Purely hypothetical - banking of ~£20m

grey_gym_sock

i'd invest in pretty much exactly the same way i do now, except with N x the money. you don't necessarily have to change your strategy, just because you have 10x, or 100x, or 1000x, the money to invest.

why spend your time talking to wealth managers, when you could be doing something fun or worthwhile? and when they are unlikely to outperform a simpler, cheaper strategy, after costs. and when it doesn't really matter to you whether they do!

of course, if you're not confident doing your own investing, it's perfectly sensible to pay somebody to do it for you, when you have £20m.

cash management is a bit different with bigger sums, though:

Malthusian wrote: »

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.

a valid approach. or you could park money in very short-term gilts. which would give you a fraction of a percent in return, with no management charges to pay. though you'd lose a fraction of a percent (on the bid-offer spread) each time you buy and then sell.

Wookey wrote: »

buy a small busy viable business where next to no knowledge is required (cornershop/newsagent type shop) 150-300k

no way. small shops are not very lucrative. often run by self-employed people who work incredibly long hours for not that much profit (if you figure out the profit per hour worked). your 50k salary for the manager sounds decent, but it won't leave much profit for you.

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

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

a direct property portfolio of £3-5m is a reasonable idea. i wouldn't do it - too much work - i'd stick to buying listed property shares - but each to their own.

however, it's not nearly big enough a portfolio to employ your own manager(s). you need a team of managers, to give you knowledge of property markets in different areas. and £50k salary isn't going to get you a very good property manager, anyway - like many roles in financial services, they are overpaid. so you'd need to have a contract with a property management company to look after your portfolio.

and i really wouldn't mix up holiday homes with letting. why take on that hassle, when you don't have to? you might want to let friends use your holiday homes for free when you aren't using them, though.

you probably would want a good accountant. (i would be tempted to keep filling in my own tax return, without help from an accountant, since i think i know what i'm doing. but that would probably be silly, given this scale of wealth.) is £50k supposed to be a full-time salary for that? that's low for an accountant - it won't get you a very good 1. fortunately, you don't really need a full-time accountant if you only have £20m assets - just a service contract with a good 1.

Apodemus

Clearly the best thing to do would be to contact Father Abraham (http://forums.moneysavingexpert.com/showthread.php?t=5680095) and get his advice on where to hypothetically hide your hypothetical £20m!

Hussel

Invest immediately in short-dated index-linked government bonds. Really low real yield but I'd be worried about inflation wiping out my windfall if the pound falls further.

Might buy some US, German and Japanese ones too, particularly if I wanted to spend a lot of time abroad.

Then get on with planning a long-term income generating portfolio that would allow me to focus on enjoying my indefinite gardening leave :j

Malthusian

grey_gym_sock wrote: »

a valid approach. or you could park money in very short-term gilts. which would give you a fraction of a percent in return, with no management charges to pay. though you'd lose a fraction of a percent (on the bid-offer spread) each time you buy and then sell.

Do you really want to risk a £20m fortune on the possibility that tomorrow the UK undergoes a coup d'etat and defaults on its debt?

It may seem a remote possibility but when you have £200,000 you don't stick it all in one bank even if it's extremely unlikely that the Government will let it go under, and when you have £20,000,000 you don't stick it all in one country.

When you have a £20,000,000 fortune wealth management is about holding what you have, not eking out another 0.1%pa (you wouldn't even get that with short-dated gilts).

LuxuryWoman

This is something I day dream about often, in fact a couple who live fairly near me and work for an organisation I know well won 130m on the euromillions which is a frightening amount of money.


From what I've read when people win big the Lotto owners organise a new bank account immediately, you don't just get a cheque and go pay it in to your local HSBC or wherever partly for security reasons (your bank know where you live and word could easily get out by loose tongued bank workers) and you are offered a FA.


If it were me, I would obviously ensure the security of my immediate family, I'd be very careful about certain less close family knowing as they would plaster it all over social media (in naivety more than anything else)


I have always loved the idea of scrolling through 'just giving' pages and making anonymous donations to people who are fundraising for medical equipment or treatment, imagine a family trying to get 20k for an adapted bed or wheelchair whatever and just being able to provide it.


Apart from the big winners mentioned above I know a syndicate who won 3m and a couple who won 1m so while the chances of winning are remote I know 3 sets of people in my area who have won life changing amounts - one day it could me <prays, wishes, hopes>

Freecall

Malthusian wrote: »

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

No very MSE though is it.

grey_gym_sock

Malthusian wrote: »

Do you really want to risk a £20m fortune on the possibility that tomorrow the UK undergoes a coup d'etat and defaults on its debt?

perfectly happy to.

because there is no significant section of political opinion in the UK that wants to default on the debt. and even a coup (which certainly isn't happening tomorrow, and is very unlikely but conceivable looking further ahead) isn't a complete reset of politics: it's about some existing strands of opinion seizing a larger share of power.

and because countries (such as the UK) which have their own currency never have to default: it can only happen if they choose to.

this is obviously my judgement based on the current situation in the UK, and could change. but not likely to change quickly.

do you have a different view on any of the above?

It may seem a remote possibility but when you have £200,000 you don't stick it all in one bank even if it's extremely unlikely that the Government will let it go under, and when you have £20,000,000 you don't stick it all in one country.

but weren't you going to stick it all in a money market fund held on a UK investment platform? if the UK government were really determined to mess things up, then as well as defaulting on its debt, it could also confiscate assets held on UK platforms. i.e. you are still "stick[ing] it all in one country".

it is possible to split up a large fortune, so that you have a home, bank accounts, and investments in several countries, any 1 of which would be enough to live off. but that's not what you were proposing.

and in any case, why would you do that, unless you can see warning signs? (e.g. such as you would have seen if you were a jew in 1930s germany.) if you saw warning signs, and had enough money, you would be sensible to split it up, or just to get out of where you see the danger. otherwise, just ticking off "i could live in N different countries" is a bit pointless (unless it's because you like travel, which is something different ...).

adonis10

darkidoe wrote: »

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.

Indeed, but I absolutely know it wouldn't do that to me. Yes I'd splurge a little initially but buying a new Ferrari each month wouldn't interest me, and I wouldn't want a new set of friends so would know exactly who and who isn't trying to fleece me. I think it'd be an absolutely fantastic oooortinity for someone who has genuine interest in investing wisely, working in property development etc. Don't forget a lot of those you read about in the Daily Fail may not be of that mindset and would be happy to go out and spend 10k on champagne every weekend, crash Ferrari after Ferrari etc. Yes, I want out of full time employment working for someone else but even with such wealth I'd want to do something during the day - I assume when you don't have this focus is when you get into trouble, i.e. Lots of money and not much to do = frivolous spending!

adonis10

LuxuryWoman wrote: »

This is something I day dream about often, in fact a couple who live fairly near me and work for an organisation I know well won 130m on the euromillions which is a frightening amount of money.


From what I've read when people win big the Lotto owners organise a new bank account immediately, you don't just get a cheque and go pay it in to your local HSBC or wherever partly for security reasons (your bank know where you live and word could easily get out by loose tongued bank workers) and you are offered a FA.

Wow, that's insane! I mean 20m is insane but 130 is just out of this world.

Get the point about the new bank account but the bank staff there would also know your name and address so not overly different!

LuxuryWoman

adonis10 wrote: »

Wow, that's insane! I mean 20m is insane but 130 is just out of this world.

Get the point about the new bank account but the bank staff there would also know your name and address so not overly different!

Yes but it would a private bank I guess, not a high street one - I suppose billionaires and Oligarchs need bank accounts as well as regular very high earners. Imagine strolling into your local Santander with a cheque for 20m or more (I love to imagine actually)


If only I get to find out, my euromillions syndicate has about £150 in winnings so far - maybe a nice meal for the 3 of us rather than private jets!


Yeah, it was over 130m, it was in our local paper, seemed a nice mid-life couple with children and lots of grandchildren too, I hope it has made them happy - it's such a lot of money to be responsible for isn't it? The thoughts both thrills and terrifies me.