"Living off the interest" is what twats who don't understand money say
if the country's inflation level is 3%, and you're making 5%, it means that in fact you're only making a 2% profit, which is only 18k. Granted, that's nice, but you'll still be taxed on the 5%, so you have to pay 9k in tax, which means you're trying to live on 9k a year.

Fucking hell, that's poverty level.
( Grrrmachine the indifference engine, Fri 24 Oct 2008, 16:34, 2 replies)

Exactly.
The only sort of cash account which would allow larger profits is of course ISAs, which strangely have a £3600 annual limit.
(Vikingheadache, Fri 24 Oct 2008, 16:41, closed)

"Living off the interest" is what Actuaries at pension annuity providers say
Admittedly, they indulge in some more complicated investments than just bunging it a bank account, but the gist of it is that they aim to turn a profit, on a combination of you dying early, and them being able to earn more than they give you.

You are correct that 1M won't last forever, but I'm not convinced that one couldn't live off the interest of £900K for at least a good long while.

Yes, you get taxed, but £45K Gross PA is still a pretty nice salary, that plenty of two-income households still don't reach. It will continue to be at least an above-average one for some years to come.

It's even nicer for someone who owns their home outright, thereby dropping somewhere between 8-20K off your outgoings. Not to mention that they no longer have to save up to buy somewhere. My home costs me and Mrs Watermelon about 13K PA (and I've already paid tax on the income that gave me that), so your 9K in the pocket looks more like 22K, which plenty of people wish they could receive gross.

Yes, the £900K in the bank and the £45K it earns is decreasing in value, but a healthy dose of frugality, particularly in the early years, can decrease the effect of that.

The OP's premise that they will have a nice lump sum to leave to their offspring is flawed; and good luck to him finding a home cheap enough to give change of £100K to buy a Landy; and let's hope, for his sake, that interest rates don't drop, as each % is 10K.

At 22, a millionaire has a fuck of a long time to live off that cash, and someone who spends their prime career-building years living off the interest, might well have to start serving school dinners in their 30s or 40s when they find they have to start eating into the capital.

The point is that it's not "what twats who don't understand money say", but "what 22 year old twats who don't understand money say", a 50 year old middle-manager could live quite recklessly off that money, and still have enough left at 55 to buy an annuity that will match his current salary.

All of this rambling of mine has made me wonder two things:
1) At what age does one cease to be a twat for thinking one can live off the interest on £1M?
2) How much of a lump sum would a 22 year old need, in order to live a normal lifestyle, without ever depleting the capital (80+ years to go)?
(Rastus P Watermelon, Fri 24 Oct 2008, 18:05, closed)

All your massive ramble has done
is prove that I, and my statement about twats, is correct. If you wanted to make 1m work for you, you'd have to do a hell of a lot more with it than just stick it in a bank. And increased gain means increased risk, so a higher chance of losing the capital lump to begin with.
( Grrrmachine the indifference engine, Fri 24 Oct 2008, 20:00, closed)

you are an angry man
and you were also wrong in the first instance.

So be a good chap and shut up.
(rockdoctor, Fri 24 Oct 2008, 20:08, closed)

He isn't.
No he is not.
And who are you to tell him to shut up?
So why don't you show us what your accurate explanation is then!
( turb0t, Fri 24 Oct 2008, 22:27, closed)