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Purely hypothetical - banking of ~£20m

adonis10
adonis10 Posts: 1,810
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edited 20 July 2017 at 11:29AM in Savings & investments
Totally out there and 'never going to need this advice' type of situation but was doing my banking earlier when I saw an ad for the upcoming lotto which is in excess of £20m. Now, I rarely play it for obvious reasons but it did get me thinking about where on earth to bank that cheque initially due to the following:
- I'd be paranoid to put it in a bank account due to the FSCS limit, albeit highly unlikely that the bank would collapse but with that amount of money there would be paranoia.
- also be paranoid about having it in an account and being subject to online or other fraudulent activity.
- would you just go to the high net worth part of your bank and simply pay in the cheque and leave it there until you decide what to do with it?
- in general, what would one do with it?

Obviously, as the weeks and months go by I'd be putting a decent chunk of it into property and investments but this would need a whole lot of research time so it would end up being sat there for a while.
Sorry for the slightly day-dreamery nature of this post but it just intrigues me.
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  • Malthusian
    Malthusian Posts: 10,898
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    edited 20 July 2017 at 2:49PM
    While you do the research you would put the money in a money market fund (e.g. BlackRock Cash, other cash funds are available) which would diversify across numerous short term cash instruments and therefore have virtually zero default risk.

    It would also have zero yield (negative after charges) but who cares when you've got £20 million.

    That is assuming you want to DIY your £20 million - most people would hire a discretionary wealth manager or other professional who would do something similar.

    As for online banking fraud, the same law applies whether you have 20 million in the bank or 20 quid - unless you are grossly negligent (e.g. giving someone else your login details), the bank would be liable.
  • Wookey
    Wookey Posts: 812 Forumite
    I'm fairly certain that the lottery give guidance on this when you win a large sum.

    But, I would
    ensure immediate family are financially secure 5m
    max out premium bonds 50k
    max out a sipp with a lifetime pension contribution asap 1.0m
    buy a small busy viable business where next to no knowledge is required (cornershop/newsagent type shop) 150-300k
    stocks and shares ISA to levels i was comfortable with circa 100k
    long term bonds at a risk level/rate i was comfortable with circa 100k
    small well managed property portfolio with a mix of commercial/domestic property in sought after areas 3-5m
    buy a few holiday homes in various countries which could tie in within the managed property portfolio as holiday rentals 1m
    keep around 2-5m as easy access working capital for opportunities arising
    employ a dam good accountant, shop manager and property manager @50k per year each with a two week summer vacation at one of the holiday homes included for hitting and maintaining targets
    spread the remainder over multiple accounts with varying banks up to 100k per bank
    Norn Iron Club member No 353
  • sorcerer
    sorcerer Posts: 878 Forumite
    That sounds like a lot of work, I might just blow the lot on expensive cars and women :j
    Wookey wrote: »
    I'm fairly certain that the lottery give guidance on this when you win a large sum.

    But, I would
    ensure immediate family are financially secure 5m
    max out premium bonds 50k
    max out a sipp with a lifetime pension contribution asap 1.0m
    buy a small busy viable business where next to no knowledge is required (cornershop/newsagent type shop) 150-300k
    stocks and shares ISA to levels i was comfortable with circa 100k
    long term bonds at a risk level/rate i was comfortable with circa 100k
    small well managed property portfolio with a mix of commercial/domestic property in sought after areas 3-5m
    buy a few holiday homes in various countries which could tie in within the managed property portfolio as holiday rentals 1m
    keep around 2-5m as easy access working capital for opportunities arising
    employ a dam good accountant, shop manager and property manager @50k per year each with a two week summer vacation at one of the holiday homes included for hitting and maintaining targets
    spread the remainder over multiple accounts with varying banks up to 100k per bank
  • Wookey
    Wookey Posts: 812 Forumite
    sorcerer wrote: »
    That sounds like a lot of work, I might just blow the lot on expensive cars and women :j

    Lol, you would only need one of those as that then attracts the other, but a lot of work maybe only in the first year after that it should start to look after itself if managed properly and with 20m in the bank it's not like you would be doing a 9-5 every day for a wage so plenty of time to work on it.
    Norn Iron Club member No 353
  • adonis10
    adonis10 Posts: 1,810
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    Wookey wrote: »
    Lol, you would only need one of those as that then attracts the other, but a lot of work maybe only in the first year after that it should start to look after itself if managed properly and with 20m in the bank it's not like you would be doing a 9-5 every day for a wage so plenty of time to work on it.



    Exactly that, getting back the 45 hours/week committed to commuting and working would give one an awful lot of time in the year to do more interesting and productive stuff.
  • adonis10
    adonis10 Posts: 1,810
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    Wookey wrote: »
    I'm fairly certain that the lottery give guidance on this when you win a large sum.

    But, I would
    ensure immediate family are financially secure 5m
    max out premium bonds 50k
    max out a sipp with a lifetime pension contribution asap 1.0m
    buy a small busy viable business where next to no knowledge is required (cornershop/newsagent type shop) 150-300k
    stocks and shares ISA to levels i was comfortable with circa 100k
    long term bonds at a risk level/rate i was comfortable with circa 100k
    small well managed property portfolio with a mix of commercial/domestic property in sought after areas 3-5m
    buy a few holiday homes in various countries which could tie in within the managed property portfolio as holiday rentals 1m
    keep around 2-5m as easy access working capital for opportunities arising
    employ a dam good accountant, shop manager and property manager @50k per year each with a two week summer vacation at one of the holiday homes included for hitting and maintaining targets
    spread the remainder over multiple accounts with varying banks up to 100k per bank


    Ah yes, absolutely. But given that I'll never experience it and I am inquisitive about it, I thought I'd see what the wise folk of MSE forum think!


    My initial query was more about handling the initial cheque and where to put such a big lump sum, but I don't think I'd do an awful lot different to you in terms of using the cash. Sort out immediately family with big house by the sea, an Aston Martin and big chunk of pocket money > buy a piece of land to build my own house > holiday to chill and mull over what the heck has happened > invest, invest, invest > start business with the aim of making profits for charity, of some sort.
  • Zola.
    Zola. Posts: 2,204
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    I'd love to have this problem to sort out for myself.
  • adonis10
    adonis10 Posts: 1,810
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    Zola. wrote: »
    I'd love to have this problem to sort out for myself.

    Wouldn't we all!


    *Meanwhile, back in the real world.*
  • Malthusian
    Malthusian Posts: 10,898
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    Wookey wrote: »
    max out a sipp with a lifetime pension contribution asap 1.0m

    Terrible idea as even in the best case scenario (£1 in a pension established at least three tax years ago) you would face a hefty annual allowance charge which would wipe out almost all of the tax relief, then a lifetime allowance charge on all of the growth above £1.25 million (assuming you applied for Fixed Protection immediately after making the contribution), on top of the income tax you would pay when you took money out of the pension. Which is almost certainly going to be at the additional rate, thanks to the dividend income from your £20,000,000 fortune (even after maxing your ISA allowances).

    Of course talking about the UK tax system may be a bit of a red herring... I hear Bermuda is lovely this time of year (any month with an R in it, or a Y or a U).
  • darkidoe
    darkidoe Posts: 1,125
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    You will find sudden windfall might not be the best thing that can happen to you. Just have to check out Daily Mail stories of past lottery winners few years down the line. Divorces, fall-outs, harassment by people wanting a share of the pie, bankruptcy and years of unhappiness.

    It will take quite a strong character and will of personality to not let £20 million change your life but unfortunately we are only human and once it happens to us, we tend to fall to depravity and why shouldn't we.

    Save 12K in 2020 # 38 £0/£20,000
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