Brendan Hughes

I know some of you on here can help. As I'm in Portugal, and thus a) Eurozone and b) different tax law system, the details may differ, but it's still worth asking for ball-park advice.

I have one thousand pounds (1480 euros, apparently) as a capital sum. This can be increased if necessary. I would like to invest it to produce 100 euros per year as a prize for an award for 16 yr old schoolchildren. I don't really want to manage it, I'd like to put it somewhere (account, shares, bonds, whatever) and forget it. Probably it would be managed/handled by the school.

Not sure I can think far enough ahead about whether the money should be index-linked or whether the 100 euros will slowly decrease in line with inflation - seems like a silly detail at this stage.

Can anyone tell me
a) is the capital sum enough for the annual dividend? If not, what's a better figure?
b) any other hidden costs?
c) where to invest it?

Very many thanks for any help. Please not too much muppetry, this is in memory of someone.

cheers
Brendan

Suresh

Brendan, what you are looking for is technically called an "annuity". other than that I can't help, I'm afraid.

More here : Annuity (European financial arrangements) - Wikipedia, the free encyclopedia

Suresh

jonnyh

The 100 euro return off 1480 euros is 6.76%.

I think what you need is a straight forward bank deposit account. Find the one offering the highest rate and work out how much you need to deposit for the 100 euro return. 4.5% on 2200 euros will give you the 100.

Brendan Hughes

Thanks both. Suresh, that certainly sounds right, but I would have thought a 70-ish pound annuity would be too small for anyone to sniff at? I'd assume there are some sort of entry/ exit/ running costs, which wouldn't make it viable on such a small scale? (And where does one go to set up an annuity? Local bank?)

jonnyh, trouble is that even the generous banks round here barely give 3% (eurozone interest a lot lower than UK), so I don't see how I can get 7%... Maybe I could put it into a UK account in pounds, but then it's a bit of a pain to access from here.

Any further info or other suggestions very welcome

douglasb

Brendan, is it possible to set this up as a charitable trust which would allow the whole thing to be tax-free? As johnnyh has said, you need to have the money earning a high interest rate to give you the amount you require per annum. You don't want to be paying tax on that interest.

I'd suggest asking the school for their advice on how to do this in the most high interest/lowest tax way as they may have had this kind of enquiry before or will have access to people who can give the best advice related to Portugal (unless you want it to be a surprise gift).

Doug