I'm getting a large settlement(700,000), what's the best method of living off the interest if possible

Question

I want to put the settlement into a savings account and hope to accrue enough interest monthly so I can just live off the interest and not touch the settlement, is this possible? Any ideas would be greatly appreciated

Answer 1

You should really sit down with an independent financial planner... don't talk to the guy at the local bank, don't go to the financial adviser arms of the big Wall Street firms... talk to an independent.

700k is not that much money, especially if you are young. At a minimum, it is not the type of money that you could retire off of. First, inflation will erode its relative value. With inflation historically between 2-4%, much higher then a traditional savings account, over time your money will be worth less and less in buying power, even if you NEVER touch the principle amount!

700k IS enough money to set you up pretty well financially though. First, I would get out of any debt you have to include credit cards, car loans, etc. Second, if you don't own a home, but you could use a portion of this money to buy one, you should STRONGLY consider it. Third, the money you have left should probably be invested (through the advice of an independent financial planner) relative to your goals... retirement, education for your children, etc. will all influence the type of investment strategy you should have.

So, while it is a great windfall, it is not instant retirement money... sorry!

Answer 2

You can invest in the stock market, mostly bonds perhaps, and take out about 4% a year. That's $28,000 a year. Can you live off that? On the other hand, if you can invest it for eight years and get 9% a year, and not touch it, you can have double that amount. Is it better to start now or wait? Personally, I'd get a good advisor, invest in a mix of stocks and bonds, and maybe wait until it's higher. You could also find a job you love that pays some money, and use this as extra to live a better lifestyle.

Answer 3

take around $200,000 and purchase some mutual funds (be sure you use a reputable company) and put the other $500,000 in a Money Market Account. These high-profile checking accounts allow you to draw checks from the account so many times a year. At the same time you earn a higher interest rate than you would with a regular savings account.

Lastly, CDs. With some earning just under 10% these are a good choice. However, you have to have patience in letting the CD's mature a number of years before seeing any big investment. But a few hundred-thousand dollars would certainly start earning interest right away.

Answer 4

If you are taking a single payment, then the first step is to find a good financial advisor. It would be to your advantage to avoid dropping this lump sum into a savngs account. There are many investment opportunities available to you to let large cash assets work for you. Put some of the funds into savings so that you have access to a limited amount of cash for immediate needs. Find a qualified financial advisor and learn how the markets work so you understand what's happening with your assets. You have a great opportunity to create a comfortable lifestyle and help some other people along the way. Don't quit your job. You'll be miserable, bored and lonely. Enjoy your good fortune!

Answer 5

You really cant. I computed it once. You need over 1.1 M to live and sustain yourself off of interest alone... that is living humbly and not living it up. Its also using a generic bank savings account... the most stable and reliable return you can get anywhere. Anything else is only riskier and might not return as much from time to time. And when I computed it, the cost of living and the economy was better... and the savings interest rates were higher.

On a side note, chances are you wont get all that cash up front. It will most likely trickle in over a few decades.

Thats if you get any of it at all. My brother won a law suit a while back for a measly few grand. He hasnt seen a cent and never will. As the lawyer said, "you cant squeeze blood out of a turnip". The person that owes has ruined credit and has no obligation to pay until they are financially stable.

Answer 6

Send me half, no, just kidding. You might have to let it build awhile first to live alone of the interest. My mom always told me to put a thousand in a savings account and by the time I was 60 or so I could retire of off it. So, I'm thinking that if you don't want to touch it......well, depending on how old you are.....like if you are 50 then I think it's okay to touch it and use it. If you are 20 or 30 then, maybe work a year to let the interest build. Then check how much you have and go from there.

Answer 7

Your money is going to decrease in value over the years, and the meager amount of interest you get from a savings account will not keep up.

Invest it in a diversified portfolio. Money is a verb; in other words, money makes money. If you're young, you can have your investments skewed more toward the risk side; if you're middle-aged, you might want to lower the risk.

Eventually you will be able to live off your investments; however, investments are for the long term. Speak to a licensed financial advisor for help.

Answer 8

I would find a home business even if it is a hobby business. and put some of the money in to setting up the business.
this will give you a income that in good times can allow you not to use your settlement.
think of the $700,000 as a bank that you can get a interest free loan in bad times and save money in in the good times.
set up a business that you can run from home when you want to. and you can set your own hours.
This will allow you to pay into social security for when you reach 65 then you will have even more money to live on.

the rest you should put in to a high yield CD account at your bank.

I am disabled and I am looking to set up to build small wind generators for motor homes that people can tie into there solar panel system to use wind power to supplement the power from the solar systems.

These i can sell at swap meets and on ebay.
Also in the winter i can build the units and in the summer as i travel in my motor home i can sell the wind generators at campgrounds that i stay at. This should pay for my gas money as i travel. I can put a 100 kits in a trailer that i can tow as i travel.

Answer 9

I would recommend NOT living off the interest, unless you're a ripe old age, like over 65.

Let those earnings ACCRUE and don't "live off them." That's mostly selfish, lazy and foolish (and the principle will become jeopardized by inflation).

Answer 10

Perhaps you could put it into an (high) Interest Bearing Deposit Account, that way you earn more interest than the norm but I don't think you could live of the interest, perhaps you would be better to buy some shares, maybe in yahoo or google, or even ebay!