Minimum Lotto winning you could retire on?

[soikeonhanh]

@xemketqualode So. It’s all very very voodoo.
You put your €1 million in a cupboard over there. This guy gets to play with it in investments and do dahs. And you get 4% a year back for letting him?
What’s he getting?

Capitalism is utterly malignant.

 

[xemketqualode]

@soikeonhanh You're the one doing the investing, you're buying shares of companies that you think will grow and that other investors in future will want to pay more than you for. Buying an ETF does involve a middleman but they're not off gambling randomly, they're just buying shares according to specific rules, generally just matching the makeup of the top valued companies on certain exchanges or indexes, and charging a fraction of a percentage compared to your hopefully 10% gross return per annum. There are plenty of valid criticisms of capitalism but I don't understand how people buying shares or funds is problematic.

 

[soikeonhanh]

@xemketqualode Way over my head. Thanks though.
Is there such a thing anymore as just putting it in a bank account and them giving you a high yield interest rate and doing that? No frills no nonsense no headaches? Every ad for any of the stuff you mentioned has that bullet quick ‘investments may go up or down and your money is at risk’ etc etc

 

[xemketqualode]

@soikeonhanh Nothing really these days. The reward matches the risk ultimately - if you want a no risk return, it's gonna be very small, and won't keep up with inflation. Banks are businesses - if they're giving you money as interest, it's because they're making much more money from using it to invest themselves, whether that's through buying shares or lending it out, in which case they won't be able to give you more interest than they interest they're taking in from loaning it. There's nothing wrong with accepting a very low interest rate if you want no risk.

 

[soikeonhanh]

@xemketqualode Thats what I was always wondering lately. Thank you.

 

[orion3003]

@renewright if you had 10m then thats 400k a year withdrawn from the pot. Tax free.

i think it really depends on the amount you win and what your average outgoings are.

 

[frogger94]

@orion3003 Tax free in Ireland? Could you please give me some details? thanks

 

[orion3003]

@frogger94 Lotto winnings are tax free. Taking money from this pot is tax free

Any earnings on this pot are taxable as normal (eg interest or investment income).

 

[malachi569]

@renewright But you'd need to compound it as well as withdraw.

 

[brobear]

@renewright Did you remember to subtract capital gains tax?

 

[terasee]

@blessbrenda The new lotto game of 20k a month for 30 years is a great idea.

 

[gitasanjeevani]

@terasee Obviously if inflation gets this bad we’ll have a lot of other problems to deal with… but wouldn’t your last 20k be worth so much less than your first 20k? What if the lotto company goes bust (maybe it’s held in escrow or bonds or something)?

I understand the benefits of this approach but I’d honestly rather take half the winnings up front and forfeit the other half that trust nothing will happen in the next 30years that ruins the money. Or am I being silly?

Hypothetical fun of course

 

[moniquerenewed]

@terasee At the rate of inflation that 20k will lose it's value over the years. I'd take the lump sum.

 

[resjudicata]

@moniquerenewed You can’t.

 

[moniquerenewed]

@resjudicata Sorry meant I'd rather play a game with a lump-sum prize

 

[amandal]

@terasee If you had the choice between 20k a month over 30 years or 25% of the total amount in one lump sum up front and a forfeiture of the monthly payment you'd be a fool to not take the latter.

 

[resjudicata]

@amandal Not how the game works.

 

[pge]

@resjudicata You're right that it's not how it works but I would guess you could sell it to a financial institution for less than the total value, I would also say you might have to pay CGT on that sale (don't know that as a fact but I would hazard a guess that Revenue would jump on that sale although if you're selling it for less than the value I'm sure some fancy accountant might be able to somehow claim a loss on the asset sale and therefore not have to pay CGT) and you'd still end up with all over 25%, based on a rough guess you'd still have over half of it.

20k × 12months × 30 years = 7.2million

If you sold that to a financial institution for say 6million.
Then pay CGT of 2 mil (33%), you'd be left with 4mil.

So in the end you'll be left with 55% of the total (83% if you can dodge CGT).
A lot of assumptions made there but might not be far off and for the money involved could be well worth exploring given the time value of money and all that.

Until that day comes for me however, I'll just focus on having enough money in my account for when January's gas bill hits....

 

[b4jesus93]

@blessbrenda My net income from the rest of my working life (based on current salary, after tax, and years left to retirement) will be about 1.4m.

So anything over 2m would be doable really, as that would afford me my current income (plus a bit more) with zero stress of working.

 

[resjudicata]

@blessbrenda Honestly if I had €5M tomorrow tax free I’d likely be able to retire without the stress.