Won A Million - Clueless

luckylucky11111

Long time reader but first time signing up.

As the title says I was incredibly fortunate a few weeks back to win a million in the lottery.
Since then life is a blur.

Married in mid 40's with 4 kids
Still have a mortgage (circa £150k) and owe plenty on credit cards and loans (circa £30k).

Havent touched any of the winnings yet even though Camelot have given me very helpful advice on what I can do.

Didnt go public so keeping between myself and wife is incredibly difficult however I am determind not to tell anyone else.

Naturally when I get my head straight I want to pay my mortgage and debts off. But what then?

I am only breadwinner in the house and have a salary of £40k per annum. Looking at the figures I dont think I can afford to quit work.

Kids are all under 10. Want to ensure they have a good start to their adult life

Basically just wondering if anyone had any thoughts on what they would do or even advice on what i should do.

Realise I am incredibly incredibly fortunate and not moaning but feel clueless on what to do.
Am going to see an IFA but want to ensure I have at least some idea of investments etc before I do as am wary of anyone saying they want to 'help' me with my money

[Deleted User]

Congratulations!

As you say, it's not really a 'quit work' forever sum, but you can do some serious damage with it.

I'd be looking at the mortgage (depending on the rate) and kick-starting a pension if necessary. Then it's about what you want to spend and what you want to invest, including money for the kids.

A lot of it depends on whether you want any 'life changing' spend - a 6 month holiday, Ferrari, a new house and a pool.

Or whether you want to use it to make life a bit more pleasant in the long run. eg a new Branbantia bin for the kitchen or Heinz beans instead of Tesco's.

luckylucky11111

Thanks.
No life changing spend planned as will continue working however it would be nice.

Have a pension in work which they match but again clueless about it as well unfortunately

short_butt_sweet

i disagree: stopping working is possible.

£1m invested sensibly could replace a £40k salary. that salary is about £33k after tax/NI, so you'd need 3.3% return (after tax) on the £1m. and you'd pay minimal tax on investment income, if you split the capital between the 2 of you, and neither of you also had a salary (and if you gradually moved some capital into ISAs/pensions).

however, are you spending more than your net salary now? (if not, why do you have £30k non-mortgage debt?) so replacing your net salary may not be enough. figure out (if you don't know) what you're actually spending.

OTOH, replacing your salary may be more than you need. because: do you have expenses that would disappear if you weren't working? e.g. commuting costs. or are you living in a more expensive location than you might choose if it wasn't convenient for your work? (maybe not.) but the point is: try rethinking all your expenditure in terms of what you'd do if you weren't working. how would you go about giving your children the best possible upbringing, if you weren't tied to your work? clearly, you'd have more time to spend with them.

perhaps you don't really want to give up work. perhaps it gives your life a meaning. but at any rate, ask yourself whether you're in the best job for that purpose. because you could certainly manage financially on a lower-paying job now, if the job itself suited you better, in terms of the satisfaction it might give you, or less stress, or shorter hours. you could also afford to have a gap in your earnings, while you retrain for some other job.

there's lots to think about! there are may ways you could use this money. you need to figure out the best way to use this money to improve your and your children's lives.

as i take it you don't already know about investments (though it is not hard to learn), i would suggest talking to an IFA about the financial side. what an IFA can't tell you is how you want to spend your life - and you do have more options for that now.

paying off the non-mortgage debt is perfectly sensible. it might be better to keep the mortgage, rather than pay it off; i would at least pause before doing that.

googler

£1mill in a high-interest account (2.3% was quoted here as the best available) would bring in £23,000 pa.

Others can advise if there's higher returns available elsewhere.

You say you're currently bringing in £40k, so could you consider, or would you want to, do part-time at work? £23k coming in from the interest, do a 3-day week, that would bring in (say) £24k ....

My inclination would be to immediately pay off the mortgage, settle all credit and loans, and work with the rest.

In summary, what WAS Camelot's advice?

Oh, and Congratulations!!!

atush

I would up your pension, and up the wife's as well. You can put in up to 40K each year (and as you earn 40K you can use the whole allowance). Even if your OH isnt working they can put in 2880/3.6K each year.

Do this each year going forwards, the next can be from April 6 onwards. This years must be in by April 5.

S&S isas, open one each and pay in 20K each. Plus Jisas for the children.

Make any repairs to your property you have been putting off.

You may want the advice of an IFA.

Robin9

Have a bit of fun with some of it.

masonic

Certainly you'll want to clear the more expensive debts (credit cards if not 0% and loans), the mortgage is more questionable, but perhaps you'd want to reduce it and remortgage if you can then secure a better rate. Do all those things that are important but you were unable to do because money was tight.

Things to discuss with your IFA:
- Pensions planning, thinking about things like carry forward and the lifetime allowance, salary sacrifice (if available) into employer pension vs a SIPP
- Provisions for the kids - trust options if you don't want them getting access to some of those funds automatically at 18.
- S&S ISAs and other unwrapped investments

MatyMoo

When a family member was retiring with a very large pot he was advised to think about things in three stages.

Immediately available - day to day living, holidays
Not readily available but may be needed in 3-5 years - cash he could get his hands on if the children threw a wedding in the mix or they wanted to renovate the house or change cars
Longer term - everything else

These sort of things may help with your thinking before you see an IFA

Heedtheadvice

That is good fortune and nice problem to have. Huge wins (much greater than yours in todays terms ) can actually be very problematic!


Consider doing all the sensible things that some less fortunate than you would do if they could. Getting rid of debt; ensuring an emergency fund readily available; pension provision; provision for family needs (housing, clothing, feeding, future expenses etc.); and enjoy some of the leftover. Somewhere towards the end of that list and to future proof things would come investments.


Security of finances is great and you could be heading towards that or you might blow the lot!
Not having a job ('retirement') can be a bad experience if you end up bored; also you do not know what lies ahead so consider worst cases such as you or member of your family has expensive needs (care or other paid for support)that can be very costly. £50k per annum per person soon eats into your win! Then consider best cases, you might invest half and in ten or twenty years time it's worth say £5M and the rest has given you good holidays, paid for weddings, helped with paid for education giving offspring or theirs a good start in life.


As posted by others toss around the ideas and come up with what is important to you which might be change to a less lucrative but more enjoyable job, get more education, fixup/move home, ensure security (such as the above) etc. and then get advice as to how to organise your finances to help with your aims.


Above all be realistic. You are probably not 'made for life'.

masonic

Oh, and I forgot to mention earlier. Stop buying lottery tickets, it's a mug's game