"The higher the return they want, the greater the risks they'll have to take, " he says. "The question they'll have to ask themselves is would they be ready for the huge downside if their investments went pear-shaped? It strikes me that their risk profile would have to be very aggressive to make this work."

On paper, stocks and shares have the potential to meet their income target of 100,000 a year. The trouble is, this income cannot be relied upon. "Over the very long term, equities have done 9%-10% a year, " Porter says. "But this is an average and, while we've seen good returns in recent years, Mark and Elizabeth would be pushing their luck to expect an equity fund to do 10% over the next few years."

To get what they are looking for, he believes the couple have no option but to "bulk up" their nest egg through borrowing, which would push them into the investment big league. This borrowing, or gearing, magnifies returns in a rising market. But it could also wipe out their investment if asset prices were to fall.

"They could squeeze 10% a year out of their money through geared property or equity investments and there are a number of funds available at the moment, " Porter says. "To get the serious returns they're looking for, they'd have to be looking at geared rather than conventional investments."

For example, Friends First's Oracle fund has the potential for 9-15% annual growth by borrowing to invest in commercial property in Britain and continental Europe. But this upside is based on strong capital appreciation rather than the rents paid by tenants.

Other possibilities include New Ireland's Trilogy fund or Liberty Asset Management's Flagship fund, which invest in equities, commodities and other asset classes as well as property.

"Davy Stockbrokers has geared property funds with a recent track record in giving the type of returns that would match Mark and Elizabeth's expectations, " says Porter. "But as always, there are no guarantees that these returns will be repeated in the future."

Even though the couple would be prepared to dip into their capital to support their lifestyle, Porter warns that this would be very dangerous as they are both young and neither has a big pension to look forward to in later years.

"It would be very short-sighted to eat into the capital sum now because this would greatly increase the risk of running out of money at a later stage, when they mightn't be able to work any longer, " he says. "They don't have a huge pension fund to fall back on so there's no comfort factor there."

IanMitchell MANAGING DIRECTOR DELOITTE PENSIONS & INVESTMENTS One million might sound like a jackpot but, rather than providing a comfy income, Mark and Elizabeth would be doing well if it brought in half that.

"Of course it would be possible for them to make 100,000 a year but, to get there, they'd have to put themselves in a position where they could also lose 100,000, " Mitchell says.

While Mark claims he is willing to take risks, Mitchell questions how much he could really afford to lose by taking the gambles that would be necessary to squeeze the most out of his money. "Is he really willing to take risks, given that it's the family home he's put on the line? Could he really live with the consequences of the 1m dropping in value to even 900,000?"

Rather than taking gambles, Mitchell believes Mark and Elizabeth would have to play it safe to protect their nest egg. This means making do with an income far less than 100,000 a year.

"Even though they could get their hands on a million, these people are not strong financially, especially as they effectively plan to retire while still in the prime of life, " he says. "That's why, if they go ahead, they've got to play it defensive, defensive, defensive."

In investment terms, this means picking stocks that offer solid dividends rather than racy growth. It means picking properties that have tenants tied into long leases rather than speculative land deals. And it means keeping a big reserve if all else fails.

"Mark and Elizabeth couldn't afford to lose any of the 1m so this means the money has to be ring-fenced, going for assets that yield an income rather than offering capital growth."

The price for caution is lower returns and, rather than achieving their target 10% return on capital, Mark and Elizabeth would have to lower their expectations considerably. Even then, the couple would see their income and capital eroded by inflation over time.

"They're young so, if they take an income that will be worth 50,000 today, there won't be a lot left in 20 years because there's no allowance for inflation. Once you've taken out the income from a high-yield portfolio, you've taken all the growth away too."

To to able to inflation-proof their earnings, Mark and Elizabeth would have to start out on a much lower income. "If they were relying on my advice, they'd assume an index-linked income of 30,000- 35,000 a year."

To achieve a defensive portfolio, he advises Mark and Elizabeth to keep 5% of their nest egg in cash in an account such as Anglo Irish Bank's 30-day notice deposit. On a 50,000 lump sum, the 3.75% rate of interest would be worth 1,875 a year before Dirt tax.

Mitchell advises the bulk, around 750,000, should be divided up between high-yield equity funds such as that by Bloxham Stockbrokers, commercial property funds such as Hibernian's, and cautious managed funds like Eagle Star's. These should produce an indexlinked income of 30,000- 35,000 a year.

The couple could take chances with the remaining 200,000 in the hope that they would be able to beat inflation. Mitchell suggests investments such as Eagle Star's Five Star Five fund, which invests in a basket of highgrowth equities, or the Irish Life/Fidelity Indo China fund. This is high-risk stuff and, although the Irish Life fund is up 40% in the past year, it tends to be a white-knuckle ride.