1 million to invest

plinth

I have recently sold my company for 5 million pounds I was a third owner so am due 1.5 million pounds-I have spoken to some independent financial consultants (not so sure how independent they are) but have decided to semi retire however I want the cash to work for me the best bank interest is 3.6% but worried about putting it all into one bank- I have decided to upgrade the family home pay off debts and have allocated 500k for this so debt free and with some gifts I will have a million pounds roughly.

Any advice would be greatly appreciated

Aegis

If you choose to keep it in cash, then consider spreading it around quite a bit, as the maximum protection you get from the Financial Services Compensation Scheme is £85k per depositor per banking licence.

If, on the other hand, you want to preserve and possibly grow your capital, then you probably need to consider alternatives to cash, which is where the independent financial consultants/advisers come in, unless you're prepared to do all the research and management yourself. You're certainly right to consider how independent certain advisers are. As an example, most of the banks employ a salesforce called "independent", but they are still tightly controlled by the bank and will usually include that bank's own investments on their panel even if almost not other IFAs in the country do so.

It's certainly worth asking around a few different companies to make sure you get an adviser you're comfortable with, and it's definitely a good idea to ask questions about their independence if you have any concerns over anything you find out about them.

Depending on personal circumstances, your recommendations are likely to include use of pensions, ISAs, direct investments and insurance-based investments to maximise your tax efficiency. When it comes to investment selection, it's worth asking some questions about the process. Some IFAs have an in-house investment analytics team, others outsource the research to a third party, others still outsource the entire investment management to a discretionary portfolio manager and manage the cashflow and tax situations exclusively. Ultimately it's your call as to which type of adviser you use, if any.

Don't be afraid to ask further questions both here and elsewhere. There are a lot of conflicting opinions here, but plenty of posters who know what they're talking about.

jamesd

The central place for finding unbiased independent financial advisors in the UK is unbiased.co.uk.

Many people in your position might find buy to let property to be an attractive option. You might say purchase ten to twenty properties with mortgages using £25,000 to £50,000 as 25% deposits on the properties for interest only mortgages. You could do this within a business set up for the purpose and take income int eh form of tax-efficient dividends.

You could consider that instead of repaying your mortgage, instead of paying off the mortgage using the income from the properties to pay the mortgage cost and make additional profit.

Bank savings accounts aren't really appropriate for long term income. Funds like Invesco Perpetual Monthly Income Plus are very popular with retirees and that one pays out around 7%, split into variable monthly payments. Capital value will vary. You wouldn't use one fund, you'd get an IFA to help you put together a mixture. With income as your objective it's possible that an investment trust as a tax wrapper may be appropriate, depending on your age, tax status and anticipated future tax status and country of residence.

ChiefGrasscutter

What's the tax situation re selling businesses?
Capital gains tax and all that?
No idea myself, wasn't there some CGT relief available at one time for businesses being sold if the owner was retiring but I recall that was phased out from what I remember.

What ever it is that might be due I hope you have allowed for having to pay it in calculating what is finally due to you as a net receipt

plinth

Wow thank you for the advice I do like the idea of spreading it around and I only have a small mortgage on my current home. I also like the idea of purchasing say 10 houses using say 25-50k as a deposit as that will keep my wife busy with a property management role. It would allow for the other cash to be put in the accounts at 7% which is nearly double what I thought you could get? I have a wife and 4 kids I may also be able to set up an ISA in all their names and pay the max into them- food for thought I didn’t realise there would be so much involved ha ha-I am also involved in a new business venture (part time) so the split in investment will allow me to focus on this-thank you very much-I’m sure I will be back in contact ha ha

ChiefGrasscutter

I see you were a teacher from this post....
http://forums.moneysavingexpert.com/showpost.php?p=47567263&postcount=15

plinth

From the process I have to pay 10% entrepreneurs tax so my 1.6666 becomes 1.5 mil effectively as far as I am aware and my accountants have informed me under new government relief for entrepreneurs that is all I will have to pay so those allowances have been taken into consideration-to be honest the due diligence is quite a detailed process so all this is picked up then (very black and white with figures)

plinth

ChiefGrasscutter wrote: »

I see you were a teacher from this post....
http://forums.moneysavingexpert.com/showpost.php?p=47567263&postcount=15

yes indeed I was a university lecturer the business was on the side and I invested about 6 years ago with 2 friends who worked full time in the business but shareholding was 33% each-it was purchased by a private equity firm

ChiefGrasscutter

Ah, so short term capital gain rather than long term building up the business over 25 years.
You will probably need professional tax advice as well then..I've no idea whatsoever of the rules/options etc at all.

Edit
You will need to start considering you attitude to 'risk' in terms of your investments if you are going to live off the income from the capital sum and will have no other substantial income source.
In general higher returns go with a higher 'risk' and that risk may be that for an example you get a higher income from an investment but the capital value has a risk of going down as well as up.
These are all thing that a professional financial advisor will go into.

lisyloo

Wow, good for you.
I would get professional investment advice rather than coming to forums tbh and professional tax advice as well.
The right advice is worth it's weight in gold - just ask Harry Redknapp and that goes for investments too.
This is not a situation where you should be trying to skimp on fees and ask some strangers you don't know.

MarcoM

Buy to let is a big committment.
Even when using a letting agent you would have to pursue tenants through the courts by yourself
if they were not paying your rent.
Also you have tax on the rental income, fees for the letting agent, repairs etc etc.
You mention that your wife would be managing the properties directly. This is just my opinion but if you have 1000000 quid why would one want the hassle of dealing with people that might not pay rent, ring you at 3 in the morning because they have lost their keys or complain to you that their flat is damp (even though they are the ones putting washing on the radiator)......

If you are of retirement age with a good portofolio of investments you can get close to the income % you would get with the BTL and without the hassle.
Remember with BTL you could still get sued for negligence. OK insurance is available but do you want the hassle.

Also watch IHT. You have children so try to avoidn paying IHT. UK has horrendous IHT rates compared to many countries.