Exciting Opportunity & Massive Risks - Opinions please

Sweetrevenge

cajef wrote: »

So you want to use the money that is being given to you for the benefit of your children in a business that may fail and they would get nothing?

I have to say the money is being given to me in consideration of an old injustice. There are no caveats that say it is for the benefit of my children, however both those giving me the money and myself naturally would like to see this money OR the benefit that this money is used for to benefit my children in the long run.

My husband and I had already decided to try to start our own business, before we were told that this money was coming our way.

My dilemma is how to a) improve our chances of starting the business in the first place (because we need the security of a house we own and a reasonable life until we die AND b) achieve the benefits for my children in the long run.

Or would you stick it in a pension and carry on moving house and earning minimum wage for the next 20-30 years?

Sweetrevenge

GazNicki wrote: »

How old is the CCJ? If the CCJ is towards the end of the 6 year period, and the balance is substantial, It may be best to let it ride rather than use up your potential business funds.

You need a solid business plan. If you have that, and you have your projected profit/loss, including market research, then you can hit the banks for a business loan. You don need to invest your funding as 100% capital for the business loan, but it could help.

The business plan is crucial in getting investment from the banks or any lender. Even if you had 90% of the money, nobody would lend to you without a solid business plan.

The CCJ is small and easily settled without impacting on this gift substantially. Does it stay on my record for 6 years after settling?

The business plan is 95% ready and extremely detailed! its been taking shape for 6 months while we did all the research.

Pixie5740

Jesus wept....talk about drip feeding information. In your OP you said that the fact you rent was affecting your credit "score" then it turns out you have a CCJ. You said the people gifting you the money want your children to benefit from it, now it turns out it's you who want your children to benefit. If you want meaningful advice stick to the facts.

Sweetrevenge

Pixie5740 wrote: »

Using the money to buy a house won't necessarily help your children nor will putting the money in a pension. Property is a highly illiquid asset and you might not be in a position to access the equity at a time when your children may need it. Not to mention that if, way off the future, you require care in your old age, the equity from the house will be used to fund that meaning your children would inherit diddly squat. With pensions the money is locked away until retirement so again you may not be able to access the money when your children need it. You will probably need the pension when your retire to live off so again it won't help your children.

The people voting you the money need to decide ultimately who it is they want to have the money, you or your children. If it's your children then they should gift it directly to them because there's no guarantee that whatever you use the money for will one day benefit your children. If it's you they want to gift the money to then a home or a new business (provided you've planned and researched properly and are prepared to accept the risk) are as good a things as any to spend the money on. You could always choose to gift some of the money to your children.

The children are being gifted by myself and the beneficiaries of the estate anyway. We want them to have some while they are young and need the help!

Sweetrevenge

Pixie5740 wrote: »

Jesus wept....talk about drip feeding information. In your OP you said that the fact you rent was affecting your credit "score" then it turns out you have a CCJ. You said the people gifting you the money want your children to benefit from it, now it turns out it's you who want your children to benefit. If you want meaningful advice stick to the facts.

I have supplied additional information where people asked for it but all relevant information for a discussion of the principles of my situation was in my OP.

Perhaps I shouldn't have assumed that people would automatically assume that I would like to leave whatever I can for my children, but I did. mea culpa!

Somerset

Sweetrevenge wrote: »

.

So do we approach the mortgage company first and commit this gift as a deposit, approach the business lenders first, or put it straight into a pension which business lenders can't take away?

There's effectively no difference to the first two re end game :
- Deposit, house, mortgage, personal guarantees, business fails, guarantees called in, house sold/repo'ed. Nothing left.
- Ploughed straight into business with additional borrowing. Business fails. Nothing left.
- Pension ? Nobody will lend to you - no house deposit, no house & no personal business funding no commercial funding.

Sweetrevenge

Somerset wrote: »

There's effectively no difference to the first two re end game :
- Deposit, house, mortgage, personal guarantees, business fails, guarantees called in, house sold/repo'ed. Nothing left.
- Ploughed straight into business with additional borrowing. Business fails. Nothing left.
- Pension ? Nobody will lend to you - no house deposit, no house & no personal business funding no commercial funding.

You're spot on there Somerset. I'm trying to find a way of having my cake and eating it!!

Somerset

Sweetrevenge wrote: »

You're spot on there Somerset. I'm trying to find a way of having my cake and eating it!!

That thought had crossed my mind


Decision - stick or twist ? Big upside, big downside.

GazNicki

I would seriously consider what it is you want to do in terms of 'gifting' to the kids.

It is difficult to advise as nobody knows how old the kids are. If they are 4 then that it drastically different to them being 24.

You need to think about what can you do that will benefit you in the long run. It seems like the only gamble you have right now is the new business. That's a risk you are going to take one way or the other. You have several options when it comes to business that can help to protect you - such as a Limited Company that would limit the disadvantages to you should the business fail.

That said, if you are looking at spending all the money one way or the other into a business, then you are risking the lot.

Buying a house is a good investment for the future. Yes, there are pitfalls like the house market could collapse and you are left in negative equity, or the equity of the house needs to go into paying medical bills, etc. But there are benefits too. If none of these things happen, the house will be worth more when you do pass and the kids will be much better off for it.

Likewise, the business is a 50/50 gamble. If it fails, you lose all your money. If you buy a house outright and then take the equity back out to invest in the business, you risk losing the house provided you can't pay the mortgage.

There are so many factors that would affect this, that I doubt you can truly get solid advice from here without divulging a lot of information. Really, you may just get opinions which are for the most part not worth very much,

Arleen

I will say one thing. If this is your first business, and you don't have another 150k to sink into the business you want to start, don't drop the 150k in the first place. Also, the idea that it will profit 50k in the first year on 150k investment is insane. It's not 50/50 gamble, its 90%+ chance that you will never see your money back, with extra kicker of going deep into debts to then try to keep it afloat.

If you want to run your own business, run it on a minimal budget first, see if it works. Almost every business can be run on a minimal budget, so think carefully and figure out how to do it. If you can't, then put the money into a mutual fund and let professionals handle it.