Won A Million - Clueless

bostonerimus

If you get 1 Million outside of pensions/ISAs then tax is an important consideration, just watch out for dividends and capital gains if you sell anything.

Asking whether or not 1 Million is enough to retire on is like asking how long's a piece of string; more information is needed like how much do you spend, how old are you, how's your general health, do you have any large future expenses ie Samantha's tuition for Cheltenham Ladies' College etc.

The thing to do after debt and a cash float is covered is to get as much as possible into tax advantaged wrappers ie. pensions and ISAs. That will take a few years, stick to low cost equity and bond tracker funds.

fiisch

Have a read of Mr Money Mustache - https://www.mrmoneymustache.com (surprised no one has mentioned this already). This will help get your head around what people are saying re.: investing and living off the returns, or indeed having investment returns and income and enjoying a better quality of life.

Echo what everyone else has said - pay off the debt, start investing in an ISA, and buy a very silly car.

DennisTenus

Congratulations!

Sorry if I missed it but what advice did Camelot give you? I've always heard people say they got advice but never what the advice actually is and always wondered!

Sea_Shell

Congratulations!!!! I agree with other posters in that, don't let on you've won BIG, but it will take the pressure of keeping it a secret, if you let it be known that you've had a modest win, £50-£100k. That way you don't have to try and hide any additional spending (Cars & holidays etc)

I agree though, at your age (with young kids) £1M is not really Life-changing money these days. Lovely to have, and great security for the future, but not "Retire to Monaco" money!!

I'd love to know how you get on over the coming months/years, so please keep posting updates (if you want to)

You'll get lots of great advice here, as many posters have net-worths in this ball-park (and more!).

trailingspouse

You and your wife need to make it your business to become experts in all things money. Coming on here is a good start, but read everything you can lay your hands on to get a feel for what it means to have money, and what that money can do for you.


One thing that no-one on here has mentioned yet, is to look into private education for your kids. This would be a major investment in their future, and something worth considering.


And this may sound counter-intuitive, but if I'm assuming correctly that your wife doesn't work because the cost of childcare is prohibitive, she might now actually be able to get out there, if she wants to. And you can afford a cleaner too.


And finally, if you haven't already made wills, do it now.

ruperts

I think I'd struggle to carry on turning up to work as an employee if I knew I didn't really need to, and with £1m in the bank you don't really need to, as you could easily use it to generate the average UK household income, which itself is more than much of the world lives on.

Carrying on working might allow you to buy a few more frivolous, superficial items with which to decorate your life but personally I'd value the freedom of not having to work a lot more highly than any of that.

I'd probably still 'work' in some capacity but it'd be on my own terms and something I actually wanted to do rather than paid employee grind.

planteria

cns06 wrote: »

..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.

i agree, and that's the way to move forwards imo. keeping going, adding to the net worth, while knowing that you are comfortable behind the scenes is a nice place to be.

short_butt_sweet

trailingspouse wrote: »

One thing that no-one on here has mentioned yet, is to look into private education for your kids.

perhaps because most of the advice has been based on the idea of not spending it all at once. you've just suggested spending what might come to all of it on one thing. perhaps more than all of it, especially if mixing with rich kids leads to more lifestyle inflation. overspending is a key pitfall to avoid after winning the lottery.

basically, £1m could approximately replace a £40k salary, but that's about the maximum it can do. so you can either stop working and have no lifestyle inflation at all, or keep working and be able to spend significantly more. (or compromise and work part-time.)

if you're going for spending more, make a plan so that it's at a sustainable rate. i don't mean you can't do some one-off spending now if you want to. just be aware of where you're going. so £1m invested might give you roughly £30k a year to spend. but if you spend £100k quickly, then you are down to £900k, which might give you £27k a year to spend. and if you get down to £500k, that's only £15k a year to spend. it's easy to get into a downward spiral. so make a plan which splits the £1m into money for one-off spending, and money to be invested to generate a long-term income.

short_butt_sweet

getmore4less wrote: »

if investing you need that 3.3% + inflation to maintain the value off that income.

i think i miscalculated when i said a £40k salary is about £33k after tax/NI, and it's actually more like £31k. so you'd need 3.1% + inflation. not that this makes a big difference.

in any case, if the idea is to have £31k or so to spend each year, and if inflation is 2% or 3%, then you need a total return from investing £1m of about 5% or 6%. which is realistic, but not a certainty, from sensible investments.

Dazed_and_confused wrote: »

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

that is (as i'm sure you know) if you only have interest. you would actually aim for a mixture of interest, dividends, and capital gains. a perfect mixture would allow you to have up to £65k of income and gains in a year without paying any tax. which is convenient, in that it would cover the 5% or 6% return that might be the target.

however, perfection is not always achievable, so a small amount of tax might be paid. gradually working investments into tax shelters will help. as others have said, you can get £80k into ISAs for the two of you by 6 april, which would be a good start. and something into pensions (how much is more complicated).

if one of you continues working, then filling ISAs and pensions is even more important. and most of the unsheltered investments should probably be held by the non-working spouse. a bit more tax would be paid on investment income in this case, but it wouldn't be that much.

i wouldn't necessarily go in for junior ISAs, or not in a big way. anything in JISAs comes under your children's control at the age of 18, which may or may not be a good idea. and filling all four children's JISAs every year would use up about £17k, which is over half the sustainable income you might be getting from £1m.

Marine_life

Do most of what's written above in terms of tax efficient investments and maximize your matched contributions at work. Pay off your debts.

Does your wife work?

Depending on how you invest the money, you might think about who holds the funds - make use of your wife's unused tax bands.