# Income versus Captial



## croquette (5 Oct 2007)

Advise please.  Married couple no children just turned 50.  We have €500k in various long term investments (which will mature in 10 years) €300k in cash (Rabo Bank), no mortgage,(house worth €1m). We were both self employed and earned about €100k per year.  Due to a recent accident we want to change our careers and lifestyle. We no longer want to work long hours (we have done that all our lives).  We have capital but no income. We need to earn about €50k per year. Any advise.


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## Bob_tg (5 Oct 2007)

Presuming you don't have a current pension you can draw from, have you considered the following:
- selling your house and renting?
- moving to a lower cost country?
- working for 2-3 days per week?
- seasonal work for a couple of months per year?


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## Brendan Burgess (5 Oct 2007)

You have €800k in savings plus a house worth €1m. 

If you are getting a real return of 3% on these, that would be about €50k per annum. In other words, you could run your capital down by €50k and still maintain your wealth in real terms. 

Your investments should be in the stockmarket to get the best long term return. I am not sure if you have other taxable income as you say "we were both self-employed". If you don't have other taxable income, you should buy a portfolio of shares directly.  Your tax credits would use up most of the taxable dividends, so this element of your income would be tax free. 

If you have other taxable income, you could either buy unit-linked funds or invest directly in shares. The advantage of unit-linked funds is that if you buy a low charge fund, you can cash part of it as you need it. 

People make a false distinction between income and capital. An investment which is paying at 5% income is the same as an investment rising at 5% a year but paying no dividend. You just have to cash part of it as you need it. 

But most of all, €300k in cash is just too risky. Over the next ten years it will decline in real terms. In other words, in ten years, you will be able to buy a lot less with €300k than you can buy today due to inflation.  

To reduce the long-term risk, put the money into the stockmarket as soon as possible.


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## croquette (11 Oct 2007)

Thank you.  We were thinking of shares.  I agree that €300 in cash is just too much. We know nothing about investing in shares - is there any good lectures we could go to? Or should we just use a broker for the 1st year?


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## Maine (15 Oct 2007)

croquette said:


> Thank you. We were thinking of shares. I agree that €300 in cash is just too much. We know nothing about investing in shares - is there any good lectures we could go to? Or should we just use a broker for the 1st year?


 
Leave this to the professionals....the papers tend to show which investment managers are doing the best.  You may want to split and allocate a portion to a number of them and get them to reallocate to a couple of their funds ie you end up with maybe up to 5 funds in total run by 1/2 investment mgrs.

Be careful of tied brokers etc if you using them - they may be incentivised.  It may be better to pay a fee and get impartial advice


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## pinkyBear (15 Oct 2007)

Hi Croqutte,
I pointed my mum to the broker we used for re mortgaging - if you want his details pm me as he gave my mum really good advice for her financial situation. He is based in Dublin.

Just for the record I have no links to this broker other than a customer.


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## ClubMan (15 Oct 2007)

pinkyBear said:


> I pointed my mum to the broker we used for re mortgaging


I think the original poster needs a *stock*broker - not a *mortgage *broker!


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## pinkyBear (15 Oct 2007)

Sorry Clubman - well spotted


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