R4 Million

blunomore said:
If you were to receive approx R4 Million, and invested it, what would be the approximate interest you would receive per month on that amount? I know the banks' interest rates differ, but let's look at best case scenario.

Thanks
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Hedge fund if you can get into one.

Else property for half and some medium risk investments for the rest.
 
Remember to account for inflation if you were to hypothetically invest that hypothetical money :)

If you withdrew your entire interest amount, and did not reinvest it, you would be getting progressively poorer at around 6% per annum (currently) due to the effects of inflation on your capital. That is the real risk of cash/money market investing that many overlook.

Unless of course it is money that you are temporarily custodian of, then spend the interest and don't hand it over when you pay the money back! :D
 
Forget all these internet-consultants, blu. They're all loco.
Here's what you should do, it's fool-proof; buy R4 million's worth of Lotto tickets! Hey!? What do you think? Just imagine the statistical probabilities behind that! Sure thing, I tell you. :D
 
If you want to keep the capital in relation to inflation then you can thumbsuck that for every million you can get R4k per month. Then your R4million will stay R4million in the long term. So you have R16k in your pocket per month for 4 bar.
 
That's a good chunk of change. With it you need to get compound interest on your side. First pay off your debts, then put the rest in a fund/index/somewhere which exceeds your risk profile but provides good returns. There are many funds that exceed 20%. Take a look here: http://www.equinox.co.za/unittrusts/funds/fundresults.asp?func=perf

But let's say you got 20%, which is entirely possible in equity over the long term, and managed to pay off R500k worth of debt. Ff you managed to leave the money alone and re-invest the proceeds your returns would look like this:

Year Year Interest Total Interest Total Sum
1 700,000.00 700,000.00 4,200,000.00
2 840,000.00 1,540,000.00 5,040,000.00
3 1,008,000.00 2,548,000.00 6,048,000.00
4 1,209,600.00 3,757,600.00 7,257,600.00
5 1,451,520.00 5,209,120.00 8,709,120.00
6 1,741,824.00 6,950,944.00 10,450,944.00
7 2,090,188.80 9,041,132.80 12,541,132.80
8 2,508,226.56 11,549,359.36 15,049,359.36
9 3,009,871.87 14,559,231.23 18,059,231.23
10 3,611,846.25 18,171,077.48 21,671,077.48
11 4,334,215.50 22,505,292.97 26,005,292.97
12 5,201,058.59 27,706,351.57 31,206,351.57
13 6,241,270.31 33,947,621.88 37,447,621.88
14 7,489,524.38 41,437,146.26 44,937,146.26
15 8,987,429.25 50,424,575.51 53,924,575.51
16 10,784,915.10 61,209,490.61 64,709,490.61
17 12,941,898.12 74,151,388.74 77,651,388.74
18 15,530,277.75 89,681,666.48 93,181,666.48
19 18,636,333.30 108,317,999.78 111,817,999.78
20 22,363,599.96 130,681,599.74 134,181,599.74

At 7% inflation the value halves about every 10 years, so in 10 years time it would provide a monthly income, in today's terms of +- R750k. In 20 years, the monthly income would be R2.7m!

Of course tax would eat away at this, but no as much as if it was regular income, as growth in shares is capital gains, dividends are pre-taxed to an extent, and it's just interest that would be considered income. Also anything left alone would be unrealised income so therefore pretty much untaxed.

Compound interest is powerful indeed!
 
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Ouch, all into equities. That could hurt. As per my example elsewhere :

On 1 May 2008 the JSE All Share Index closed at 31,841..
On 1 February 2009 the JSE All Share Index closed at 18,465.

If you happened to be really unlucky and invested your R4 million on the 1st May 2008, by February it would have been worth... R2.23 million...

If you invest fully in equity then the sensible thing to do is look at phasing it in, unless you are a gambler or certain of what the markets will do (and there is no one who does). The more sensible thing to do is not be fully equity exposed unless you can take the downside risks and have time at your disposal to sit out any market dips.
 
Yes, but if you go long term... With the fund I'm with, if you invested on 1 May 2008, today you'd have:
Value today: R6 764 362.52
Annualised return:12.63%

Still nothing to be sneezed at.
 
4mil worth of rented out property would rent out for quite a bit more than 15k per month even after costs. You also benefit long term from the capital appreciation. You can always bond them to access the capital later should you need to.
 
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blunomore said:
If you were to receive approx R4 Million, and invested it, what would be the approximate interest you would receive per month on that amount? I know the banks' interest rates differ, but let's look at best case scenario.

Thanks
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That's a very broad question.

Per month nothing is gonna sound really great but depending on the risk factor you could do 40% per annum or normal bank rates.
 
stricken said:
5.2% return is barrel scraping. you can get at least 10% without much risk. so you're looking more at something like R400k a year / 12 = R33k pm... but you want to compound so leave ~R8k pm ... resulting in R25k pm.. minus tax of about R4.5k = ~R20k pm in your pocket.
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If you had a large amount of cash, why incur the extra risk. The more money I had the less risk I would need to take. Who cares if its a low return, if its so much money you can live off the low returns? And the urge to save so much tax. Blinds people to the other hidden costs. To make a broker/investment fund manager rich and increase the risk of losing your capital?
 
Devill said:
Hedge fund if you can get into one.

Else property for half and some medium risk investments for the rest.
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SA Hedge Funds have not done well during the last 12 months. I have some money invested with SIGNAL and since October 2011 it has increased by 0.9%. There are wild monthly swings, from +5% to -8%. Over a 5 year period it has returned 28%. A property mutual fund is a much better bet and commercial property has done very well this year. Two of my portfolios are showing increases of over 33% since January
 
zippy said:
If you had a large amount of cash, why incur the extra risk. The more money I had the less risk I would need to take. Who cares if its a low return, if its so much money you can live off the low returns? And the urge to save so much tax. Blinds people to the other hidden costs. To make a broker/investment fund manager rich and increase the risk of losing your capital?
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So the banks (if you choose fixed deposits or money market) and the estate agents (if you choose property) etc make absolutely nothing off your investment with them? They do the work for the love of it?

You do not have to take on much risk at all to achieve more than 5.2%.
 
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