# I am 59 with €3m cash and no income



## mafi97 (21 Nov 2007)

*I am 59.   ** Due to a very minor medical condition, I sold out of a business earlier than intended.*
*Having paid all taxes, and having organised my children with their first houses ,  I am left with my house  and holiday home, no mortgage and no borrowings  - and the sum of Euro 3m .*
*Many years ago when time were very rough, I stopped  paying into an Insurance Policy and now just have Life Cover. *
*Effectively, I have no income. *
*Even worse, I find that I have no idea how to address the situation.*
*I have a very jaundiced view of so-called Financial Advisers - not through dealings with them but from observing some of them over the years.   How can I get unbiased advice.*
*Is there some book where I could read myself into the subject before I place myself in the hands of somebody.*
*Can I buy a Pension at this stage? .   Is an Annuity of any use to ?  Please excuse my complete lack of background in this area.*
*If I knew where I could get the information, I would read myself into the picture.   I have just been too  busy with work and some club affiliations that have absorbed all my time and energies, that I have never paid attention to investment matters.*
*I am not looking for specific answers to my questions but would appreciat any steer that anyone could give.   I intend to study up completely in this area.*
*Many thanks.  Only found this site today.   Brilliant.*


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## Stephenkelly (21 Nov 2007)

*Re: I am 59*

Hi There,
Not in a position to offer any solid advice - you are too old for a pension but with €3m you are in a very strong position to live an enjoyable standard of life. There is pleanty of money for a rainy day and you haev set yourself up well . Enjoy yourself and dont get too stressed!


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## mf1 (21 Nov 2007)

*Re: I am 59*

Oh to be in your shoes! 

I assume the money is on deposit and is generating an income - so you do have an income or at least you should put the money on deposit and have an income.

After that - you have so many options. I would firstly talk to your own accountant - my accountant has been very good at steering me in the right direction as regards pension and investments. Ask for some general advice. If nothing else they may focus your attentions on what it is you hope to achieve.  Talk to your solicitor - good solicitors with clients like you will have ideas about what others have done. 

After that -its choices - assets, income, deposits, shares, property and pensions. I'm not sure at 59 there is any point trying to organise any type of pension. Organise your 3m as best you can and treat it as your pension. 

I have recently recommended clients to Dolmen Wealth Management Department ( no affiliation) and they have been pleased. Even if you only met someone like them once for a once off fee?


mf


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## efm (21 Nov 2007)

*Re: I am 59*

I agree with the previous posts - for someone in your rather enviable position professional advice is a must - try and make sure that any investment decisions take into account the most beneficial tax treatment as well.

However, before you talk to anyone it might be worthwhile taking a moment to work out what level of monthly / annual income you need to live on - do a budget of your current and expected outgoings (like insurance, food, bills etc etc) plus whatever extra you want for entertainment and incidentals. That will then become your minimum required amount - depending on how much this is it could determine the types of investment you need to look at.

BTW, as I'm sure you know, even though 3 mill looks a large figure, if you don't manage your spending it can go very fast!!


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## Brendan Burgess (21 Nov 2007)

*Re: I am 59*

Hi Mafi

There isn't any good book on the subject. My own Guide to Savings and Investments is a bit out of date, but the principles are still valid. Chapters 11 and 12 deal with retirement issues. 

A few comments. 

You are well off. The likely outcome is that you will live for another 25 years or so and leave the bulk of your remaining assets to your kids. 

If you earn a real return of around 5% above inflation on your €3m, you would be able to spend €150k a year and preserve the real value of your money. In other words,when you die, you will leave your estate the equivalent of €3m in today's money plus two houses. 

Your investment horizon is very long term. You will be passing on assets to your kids, so your horizon stretches out beyond your own life. 

You have enough money, so wealth preservation is your goal as distinct from wealth maximization. If you take excessive risk, you may get a higher return, but you don't need that return. You could lose money, by taking such risks, so you should avoid them. 

One risk you should not take is to borrow. Borrowing increases risk and there is no advantage to you in extra return. 

The riskiest place for your money is a deposit account.  There is a very good chance that it will fall in real value because of inflation. €3m is a lot now, but it would be a lot less in 20 years' time. 

Have you any interest in business? Do you want to invest some of your money in a business and work in it on a part-time basis? This would be risky, but might allow you to do something you want to do. 

You could invest in property. You will get a good rental income, but you could have a lot of hassle with tenants. Over the long term, property should give you a return ahead of inflation. 

You could also invest directly in a portfolio of around 5 to 10 shares. The returns should be higher than the returns on property with a lot less hassle. 

It's more flexible, in that you can sell part of your shares easily if you need the money. 

Direct investment in property or shares is relatively tax efficient. When you die, there will be no CGT on the increase in value of the assets. You can set your tax credits and lower rate tax against the dividend income or rental income. 

I am wary of advisors and wealth managers. It's hard to find a good one, and most can't resist the temptation to sell you soemthing which earns them commission.

Brendan


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## webtax (21 Nov 2007)

*Re: I am 59*



Brendan said:


> You could also invest directly in a portfolio of around 5 to 10 shares. The returns should be higher than the returns on property with a lot less hassle.



If you invested on shares with good dividend yields you could live off this income and leave the capital gains in the stock. As you have no other income, your tax credits and srcop will be available to reduce your income tax liability on the dividends.
You would have to consider if irish shares have further to fall in the short term before making your decision and if it is worth waiting until there is greater clarity in the market.
Property investment requires gearing to make good returns and it might not be worth your while having the hassle when you already have substantial savings.


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## efm (21 Nov 2007)

I agree with all of the above, particularly Brendan's post, but the OP says he effectively has no income. Surely he / she needs to invest in some sort of guaranteed income product to make sure there is always a minimum amount to live on ? - you can't defer the gas bill or the weekly shopping because somebody doesn't pay rent on time or the dividend yield is lower than expected.


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## markowitzman (21 Nov 2007)

in this case I would not advise property as vacancy would have a major effect on income!


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## yob (21 Nov 2007)

first of all congrats' on accumulating such wealth.
with all due respect an accountant is not suitable for this job nor a solicitor,although he may be able to give you a contact.
brendan's is good advise,and i agree to a cetain level about wealth managers,they dont all have your interest,so first you dont go to one whos tied to a particular co',like a large financial institution.

but a wealth mgr,or private banker,what ever you want to call him or her is what you need.this person must be independant and unbiased,have access to world stocks,and contacts on the ground,with this level of fund you will be in every asset class,your aim is to maintain your wealth.

when youv'e picked 5 or6 of these guys,make an oppointment to meet them,now your a buisness man you didn't accumulate this money by being a fool,so your going to interview them and assess there ability,would you let them run your buisness?? dont even discuss a fee,your giving these guys an opportunity to manage your wealth,TAKE YOUR TIME,theres no hurry be patient and get the service you deserve,good luck,it wont be easy but anything worth while never is,but you know that.


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## Brendan Burgess (21 Nov 2007)

> but the OP says he effectively has no income. Surely he / she needs to invest in some sort of guaranteed income product to make sure there is always a minimum amount to live on ?



With €3m invested in shares, you should get around €120k a year in dividends. If you need more, you can always sell off some shares. The distinction between income and capital is really not very relevant. I don't mind if my shares give me no capital growth and 10% dividends or 10% capital growth and no dividends. 

Brendan


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## ClubMan (21 Nov 2007)

Brendan said:


> With €3m invested in shares, you should get around €120k a year in dividends.
> 
> ...
> 
> I don't mind if my shares give me no capital growth and 10% dividends or 10% capital growth and no dividends.


What about the fact that the €120K in dividend income would be subject to 41% income tax (and _PRSI _for that amount?) while liquidation of shares to yield a €120K capital release would only be subject to 20% _CGT _on the relevant assessable gain?


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## F. Kruger (21 Nov 2007)

Read 'Loot' by Eddie Hobbs for a start.

Read some of the topics covered on www.itsyourmoney.ie and then request information on the ones that are of interest to you.

Do some research on the www.Revenue.ie website about Inheritance Tax

You cannot get unbiased independent advice, everyone has their own views and preferences on issues and these influence the way they present information. 

You haven't said whether you want to preserve your capital or whether you want to pass all of your assets to your kids?


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## efm (22 Nov 2007)

*Re: I am 59*



Brendan said:


> You could also invest directly in a portfolio of around 5 to 10 shares. The returns should be higher than the returns on property with a lot less hassle.
> 
> It's more flexible, in that you can sell part of your shares easily if you need the money.


 


Brendan said:


> With €3m invested in shares, you should get around €120k a year in dividends. If you need more, you can always sell off some shares. The distinction between income and capital is really not very relevant. I don't mind if my shares give me no capital growth and 10% dividends or 10% capital growth and no dividends.


 
But surely you are assuming either capital growth, or that dividend yields remain, and there is no gaurantee of this and neither is there an inverse relationship between capital growth and dividend yield (ie declared dividends don't automatically increase if the price of a stock goes down).

Also, if someone is investing in 5 to 10 shares how would they pick the stocks that would give them adequate coverage if they have no experience in the area? Surely the best advice is to talk to somebody with experience in the market.


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## bacchus (22 Nov 2007)

Consider the most simple case... 
€3m on account with about say 20 year to live..  That equates to €150,000 per year doing nothing. Lucky you.


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## daveccork (22 Nov 2007)

> €3m on account with about say 20 year to live.. That equates to €150,000 per year doing nothing. Lucky you.


 
Don't forget tax and inflation though............. Inflation (at 4%) will mean it is half that in 20 years which is not good if you are used to earning the €150,000 and have come to expect a certain lifestyle / standard of living.


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## pc7 (22 Nov 2007)

if we are more positive and you live 30 years, you could live on 66,000 a year and only spend 2 million in the process and still have a million left over!


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## Ivanabuy (22 Nov 2007)

RE I am 59 etc.
There are a number of things you need to be aware of and the most important is getting *good and independent advice.* You may have to pay a fee for this experience but provided it is given by brokers who are Authorised Advisors and not tied agents or multi agency intermediaries then it is required to be independent. The first thing to do is contact the Financial Regulator and ask for a list of Authorised Advisors in your area and ask them to send you information on how brokers differ. I would not advise you to talk to a bank because they will simply sell you their product where as an AA will give you independent advice on everything from deposits to investment, how to generate an income and keep your capital intact. How to minimise risk right through to inheritence tax and estate planning. I dont know what area you live in and you state you have no experience in dealing with brokers etc but I can tell you that good advice is worth paying for and as you didnt work for free you should not expect an independent advisor to so. I wish you all the best of luck. Ivanabuy AA


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## webtax (23 Nov 2007)

SPC100 said:


> If you are consider any investment in the stock market read "a random walk down wall street"



or Common Stocks and Uncommon Profits by Philip Fisher


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## Maine (26 Nov 2007)

webtax said:


> or Common Stocks and Uncommon Profits by Philip Fisher


 
1. Get professional advice from bluechip wealth manager and pay a fee for it

2. Ensure tax advice is part of this....structuring of inheritence etc

3. At this point either you have been a stock market investor for years or otherwise let the professionals do it. Do it as a hobby otherwise

4. Tread carefully on property in short term particularly in western markets residential or commercial. 

5. Be aware of risk and return......offers of higher return will mean higher risk

Keep a €1m in cash or near cash......5% plus is not a bad risk free return.


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## efm (26 Nov 2007)

Maine said:


> Keep a €1m in cash or near cash......5% plus is not a bad risk free return.


 
As many people have pointed out the return on money on deposit would be 5% minus inflation (4%) and possibly minus DIRT at 23% - so the effective rate is just 1% (or less).

I would not put a million on deposit with a real return of just 1% - emergency cash of 100k maybe but not a third of my cash.


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## webtax (26 Nov 2007)

Maine said:


> 1. Get professional advice from bluechip wealth manager and pay a fee for it
> 
> 2. Ensure tax advice is part of this....structuring of inheritence etc
> 
> 3. At this point either you have been a stock market investor for years or otherwise let the professionals do it. Do it as a hobby otherwise



Would agree with you on point 2, but there is no guarantee that a professional will generate better returns than you could get yourself with proper research (nothing a 59 year old business man/woman couldn't learn!).

If you know of a professional who would have advised cash or shorting the irish market this year then they'd be worth paying for advice!


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## Maine (27 Nov 2007)

Advising someone at 60 to start playing the stockmarket with their pension pot is something I would not recommend.

Some top ranked investors would be 1/3 in cash at present.  Being 1/3 in cash may not always be appropriate but the world is littered with investors who wanted higher returns without the higher risk only to find that they generally travel together. 

this week all we have to do is look at the credit union with 10m of losses on ITSC bonds, the norwegian towns who have lost millions, not to mention during the summer a couple of german regional banks who have €bs of euro losses.......most of these investors thought they were relatively risk free


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## stir crazy (27 Nov 2007)

I could perhaps add in some investment advice which I believe in but fear my advice will be torn to shreds 
So I will say only this:

The 3 most important factors when it comes to investment are research! research! research!
Discover the level of risk and return which makes your happiest. You can employ advisers to advise you but you dont have to take their advice. Put all fees and advice in context. Some people can fret over fees of 200 euro while at the same time spending 5 grand on a holiday. 

Inertia can result from too many opposite points of view  but ask yourself this question:
Looking back historically when have the times ever been not uncertain?


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## efm (27 Nov 2007)

stir crazy said:


> I could perhaps add in some investment advice which I believe in but fear my advice will be torn to shreds


 
Oh come now....we're not that bad are we?


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## stir crazy (27 Nov 2007)

*Re: I am 59 with €3m cash and no income*



efm said:


> Oh come now....we're not that bad are we?



Ok well I dont want to be giving advice without also warnings about where the buck lies  but one option with relatively low risk which I can think of is finding a commercial property in a  good location with a solid long term tenant (such as a McDonalds which appears to make money even when times are lean) on a long lease with regular upward rent reviews. This property doesnt have to be in Ireland. It could be in Germany for example. The important thing is that it is in a good location. Its possible to live off the rental yield after all expenses are paid and even gear it very slightly  according to the OP's low tolerance for risk but a lot of research would need to be done. McDonalds was just a suggestion of what my angle is.
A lot of research would need to be done like for any investment. The capital value of the property wouldnt be important in the short term if the OP 's plan was not to sell but to live off the rent and eventually pass the property on as an inheritance.



*note I dont want this to be seen as any kind of speculation on any property market anywhere. The chief advantage I see would be a secure income from a secure tenant and perhaps some key money of secondary importance*


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