How would you invest a cash lump sum?

What do you mean "ouch"

If you set yourself up with fully paid for: house, car, everything else you might conceivably need for the future, you could live quite a good life on

40K pa.

Perhaps not a "lottery winners" lifestyle, but more than enough money to eat out twice a week, 5 holidays per year etc...

tim

"tim...." gurgled happily, sounding much like they were saying:

Would somebody care to remind me what the average annual pre-tax income is...?

In message , Adrian writes

Quite a bit more than some people have to live on. 8-(

You have to be careful about what the question means. Average income per person (including children, including benefits etc?). Or average salary (ie excluding anyone without a job)? Full time and part time?

The average full time salary is about 30,500.

Depend how old you are. Maybe OK for someone in their 50's, but someone in their 20's would have to consider inflation. A 4000 annual income 40 years ago would have been a very good income, these days most on benefits get far more.

40,000 would be worth about 4000 in todays money in 2050 given the same inflation.

That would be an average inflation rate of around 6%pa. Usually it's less than that; any more, and you might find it accompanied by higher savings rates too.

Also, it's not compulsory to spend every penny of the £40,000; some can be set aside.

There are also other investments which can have higher returns long-term (property perhaps, if not right now..).

And, it's still possible to continue working too! Someone in their 20's would either blow the lot in a year or two, or deal with it sensibly, as being idle for 40 years (and then being retired) doesn't suit everyone.

Buy a couple of decent houses that don't need maintenance and let them out, that's £375k out of your million.

Even better if you vet the tenants personally, try and get DSS candidates as the rent's pretty much guaranteed that way.

£1500 a month should be easily achievable.

Less than 5% return. A bank would almost give you the same, without the headaches.

And with property values difficult to predict at the moment, they could even lose that much in the first year.

Easier said than done. What do you do, interview them then send a rejection letter? What if no-one else comes forward as a tenant? And you don't really know what a tenant will be like, or who else they will get to share with them. Some of this can be done via an agent, but then the return goes down to nearer 4%.

Is it? I thought landlords were no longer paid rent directly for benefits claimants.

£1500 was the minimum, if the properties are up together you could command the best part of £1900.

Won't happen. I did a bit of work in the property lettings arena when I was made redundant, the generally held opinion is "here's a piece of old rope, that'll be £50 please.

IME, for every (decent) property there'll be half a dozen applicants.

Not my experience; the propco I did work for had their rent paid directly via BACS where the tenants were DSS-involved.

Stops the pesky people spending their rent on drugs, apparently.

LHA is paid differently now. See DWP leaflet HB(LHA)4, latest edition dated June 2010.

But what about inflation? In 30 years time 5% of 1,000,000 probably won't seem like much but I would expect rents to rise roughly in line with inflation.

If you want £1000000 to give you peace of mind, among other things, then buying and letting property will not necessarily give you that.

Bank returns are not that high at present, but property is roughly flat too, so I can't see the harm in having money languishing in a bank at least for the time being.

(With the right property and the right tenants, a bit more money can be made, but the risks are a little higher too. And it becomes a job requiring attention when you should be lying on a beach in the Caribbean)