What to do with £1 Million?!...

colsten

racing_blue wrote: »

JohnnyMac is an IFA

Thank you so much for this bit of detective work, racing blue. Although it seems he's now sold his business, if the OP is to be believed.

johnnymac wrote:

Hi all,

After 25 years of hard work, some luck and good timing, I have recently sold my business and just received the proceeds into my bank account. I'm only 48 years old, and now have nearly £1 million in cash to invest, hopefully to last me for the rest of my life.

Agree with jimjames, there is no rational reason why an IFA would ask the MSE forum for any advice, and certainly not after they sold their business, and for a mere £1m profit for "25 years of hard work".

EDIT: I also hope the clients will read that their IFA was "not hugely educated in the area of investments" as this could help them when claiming compensation.....

Jonnymac wrote: »

I never expected to say this, but its actually quite terrifying. I'm not hugely educated in the area of investments (particularly involving a sum this size!), and so I'm afraid paralysis might set in and I let a year go by without doing anything at all.

It doesn't add up. How can an IFA be "not hugely educated in the area of investments", and how would any IFA be fazed by a mere £1m! And who knows what else isn't true.

redux

Tax advice needed, at the very least.

Capital gains tax on sale of a business, various types of relief, etc

Mattygroves2

Jonnymac wrote: »

I have already spoken to several Advisers, and their advice has been a bit underwhelming. Its not that I'll necessarily go straight out and follow the advice of total strangers, but I am open to hear a range of opinions and ideas.

Regards.

What was underwhelming about the advice you've already received ?

If several people came up with similar suggestions after doing a proper fact find about your risk levels and needs then I'd suggest their advice is worth more than anything you will get on here.

I would have thought they would be recommending a balanced portfolio of income bearing funds / Investment Trusts, bonds, property funds or physical property and then maybe a selection of growth funds. All with a balance of sectors and geography. If you really are retiring then you need steady (hopefully rising) income and not capital growth.

If the suggestions simply weren't exciting enough then maybe think about taking a small percentage of your funds and accept that it is "fun" money and have a go at some of the more exotic investments you mention. Just accept that you may lose the lot.

All the specifics you mention are higher risk and unregulated with the exception of p2p and Woodford (assuming you mean his income fund). Even Woodford's new fund is higher risk and may have a small place in a big portfolio but it would be risky to take a big position with a fund that needs to fund your lifestyle.

If you want to invest in forestry and renewables then do it direct - buy a wood and harvest it and put renewables in at home and get the FIT or RHI payments. Tangible and in your control.

veryintrigued

I've almost spat my coffee out reading this thread.

Bonkers.

TheTracker

Suspicious:

• An IFA saying they are bewildered at the prospect of investing their own money
• The precise £1m amount
• The list of "ideas" being woodford, india, forestry, etc

On the other hand:

• The OP probably had little savings as he built his business and thus little investing experience
• If he was an IFA on his caravan park / holiday home area his advice may not have been in the investment area
• I can imagine such a business selling for £1m
• Forestry, Woodwford, India, Gold, VCTs etc are discussed here disproportionately

So getting some professional advice is probably a good idea, taking in good faith the OP isn't a troll.

Jonnymac

Okay, since the discussion has been sidetracked by a previous post I will clarify:

My firm was exclusively involved in providing Pension Admin services to a single large multinational company, for which we had to be registered with the FSA.

We never dealt with the public, never gave Mortgage advice, never had any involvement in Investments, never sold Life Insurance - basically did nothing but support 10,000+ employees by providing information about their Pensions. The Multinational wanted to bring this in house, so offered to buy me out...

I am neither a Troll nor Fantasist, but an ordinary person who was hoping to benefit from the 'wisdom of the crowd'.

I hope that clears this up.

gadgetmind

Jonnymac wrote: »

I'm only 48 years old, and now have nearly £1 million in cash to invest, hopefully to last me for the rest of my life.

Let's assume that any capital gains tax or other taxes are accounted for and the £1m is available to use. Let's also assume you have no debts, mortgage is paid off, and you have as large a property as you'll ever need.

If these assumptions are wrong, please correct them!

Whether this is enough to last you for the next 40+ years depends on what income you need. As it's all presumably held outside of ISAs and pensions, you also have yourself something of a tax problem, so need to invest wisely.

In your position, I'd be wrapping some of the money into pensions and ISAs as quickly as possible, and this needs starting this tax year. What's left I'd invest mostly into assets that create dividend income, but would also consider bonds, REITs, P2P and perhaps even property to use my personal allowance. If you're married then your spouse can also use their personal allowance.

I personally favour Investment Trusts, and you should be able to get close to 4% pa as a rising stream of dividend income, so £40k now that *should* rise with inflation for the rest of your days.

IFAs would probably use Investment Bonds and the like, and this could be a good idea if you intend to keep on working. Dunno, ask them!

You then have until state pension kicks in to get as much as you can into ISAs. You sure won't be able to wrap the lot so start with anything creating a taxable income stream.

BTW, you should keep doing enough to make sure you qualify for full state pension, and there are cost effective ways to do this.

jamesd

Does your income requirement exceed £40,000? Does it exceed £50,000? I trust that you're familiar with the 4% rule and hope that you're familiar with the research that shows how this can in the US be increased to 5% or even 6% with high success rates? Do you want your income to increase when you reach state pension age, remain level in real terms or start higher and decrease? As an IFA you can put together a desired annual spending profile including the effect of the state pension, you should, since that is an essential part of your planning.

So far as investment choice goes, significant use of P2P to diversify away from both bonds and equities in some markets that have high cyclically adjuster P/E ratios seems prudent, if you can deal with the associated risks.

Substantial forestry or Indian investments should of course be avoided because they would be excessive concentration. You probably don't have sufficient money to invest sensibly in those areas without using collective investments.

Global equity tracker, bond and property funds are boring. They are also the core of an appropriate strategy. Make extensive use of them.

As well as income targets you should also consider both your attitude to risk and capacity for loss. If you can handle a 40% drop once or twice a decade and a 20% drop two or three times then pure equity fund investing would be acceptable.

Do you have other investable assets, like pension pots? What is their approximate value and what are your plans for them?

Do you have any desire to retire to a country other than the UK, which might, for example, require half a million Dollars of investable cash to get a US or Australian investor visa.

gadgetmind

jamesd wrote: »

require half a million Dollars of investable cash to get a US or Australian investor visa.

BTW, does that include assets in pensions?

Jonnymac

atush wrote: »

Jonny,

If you are real (and I have no reason to think you aren't) then I would ask you to give more details. such as if you are married, dependents.

you gave your age (to young to really retire IMHO but maybe change life, career etc) but you didn't say IF:

this 1M was your only money. If you have any debt, own a house (mtg or not- say). If you have other savings and investments. If you have any pensions and their size/amt at SA/now if a pot.

Your qualifications and aspirations? What could you do if you wanted to? What would you like to do?

Basically, a IM windfall could set you off on the life of Riley if all the above is in good order.

Or it could pay off debt, buy you a place to live, start a pension and open a new smaller business.

We can't really say. As unlike in Masonic's case, a 500K pension isn't big enough for us. We'll be saving a few more years yet.

The £1M is all I've got (and more than I ever expected having...). I have a very small, manageable mortgage, and no real debt to speak of. I don't really need anything 'flash', but just want to maintain my lump sum into old age as best I can for security, and may be look to get a 7-10% return to fund a decent life for my family if this could be at all possible. I can afford to be a bit adventurous, but if I lost it by doing something stupid I'd never forgive myself. I may have to look towards another business - I'm stumped at the moment though, re. what I could do, or perhaps look for a job, but I was really hoping to live off the interest on my lump sum for a bit - but I couldn't on the 1.39% offered by my bank!

I appreciate a million isn't what it used to be, but it still looks like a huge sum to me.

Thanks for your input.