Living off your investments
Imagine: your assets grow while you enjoy life, without the need to work. This is possible if you generate a ‘passive income’ through investing. You will then receive regular income from a carefully constructed investment portfolio, enabling you to meet your daily needs. With the right strategy, you can optimise your returns and manage the risks. With our expertise and investment solutions, we are happy to contribute to the financial independence of our clients.
At InsingerGilissen, we focus on assets starting at one million euros. Get to know us and discover how investing can offer you a carefree and prosperous future.
What is a ‘rentier’?
A rentier is someone who can live off the return on his or her accumulated capital, without being dependent on an income from work. By investing purposefully and building wealth carefully, one can achieve a situation where your capital works for you. This gives you the freedom to decide how you spend your time – whether it's traveling, spending time with family, or starting new projects. For many, being able to retire is an important milestone that offers financial freedom with the opportunity to shape life entirely as they see fit. There are risks involved in investing though: you are dependent on the ups and downs of the financial markets and can lose all or part of your investment.
How much money do you need to retire?
As mentioned, living off one’s income from investments is an attractive goal for many, nowadays even at a young age. The amount of capital required to retire depends very much on your desired lifestyle and your financial goals. Below you can find an overview of the different amounts of accumulated capital and the average expected return opportunities that each capital can offer. Whether you have an amount of €500,000, €1 million, €2 million or even €10 million, each of these amounts gives different options for a carefree future with income from investments. Although, of course, there are always risks involved in investing.
Retire with €500,000
With a capital of €500,000 you can start living off your assets, although a modest lifestyle is part of this. This amount may offer sufficient returns to generate a basic income with an average stock market performance. For example, by opting for a strategy of (high-) dividend investing or 'passive investing’ in index funds and ETFs, these assets can provide a stable, albeit modest, income. Suppose the investment portfolio yields an average net investment result of 6% over a year, then that yields €2500 gross (before taxes) per month.
Retire with €1 million
With a capital of €1 million, you have more options. This amount can provide an income that is suitable for a fairly comfortable lifestyle, especially if you opt for investments that offer higher returns, such as dividend-distributing stocks. With good management of your finances and a well-diversified investment portfolio, you can enjoy a carefree life in many countries. Suppose the investment portfolio yields an average net investment result of 6% over a year, then that yields €5000 gross (before taxes) per month.
Retire with €2 million
A capital of €2 million gives you considerably more financial flexibility. With a well-diversified investment portfolio and a careful strategy, it allows you to fund a lifestyle that is free from worries about unexpected expenses. A wealth of this size also allows you to grow your wealth further, while at the same time enjoying a large income. This is ideal for those who want to retire in countries with a higher cost of living or for those who want to include generous travel options and luxury expenses in the budget. Suppose the investment portfolio yields an average net investment result of 6% over a year, then that yields €10,000 gross (before taxes) per month.
Retirement with €10 million
With a net worth of €10 million, you can enjoy a luxurious lifestyle without any financial constraints. This amount offers the opportunity to live wherever you want and enjoy the very best amenities, from luxury vacations to high-quality medical care. Your assets can continue to grow with good management, while you live well off the income generated by your investments. This level of power gives you the freedom to shape your lifestyle without compromise. Suppose the investment portfolio yields an average net investment result of 6% over a year, then that yields €50,000 gross (before taxes) per month.
From what age can you become a rentier?
The age at which you want to retire has a major impact on the amount of capital you need. The younger you start living off your assets, the higher the amount required will often be, because your assets have to bridge a longer period of time. Please find below an indicative overview of the required financial planning per age category.
Retire from the age of 40
If you want to retire at the age of 40, you need a considerable amount of capital. At this age, an investment portfolio of at least €2 million may be required, depending on your spending habits. The reason is that your assets must be able to generate income for a long period of time – think of at least forty years. It is therefore important that your portfolio not only generates income but also has growth opportunities (i.e. has a chance of price gains) to be able to compensate for inflation. However, when investing, risk and return opportunities typically go hand in hand: the higher the possible return, the greater the risk involved.
Retire from the age of 50
If you decide to retire at the age of 50, the required sum is slightly lower than when you retire at a younger age, although assets of €1 to €1.5 million are still desirable for a stable income. With this approach, you can meet your needs with a carefully managed portfolio without taking on major financial risks. Given inflation and expected healthcare costs, it remains important to keep your investments well diversified in order to combine the prospect of returns with dampening risks.
Retire from the age of 60
At the age of 60, assets of €500,000 to €1 million may be sufficient, depending on your lifestyle and retirement income. In the Netherlands, many people from their late sixties are entitled to a state pension or other retirement benefits, which helps to ease the strain on investments. Living off one’s assets’ income at this age usually requires a less risky investment strategy so that one’s wealth is preserved despite the ups and downs of the stock market, while living comfortably from it.
Investing for retirement
Investing can not only help you meet your daily needs, but it can also provide a solid foundation for a comfortable retirement. By starting to invest early, you can benefit from the effect of compound interest for a long time, allowing your assets to grow significantly over the years. Especially if you reinvest all the income from your assets. This can help you achieve a comfortable retirement, without being completely dependent on government provisions such as the state pension.
InsingerGilissen can assist you in drawing up an investment plan that is tailored to your pension needs and risk profile. By building a diversified portfolio, you spread the risks – which are always present when investing – and increase the chance of stable and growing pension assets. This way you can look forward to a financially relatively secure future with confidence.
How can you live off your assets?
There are several investment strategies that you can use to strive to make a living off your assets. Whether you choose dividend investing, 'passive' investing (in index trackers) or other ways, it is important to choose an approach that fits your financial goals and risk appetite. On our Investment strategy web page you can read more about different ways to realize returns. We highlight three of them here.
Income investing
Dividend or income investing focuses on investing in shares of companies that regularly distribute part of their profits to their shareholders in the form of dividends. This strategy provides investors with a stable income stream, which can be reinvested for additional growth or used as "passive income." It is an attractive option for investors looking for predictable and regular income and value the financial stability of companies with consistent dividend policies. However, the dividend policy of companies can always change, and the prices of dividend shares can also fall in the stock market.
Passive investing
Passive investing is investing in index funds or ETFs: investment instruments that track the performance of a specific market index, such as the S&P 500 Index. Rather than actively trying to beat the market by selecting individual stocks, this strategy follows the broad market and the manager 'replicates' (copies) the composition of the index. This reduces costs and risks compared to active management, while investors benefit from the long-term returns of the relevant broad market (the index). Passive investing is ideal for investors who are looking for a simple and cost-effective way to grow their wealth without the risks and costs of active asset management.
Other option: real estate
In addition to dividend investing and passive investing in shares or bonds, investors can also consider real estate investments if they want to invest for their retirement later, or for income now. Investors can invest 'directly' in real estate by purchasing real estate objects themselves and renting them out, whereby the rental can provide a relatively stable income stream. But there are also disadvantages to this. To begin with, real estate must be managed and maintained. This takes time, knowledge and money, although professional property managers can offer a solution. The tax treatment of 'direct' real estate in the Netherlands has also become less favourable in recent years. Another possible disadvantage may be that it takes time and effort to sell the property if you want to exit your investment. If real estate is invested through listed real estate funds or through Real Estate Investment Trusts with tax benefits (REITs), that disadvantage does not apply.
The real estate asset class can provide a stable stream of income. However, from a risk management perspective, we advocate a broad spread across asset classes and assign real estate only a limited position in the investment mix (asset allocation) of our asset management strategies: a maximum of 5% to 10% depending on the risk profile. You can find out more about the details of the asset allocations of our risk profiles on the Risk profile page.
How can an asset manager help you with the life of your investments?
An asset manager can play an essential role in optimizing your investment portfolio so that you can make a comfortable living from your investments. With its two centuries of experience and cooperation with the best experts and largest asset managers, InsingerGilissen is ideally suited to advise you on the most suitable investment strategy for you. By starting with a thorough analysis of your financial situation, risk appetite and long-term goals, we can create a tailor-made investment plan. This plan can range from defensive investments with stable income streams to more dynamic strategies that focus on capital appreciation. The goal is to create a balanced portfolio that both meets your current financial needs and provides you with future security.
As a client of InsingerGilissen, you can rest assured that your investments will be managed with the utmost expertise, so that you can retire with peace of mind. In addition, you can enjoy all the advantages of private banking with us, such as a dedicated Client Advisor for all your financial and investment questions, a Private Plan in which we work out scenarios for your financial future, including estate planning. We can also provide you with administrative services. If you don't have the time or just don't feel like doing your administration yourself, with our Shoe Box service, you hand over that care to us.
Tax on savings and investments
When living off your investments, it is advisable to take into account the tax on savings and investments in order to avoid surprises. In the Netherlands, the assets you own as private person such as savings and investments, are taxed in ‘box 3’ of the income tax. Until 2023, the Dutch Tax and Customs Administration (‘Belastingdienst’) used a fictitious (supposed) return, but as of fiscal year 2024, the actual returns will be used for the assessment. For fiscal year 2025, for example, a tax rate of 36% applies to the gains and income you have earned on savings, investments and other assets in box 3 (insofar as this exceeds the exemption). This benefit percentage is determined every year for both savings and investments. The benefit of savings is set at 1.44% and on investments at 5.88%. InsingerGilissen does not provide tax advice, but we can help you optimise your investments so that you can enjoy your invested assets without any worries. More information on taxation of assets can be found on the website of the Dutch Tax and Customs Administration.
Entitled to state pension?
If you are 67 or older, as a citizen of the Netherlands you may be entitled to the monthly pension benefit under the ‘Algemene Ouderdoms Wet’ (AOW, general old age pensions act). The AOW is a basic pension from the government for people who have reached the state pension age. The right to AOW depends on the number of years you have lived or worked in the Netherlands between your 15th birthday and the AOW age. For each year that you have lived or worked in the Netherlands, you accrue 2% of the full AOW pension. The AOW pension can supplement the income from your investments, giving you a more stable and secure income during retirement. InsingerGilissen can advise you on how you can optimally combine your investments and AOW benefits to achieve your financial goals.
Discover your options in a conversation with us
Would you like to exchange ideas about living from your assets? Wherever you live in the Netherlands, our offices are never far away. You can visit us in Amsterdam, Groningen, Eindhoven, Rotterdam, The Hague and Zwolle.