How would you invest £1M, starting from scratch?

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  • GeoffTFGeoffTF Forumite
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    Alexland said:
    The problem with your suggestion is that if you ask such a question of 10 different IFAs you would get at least 30 different answers. ;)
    If paying IFA ongoing charges then the drawdown rate would need to be even more conservative so retiring at 45 probably wouldn't be possible and the best advice would likely be to keep working / get a job.
    The old rule (based on historical US stock-market returns) was that you could draw down 4% each year in a tax free fund with no expenses. Stock market valuations are now at a historical high (particularly in the US). If you pay a lot for something, your chances of selling it at a profit are limited. Returns going forward are likely to be much less. If you add on tax and IFA charges, you may not have much left (and the markets could go down of course). An IFA is not going to bother with lots of savings accounts, which pay much better interest with less tax than bonds with equivalent risk.
  • threlkeld53threlkeld53 Forumite
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    maxsteam said:
    Haha. Not Darlington, not 1970s. This is currently sold STC. It was used as offices. It's in the city centre. It's 2 minutes walk from the main library, 3 minutes walk from the main theatre. There are a couple of bars nearby which I would not visit but they are round the corner. It is likely to stay as offices but someone who likes such bars would be happy living here...



    The point I am making is not that this house is right for everyone but that £150k will get considerably more than an entry-level property in much of the UK. I could list a dozen or more cities where similar properties are available, not down south and not tourist areas.
    This seems like a potentially good investment. 3-storey commercial property in Hull. Could be worth looking into. I think it's been on the market since July 2021.
  • edited 6 January at 6:52PM
    ShankersShankers Forumite
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    edited 6 January at 6:52PM
    Here's a suggestion:

    350k on a house
    15k on stamp duty, legals, removal cost
    10k on furniture for new house
    20k on car
    50k on maxing out premium bonds
    40k in a pension (e.g., a SIPP)
    20k in a tracker fund in a S&S ISA, drip-fed equally over 12 months
    'Savings ladder' with cash in a 5 year fix, 4 year fix, 3 year fix, 2 year fix, 1 year fix, with about 40k in each; then each tax year drip-feed the maturing money into the S&S ISA and SIPP next tax year once you've switched it to replenish some of your emergency fund
    15k cash instant access emergency fund
    30k for new clothes, holiday, generally things you enjoy

    That's around 750k

    If your 'friend' is freelancing, why not also do the following: Retraining. Put around 100k in a war chest for university education fees and living expenses for 3 years. In his early 50s, my father in law retrained from sales to working as a paramedic and has loved it. He took a 2 year accelerated degree course as part of his training. Use some of the 100k for course fees and the rest to cover living costs for the 2 or 3 years.

    That's still some money left over. 

  • edited 6 January at 7:05PM
    jimjamesjimjames Forumite
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    edited 6 January at 7:05PM
    maxsteam said:
    Haha. Not Darlington, not 1970s. This is currently sold STC. It was used as offices. It's in the city centre. It's 2 minutes walk from the main library, 3 minutes walk from the main theatre. There are a couple of bars nearby which I would not visit but they are round the corner. It is likely to stay as offices but someone who likes such bars would be happy living here...



    The point I am making is not that this house is right for everyone but that £150k will get considerably more than an entry-level property in much of the UK. I could list a dozen or more cities where similar properties are available, not down south and not tourist areas.
    This seems like a potentially good investment. 3-storey commercial property in Hull. Could be worth looking into. I think it's been on the market since July 2021.
    On the market for over 6 months at that price suggests something is wrong with it. If it was such a bargain in the current market it would have been snapped up almost instantly. Maybe not such a bargain after all!
    Remember the saying: if it looks too good to be true it almost certainly is.
  • CustardAppleCustardApple Forumite
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    Make sure he gets a prenup if he gets involve with someone and plan on marrying
  • FeralHogFeralHog Forumite
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    A single person aged 45, and used to living off a low income, absolutely can stop working given £1m - if they want to. The way to do this is not to live like a millionaire; living like a millionaire often means spending the money and ending up poor again.
    The 2 main things to do with £1m are buying a house to live in and investing most of the rest. How much to spend on the house depends on property prices in your area, but this would work even in London, where you could get a perfectly good house for 1 person for about £500k (obviously not in the most expensive areas, but do you need to live in them?).
    Suppose £250k is enough for a house, leaving £750k to invest. With sensible investments, it would probably be fine to spend 3% of the amount invested per year (i.e. £22,500 with £750k invested), but to be safer if investment returns are low in the next decade or 2, it would be good if you could get by with only spending 2% if necessary (i.e. £15,000 per year with £750k invested). And that is with no rent or mortgage to pay (but do allow a bit for household maintenance).
    If considering whether to buy a more expensive house (you have £1m, after all, right?), then remember that the more you spend on the house, the less you have to invest. So if you buy a £500k house, that only leaves £500k to invest. And that cuts your annual spending money to 3% or 2% of £500k invested, so now it's only £15,000 if investing goes well, or £10,000 if it goes less well. That gives a way to compare the value (i.e. enjoyment!) you would get from a more expensive home to the spending money it would involve giving up.
    When you have some idea of how much you could spend per year based on investments, you can consider whether it makes sense to keep working. Extra income from work gives you extra spending money. Is it worth it? Only you can decide. Or do you get something out of working, so you'd actually choose to do it regardless of the money? Work can certainly feel different if you know you don't have to do it.
    Or would you rather retrain to some other kind of work? If so, this could be a good use for a chunk of the £1m (despite my earlier statement that it was mostly for a house and investing). But you don't have to retrain, just because you could.
    How to invest: First, is the assigned financial advisor an independent financial advisor (IFA)? If not, have nothing more to do with them. (And don't accept evasive answers, using phrases that sound similar to "independent", but not that exact word.) You either want an IFA, or to learn how to DIY. And after suddenly coming into such a large sum, it's worth considering using an IFA. DIY requires a bit of learning about what you're doing, though it's not really difficult, and can save you a lot of money compared to paying an IFA. OTOH, an incompetent DIYer is much more likely to mess it up than an IFA is. A good place to start learning might be https://monevator.com/this-former-hedge-fund-manager-reveals-how-you-can-invest-for-life-in-five-quick-videos/ And having some understanding of investing would be useful even if you do choose to use an IFA.
  • maxsteammaxsteam Forumite
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    jimjames said:
    maxsteam said:
    Haha. Not Darlington, not 1970s. This is currently sold STC. It was used as offices. It's in the city centre. It's 2 minutes walk from the main library, 3 minutes walk from the main theatre. There are a couple of bars nearby which I would not visit but they are round the corner. It is likely to stay as offices but someone who likes such bars would be happy living here...



    The point I am making is not that this house is right for everyone but that £150k will get considerably more than an entry-level property in much of the UK. I could list a dozen or more cities where similar properties are available, not down south and not tourist areas.
    This seems like a potentially good investment. 3-storey commercial property in Hull. Could be worth looking into. I think it's been on the market since July 2021.
    On the market for over 6 months at that price suggests something is wrong with it. If it was such a bargain in the current market it would have been snapped up almost instantly. Maybe not such a bargain after all!
    I would not want to live there. There's no parking and a couple of dodgy bars nearby. It only looks a bargain if you are looking at it from an expensive part of UK where many people grow up in the belief that they will never be able to afford their own home. If you look at it as someone who lives a few miles away, the price looks a little high to me. OP is single so might be thinking about spending £150k on a posh apartment.

    I will restate the point that £150k will buy a lot more than an entry-level property in much of the UK.
  • edited 16 January at 1:04PM
    adindasadindas Forumite
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    edited 16 January at 1:04PM
    maxsteam said:
    Haha. Not Darlington, not 1970s. This is currently sold STC. It was used as offices. It's in the city centre. It's 2 minutes walk from the main library, 3 minutes walk from the main theatre. There are a couple of bars nearby which I would not visit but they are round the corner. It is likely to stay as offices but someone who likes such bars would be happy living here...



    The point I am making is not that this house is right for everyone but that £150k will get considerably more than an entry-level property in much of the UK. I could list a dozen or more cities where similar properties are available, not down south and not tourist areas.
    This seems like a potentially good investment. 3-storey commercial property in Hull. Could be worth looking into. I think it's been on the market since July 2021.

    If the surrounding is not that cheap than, it might be a good idea to use a surveyor to investigate that. it might be Cheap for a reason??

    Previous Surveyor bad report, Bad neighbourhodd, No Lenders want to loan after discovering the problem, Leasehold close to expiration ??

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