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Objective Developer

Str And What To Do With The Cash

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Alright Peeps,

Here is the scenario; my parents would clear around £180k if they sold their house, and I assume that they would not have to pay CGT as it is their only home etc. What they would like to do is move around a bit, travel (they are both around 50), and find a cheap part of the world and live off of the nest egg. Now, although this means that they would be spending all my inheritance (which I don’t really mind), is there a way that they can earn a decent living from their nest egg through interest etc? I’m thinking that they would only need 6% pa to give them enough to live off of, but is there a fatal flaw in this plan?

Any thoughts welcome.

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Fatal flaw? Don't know but sounds very optimistic to me. Here's a few things to consider:

Inflation: The big one. They don't want to be on a fixed income EG bonds, fixed-rate annuities while prices rise. Index-linked bonds maybe?

Tax: 6% net may be very different to 6% gross depending on where they live and what the tax arrangements are.

Pension: If they are entitled to any UK pension, would they forfeit this right by moving overseas?

I'd be interested to know other people's thoughts. 180k just doesn't sound enough to me...

Edit: Personally, my STR fund is in cash, index-linked bonds and a little gold and overseas currency; the object of the exercise is just for it to maintain its value so that I can buy back into property for better value in the future.

Edited by Selling up

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Alright Peeps,

Here is the scenario; my parents would clear around £180k if they sold their house, and I assume that they would not have to pay CGT as it is their only home etc. What they would like to do is move around a bit, travel (they are both around 50), and find a cheap part of the world and live off of the nest egg. Now, although this means that they would be spending all my inheritance (which I don’t really mind), is there a way that they can earn a decent living from their nest egg through interest etc? I’m thinking that they would only need 6% pa to give them enough to live off of, but is there a fatal flaw in this plan?

Any thoughts welcome.

Probably not what you (or they) want to hear but imho:

I would suggest that isn't enough money. They're only 50 so it has to last a long time and if they're taking 6% pa out (through investing as illustrated below) then inflation will erode the capital and the value of the interest each year. Also they don't have any margin for contingencies. If one of them fell ill then overseas medical bills would be prohibitive so

they would have to move back and would then find themselves with insufficient money to live here. Sorry to put a downer on it..

Savings Advice

If they want it simple and safe then I suggest NS&I bonds (index linked are good) plus high interest savings account like Icesave. As there is a risk that the forthcoming credit crunch could take the odd bank with it ensure they stick to the FSA compensation limit, which gives you 100% of the first 2k and 90% of the next 31K if an FSA authorised savinsg provider fails.

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Guest The_Oldie
I'd be interested to know other people's thoughts. 180k just doesn't sound enough to me...

I wouldn't like to retire on £180K, especially in my early 50s.

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£180K is peanuts.

6% of peanuts is approx £10Kpa for 2 people. Where are they planning on living - Bulgaria?

And you can't see a flaw in this ludicrous plan?

Good to see you've come to your senses!

Can't see a camp site in Devon working either.

Edited by Ignorant Steve

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£180K is peanuts.

6% of peanuts is approx £10Kpa for 2 people. Where are they planning on living - Bulgaria?

And you can't see a flaw in this ludicrous plan?

Good to see you've come to your senses!

Can't see a camp site in Devon working either.

:lol:Harsh, but funny. ;)

Gah! Doesn't make sense after Ignorant Steve's edit. Oh well.

Edited by bomberbrown

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:lol:Harsh, but funny. ;)

Gah! Doesn't make sense after Ignorant Steve's edit. Oh well.

Had I posted a minute earlier I'd have left it.

Comedy timing is all about er....timing

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180k is plenty.

if they want to go travelling in places like asia, the average wage for places like malaysia thailand china is only a few thousand dollars a year. they could get by pretty comfortably to be honest.

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180k is plenty.

if they want to go travelling in places like asia, the average wage for places like malaysia thailand china is only a few thousand dollars a year. they could get by pretty comfortably to be honest.

But the problem is you need to be earning interest at a greater rate than inflation (to protect the capital) so £180k is relatively pittance.

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180k is plenty.

if they want to go travelling in places like asia, the average wage for places like malaysia thailand china is only a few thousand dollars a year. they could get by pretty comfortably to be honest.

And what happens in 10 years? 20 years? 30 years. They're only in their fifties - you idiot.

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Guest The_Oldie
But the problem is you need to be earning interest at a greater rate than inflation (to protect the capital) so £180k is relatively pittance.

It depends at what age you retire. At 70 or 80, with two pensions coming in, it would probably be doable. At 50 though it's a non starter, in my opinion.

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Index-linked gilts from NS&I are designed to yield a little over 1% above RPI. So if you wanted to keep your capital value the same you'd only be able to spend a little over 1% annually.

:(

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And what happens in 10 years? 20 years? 30 years. They're only in their fifties - you idiot.

well £9000 equates to about $18000 a year.

if typical salary in malaysia/thailand is about $5000, im pretty sure they can get by ok. muppet.

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Put the money in an offshore savings account at 6.4%. Rent a nice flat in Malta for £300 a month. (Type in Frank Salt Malta in google.)

Remit capital ony to live on. Leave the interest in a seperate offshore account. This way you pay no tax in Malta as they will be classified non domicile.

Food is lot cheaper than in UK plus hardly any heating bills and no council tax either.

A lot of STRs can do this.

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Some kind of index-linked savings scheme? Asia was one of their options.

Seriously;

Buy a fishing lake in Germany for under £20,000 then market it to UK fishermen in the Angling Times.

If interested I will assist as a good German freind has one to sell.

I dont know what the income will be but I do know property is massivly cheaper than overdone France or Devon and Berlin is 1 1/2 hr flight from Stansted.

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well £9000 equates to about $18000 a year.

if typical salary in malaysia/thailand is about $5000, im pretty sure they can get by ok. muppet.

mfp, not sure if you've actually read the thread.

The problem is finding an zero-risk asset which pays enough OVER THE RATE OF INFLATION that one can live on that portion without eroding the capital.

In my example, NS&I index linked bonds give a return over inflation of 1.15% IE £2070 available to spend, not £9000.

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I dont know what the income will be but I do know property is massivly cheaper than overdone France or Devon and Berlin is 1 1/2 hr flight from Stansted.

How much will 1 1/2hr flights cost in 5 or 10 years time?

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mfp, not sure if you've actually read the thread.

The problem is finding an zero-risk asset which pays enough OVER THE RATE OF INFLATION that one can live on that portion without eroding the capital.

In my example, NS&I index linked bonds give a return over inflation of 1.15% IE £2070 available to spend, not £9000.

it makes no difference. if the interest you are earning gives you 2-3 x income of the local population you can obviously live quite comfortably.

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it makes no difference. if the interest you are earning gives you 2-3 x income of the local population you can obviously live quite comfortably.

That was kind of their thinking - and not to put a too finer point on it, they haven't got a clue about this sort of thing.

It seems like a risky business but they really want out. They are both in dead end jobs, neither have much in the way of savings etc, and are basically screwed. If they can get a big cash injection and sod off from this country then maybe they have a chance.

Come on you lot, you're a clever bunch, what can be done??

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Seriously;

Buy a fishing lake in Germany for under £20,000 then market it to UK fishermen in the Angling Times.

If interested I will assist as a good German freind has one to sell.

I dont know what the income will be but I do know property is massivly cheaper than overdone France or Devon and Berlin is 1 1/2 hr flight from Stansted.

Interestingly, my Grandfather (Mothers side) used to own and run a fishing lake in the UK. There was a pretty good income but the not enough to live on, but as it was a retirement project it didn’t really matter.

It cost a bomb to stock though and I spent my school holidays there from dawn ‘till dusk shooting Cormorants with my .22. Those bloody things can take massive fish and all they seem to do is eat no stop! The buggers cleared out all the good ones in no time at all.

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they could easily live off the interest if they choose to live abroad. it would be like a wealthy russian coming to britain and living off £90000 interest a year from his money back in russia.

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Index-linked gilts from NS&I are designed to yield a little over 1% above RPI. So if you wanted to keep your capital value the same you'd only be able to spend a little over 1% annually.

:(

Thats exactly what I was getting at.

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