Won A Million - Clueless

BM5118

Just to toss in my 2 pennies.
I know a school friend who won 580k. Not even 10 years later he and his wife are now divorced and entirely skint.


They had a lot of friends appear soon after their win, and they all enjoyed their money.



My only advice would be to get yourself a passive income from those funds so you can live worry free until you are 100 years old and leave your adult kids a healthy sum.


Very good luck with it all!


p.s I work for a billionaire, and I'm paid to spent a lot of time in the company of comfortable millionaires. All the kids I meet are spoilt and have no respect for money. For you kids sakes support them, don't spoil them.Use this leg up to enhance their lives rather than teaching them to rely on their parents wealth.

cns06

If it were me;
Pay off CC debt
£20k each now into VLS80 ISA (40k)
£20k each in April into VLS80 ISA (40k)
Top up your pension including last few years unused pension, possibly upto £120k ish?
Same for wife, although will be much smaller sum

So before you do anything serious thats probably £200k squared away.

Then moving forward I would:
Set up ISA for kids. £40k each at 18 ish. £160k done but over a long period. Should see them through uni no problem or house deposit.
Split the remaing between SIPP and ISA each year allowing you option to retire early if needed but if not you have wrapped as much as you can.
Consider paying off mortgage. Interest rates are low but on modest sum the interest over long period still adds up and nice to be mortgage free.

Tell no one. Ask your IFA to provide NDA / privacy policy. Dont discuss it near the kids, even if you dont think they can hear.... because they will... once they grow up it will be very tempting to tell them but I wouldnt until they are well into their mid 20s.

Dont forget you need to spread the money out a little, to maintain govt bank protection.

Dazed_and_confused

£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).

Good point. In fact if you split the capital between you and both stopped work and received final salary payments before 6 April so your only taxable income in 2019:20 came from savings interest you could actually get £37,000 as a couple before having to pay a penny in tax

cns06

It is a good point, however time vs reward here is actually pretty good. He could, for example, work for another 10 years and earn c.£400k. Increase of NW of almost 50%. If he uses his windfall wisely he could actually turn the 1M into 2.. would need a bit of work and luck but easily possible to be 50 with £2 mil in the bank is a pretty cool place to be.

Flobberchops

Congrats!

My other half and I decided a long time ago that if we ever won the jackpot, we would follow two rules. First, tell nobody. If anybody questions the new car, ability to take holidays, etc, then it's from existing savings, a timely inheritance, etc.

Secondly: we owe nobody anything. My sister in law suffered a life changing injury and received similarly life changing compensation money, and the vultures are SHAMELESS. You will have friends, old, new, possibly fictional, hound you night and day trying to make you feel like a terrible person for not funding their wedding/kids university/holiday/retirement/medical treatment. But refer to rule one; nobody knows this money exists, and you most certainly don't owe anybody. At least no more than you may have owed them before you won.

If it was me: get completely out of debt, just on principle, even if your mortgage is fantastic. Put aside as much money into ISAs as you can; 20k per adult now, another 20k in April, and the maximum each year thereafter. Small fry compared to the total but over the years it will add up and you may come to appreciate the tax free interest and/or capital gains. Contribute as much as possible to your workplace pensions.

And then sit down with your wife and have a very frank talk about how you want this money to benefit your children. As BM5118 points out you don't want to raise entitled brats with no appreciation of money, but as parents I think we all want our children to have better than we did. A Junior ISA each would be a straightforward way to put aside a little over £4000 per child per year. See a decent solicitor and update your wills, if you haven't already. Increase your life insurance premiums.

Don't forget to enjoy some of your win straight away - you could get hit by a bus next week (did I mention life insurance!) but as you rightly say it's probably unwise to turn up drunk in your boss's office on Monday with "I" felt-tipped on your left buttock and "QUIT" written on the right one. Quite aside from the financial situation, work may represent some much needed routine and normality at a time where less disciplined people would be losing their heads and then splurging to alleviate the boredom. That's assuming you enjoy your work, of course - and if you don't, you have the perfect opportunity to explore new opportunities at a leisurely and considered pace.

Once again, congratulations, don't blow it all on sweets and be very selective with who you tell.

bostonerimus

Pay off the credit cards. Paying off the mortgage is more of a psychological thing, but that's not to diminish it as being mortgage free is great and helps with cash flow and makes for a good night's sleep.

Then open up SIPPs and ISAs and max those out along with any workplace pensions you have.
I would put 1 year's spending in the bank and take 5% or 10% of the total after debts are paid off and put it into a savings bond ladder...cash is good to have if you can afford it.

Then in the pensions/ISAs/general accounts invest in 5 or 6 low cost equity and bond tracker funds..a global bond index, a global equity index and then 2 or 3 where you might want to overweight.

Aegis

My usual unofficial advice under these circumstances:

• Take your time making decisions. Sleep on everything before signing any agreements or deciding to spend any significant amount.
• Clear debt unless it's advantageous to keep it.
• Take advice to make sure you invest appropriately for your risk tolerance and goals. Make sure you understand the charges before going ahead, and ideally compare costs between different advisers before going ahead (not necessarily picking the cheapest, but at least being able to compare ballpark costs between firms)
• Remember that this probably only happens once, so live within your new means.

Getting technical for a moment, be careful about funding your pension to the level mentioned above. Tax efficient finding is driven by relevant UK earnings (i.e. not all taxable income, only the bits attributed to employment or self employment). If you over fund, you'll be hit with tax charges on the way in and out, which would almost certainly leave you worse off rather than better.

Using a combination of ISAs, pensions and normal tax allowances will likely be very efficient. Depending on what you do next, an insurance bond may be appropriate, but this is niche.

Enjoy the huge change in your lives!

Techno

Congratulations - what a lovely position to be in. Can't add much more than above but definitely endorse all recommendations particularly paying off non mortgage dept, to get as much under tax free wrappers as possible and definitely contribute to a pension for your wife whilst she isn't working as you will get that 'free' money from the taxman!

It might be worth you having a look at some of the other threads, particularly those linked to early retirement on the pensions thread. It sounds like you want to carry on working but, is there a job you have always dreamed of doing but couldn't because you had to bring home the bacon (vegan alternatives are available ) did one or both of you want to go to uni to study something you love, are you able to take a sabbatical and travel whilst the children are young.

The best advise is, apart from doing the things in the top paragraph, sit down with your wife and write down all the things you have to do, need to do and want to do and build your plan from there. You will then have a good idea as to what you want this money to do for you, hence how much you will have left and then your FA can advise you where to save/invest it (make sure they are independent and not tied to any particular funds). In the meantime, well done and have some fun :T

cfw1994

Congrats!
Some great suggestions here!
I feel cns06 & Flobberchops nailed it. Take your time, and tell no-one....especially your kids. If they get wind of it, I’d be astonished if it would remain secret.
Regarding work.....maybe you could figure a way (over time, nothing urgent to do) to get a day off a week....that day could be your “bonus day”....
But take your time, and enjoy.
& if the IFA has anything about “wealth management” splashed on card or website, run a mile....it won’t be your wealth they are managing!

Norman_Castle

Deleted_User wrote: »

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.

Steady on, its only a million. To avoid being overwhelmed spread the lifestyle changes. Tescos to Branstons to Heinz.