Sanity Check
Sorry for the throwaway account; my main account includes my IRL name so I wanted to post anonymously.
I’m in the very fortunate position that I have pretty much hit FIRE. I have a property portfolio worth approx £3.5m (excluding my home), a mix of residential and commercial, all with no borrowing. I’m in my early 50s, no kids or dependants, and I manage the portfolio myself, so there are currently no management costs. These properties are my only source of income. Headline rents received are currently £260k pa assuming full occupancy, however after expenditure etc my profit for the year ending April 2026 was approx £180k, so I’m well into the additional tax rate. Anticipated take home income after tax for the year is approx £119k. Living expenses are currently approx £60k pa, I also put £20k in a S&S ISA global index tracker, leaving a comfortable surplus. ISA is currently at approx £100k, I have a very small SIPP which was fairly recently opened, however property income is non-qualifying so contributions have been limited.
I’m considering whether I should sell the properties and invest the majority in a global index tracker fund. Current CGT exposure is fairly low; I’ve calculated that after tax & sales costs I’d be left with approx £3.3m to invest. I’d be drawing down on the investment over the years to fund lifestyle, plus switching £20k pa into the ISA. I know that a ‘cash’ style buffer of 2-3 years expenditure is a good idea to protect against having to sell shares in a market downturn.
I’ve run the numbers through various tools including PortfolioCharts and FICalc, and even factoring in market crashes over the years, the numbers seem to come out very favourably, assuming I don’t go crazy with drawdowns.
One reason for thinking of doing this is to simplify things so they need less input from me. As I get older I expect I’ll be less willing / able to manage the portfolio myself, would need to employ agents, and that feels like just adding an extra layer of hassle & cost. Another reason is that a tracker plus compounding seems like a very good growth mechanism, so could be a better way to grow wealth than the current investments.
However I can’t get away from the feeling that owning property is something physical which will keep generating some income even during bad periods. Whereas with shares & drawdown, if things go very wrong, with long term suppressed values plus necessary drawdown, the pot could run dry.
Can someone give me a sanity check on whether this switch is a good idea, or whether I should just be grateful for the regular property income I have and stick with the current set up? Has anyone here made a similar move from property income to equity drawdown? I’d be interested for your thoughts.