, I was just posing a question about the best way to put money to work should someone ever come into it but thanks for the info

Judge the advice you are given with caution. Often people who own gold or shares or whatever will push others into investing, so that the asset will increase. You could make a lot of money, but you could also lose by going into shares, property, precious metals, digital currency, fine art and so on.

The only schemes which will protect your capital are government guaranteed deposit accounts, but the return is very low, and will be eaten up by inflation. Also because financial institutions do not want deposits at present, they have imposed limits typically of €250,000 on how much a saver can have.

Leg End Reject · 28-09-2019 8:10pm

Strumms wrote: »

That’s mad, so if I go to my bank on Monday, a cheque for 50,000 to be lodged they are entitled to ask where I came by the dosh and if not altogether satisfied then go and ring the revenue ?

Yes, you could be laundering money, as well as trying to avoid paying tax. The bastards have you every way

CelticRambler · 28-09-2019 8:12pm

Leg End Reject wrote: »

You'd need more than a million to stop working.

Assuming I live another 50 years (which would be fairly good going, even if both my granddads lived into their nineties), that's 20k a year which is about twice what I need to live on at the moment.

So I'd spend the first half of it on a property based retirement project that may or may not pay for itself, knowing that I'd still be able to maintain my current lifestyle.

nsi423 · 28-09-2019 8:15pm

pearcider wrote: »

Unless of course you bought Altria in 2017 in which case you’ve lost half your investment.

This is true but not relevant to the OP's question.

Let's say OP bought Altria in 2017 for $70. The dividend in 2017 was $2.54, a 3.6% return before tax, ahead of valeron's 3% target.
In 2018, Altria paid out $3.00, a 4.3% return for OP's $70 investment.
This year they look set to pay out around $3.28, 4.7% return for OP.
OP's invested for cash flow, not capital gain and their income is increasing year on year.

Leg End Reject · 28-09-2019 8:16pm

CelticRambler wrote: »

Assuming I live another 50 years (which would be fairly good going, even if both my granddads lived into their nineties), that's 20k a year which is about twice what I need to live on at the moment.

So I'd spend the first half of it on a property based retirement project that may or may not pay for itself, knowing that I'd still be able to maintain my current lifestyle.

What about inflation? €20k won't have the same buying power for ever. Property gains will be taxed to the hilt too.

Mint Sauce · 28-09-2019 8:16pm

A great aunt. So it would probably be about 500-600 k by the time you pay the inheritance tax.

Probably pay off the mortgage, and invest the remainder.

Deub · 28-09-2019 8:16pm

CelticRambler wrote: »

Assuming I live another 50 years (which would be fairly good going, even if both my granddads lived into their nineties), that's 20k a year which is about twice what I need to live on at the moment.

So I'd spend the first half of it on a property based retirement project that may or may not pay for itself, knowing that I'd still be able to maintain my current lifestyle.

You just forgot inflation.

marieholmfan · 28-09-2019 8:16pm

Strumms wrote: »

That’s mad, so if I go to my bank on Monday, a cheque for 50,000 to be lodged they are entitled to ask where I came by the dosh and if not altogether satisfied then go and ring the revenue ?

Yes ; obliged not entitled

nkl12xtw5goz70 · 28-09-2019 8:17pm

Mad_maxx wrote: »

My aunt hasn't left me anything, I was just posing a question about the best way to put money to work should someone ever come into it but thanks for the info

Grand. Unfortunately there's no way to say what a hypothetical beneficiary should do with a hypothetical €1 million before CAT without knowing more about that person's age, circumstances, investing knowledge, and so on.

I will say, however, that retaining a financial adviser and handing your money over to him or her is probably the single worst decision a person could make.

Ginger83 · 28-09-2019 8:22pm

nsi423 wrote: »

This is true but not relevant to the OP's question.

Let's say OP bought Altria in 2017 for $70. The dividend in 2017 was $2.54, a 3.6% return before tax, ahead of valeron's 3% target.
In 2018, Altria paid out $3.00, a 4.3% return for OP's $70 investment.
This year they look set to pay out around $3.28, 4.7% return for OP.
OP's invested for cash flow, not capital gain and their income is increasing year on year.

So dont worry about dips as long as dividend is paid?

CelticRambler · 28-09-2019 8:25pm

Leg End Reject wrote: »

What about inflation? €20k won't have the same buying power for ever. Property gains will be taxed to the hilt too.

Any decent savings account or other low-risk investment vehicle would cover that. Chances are that my expenses will decrease as I get older anyhow - most of what I spend at the moment goes on diesel for long-distance travel.

Still waters · 28-09-2019 8:25pm

CelticRambler wrote: »

Assuming I live another 50 years (which would be fairly good going, even if both my granddads lived into their nineties), that's 20k a year which is about twice what I need to live on at the moment.

So I'd spend the first half of it on a property based retirement project that may or may not pay for itself, knowing that I'd still be able to maintain my current lifestyle.

You live on 10 grand a year ? How

Leg End Reject · 28-09-2019 8:28pm

CelticRambler wrote: »

Any decent savings account or other low-risk investment vehicle would cover that. Chances are that my expenses will decrease as I get older anyhow - most of what I spend at the moment goes on diesel for long-distance travel.

I'm not sure it would cover it. Are you relying on the current pension not being decreased? 10k is a very small amount to live on for a year, I'm not sure how you do it.

Mad_maxx · 28-09-2019 8:29pm

Instinct tells me buying two luxury apartments in the centre of Dublin would be the best option, cater to the executive type high earning tenant, three grand per month type client

Strumms · 28-09-2019 8:32pm

If I was to be on the end of a windfall, that’s what I’d do, buy an apartment with the dosh, rent out the gaff for a couple of years then sell it.

dxhound2005 · 28-09-2019 8:32pm

CelticRambler wrote: »

Any decent savings account or other low-risk investment vehicle would cover that. Chances are that my expenses will decrease as I get older anyhow - most of what I spend at the moment goes on diesel for long-distance travel.

Not any no risk account.

https://www.askaboutmoney.com/threads/savings-best-buys.90481/

Mad_maxx · 28-09-2019 8:35pm

Strumms wrote: »

If I was to be on the end of a windfall, that’s what I’d do, buy an apartment with the dosh, rent out the gaff for a couple of years then sell it.

Income then diverted into a pension in order to further grow one's wealth

Leg End Reject · 28-09-2019 8:36pm

Strumms wrote: »

If I was to be on the end of a windfall, that’s what I’d do, buy an apartment with the dosh, rent out the gaff for a couple of years then sell it.

You'd be taxed on all profits minus expenses, capital gains at 33%. Taxed on rental income too ...

Growing wealth

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