Sudden wealth

[swsyndrome]

Hi
First time posting in this section of Mumsnet. Have previously posted elsewhere. NCed for obvious reasons.

Want to post anonymously because it's difficult to talk to RL friends about this.

Basically we've recently become quite wealthy on paper and have cashed out a few hundreds of thousands of pounds which is a fraction of the total potential wealth. Before this we are pretty middle class young professionals. Not badly off but not wealthy either, own our property (London) but live from pay cheque to pay cheque paying mortgage etc, with a little cash saving and some long term investments.

Before this happened, I would've thought it would be amazing to have so much so we could have some indulgences, but it's incredibly weird. I have told a few closest friends but some of them get weird so the conversation doesn't continue. Certainly can't share with wider social circle because I don't want things to be weird, and want to protect privacy as well. People who haven't experienced it probably see it as completely positive but in reality as I've found out, I've also experienced guilt and isolation. Also feel confused about how to invest and how to think about our new situation. I've googled it and found that there is even a term called sudden wealth syndrome.

We've consulted independent financial advisors and have some ideas about investing the cash we got. Will put some money aside for children's education and will spend an amount to treat ourselves and give some away to charities we cherish. It still doesn't take away the weird feeling. Neither of us are silly spenders. Generally frugal and wouldn't spend money on flashy handbags, cars etc.

It's even more weird because aside from the money we cashed out, the remaining wealth on paper can also be gone any minute if things don't go well (E.g. economy crashes etc).

I'm not sure what I'm looking for here. Certainly not sympathy because I know we are incredibly lucky. Would be nice to hear any similar experiences and also suggestions on how to adapt to a new reality and manage the new wealth sensibly.

Thanks a lot in advance

Good for you. Congratulations!
It's great to have a lovely windfall.

What you have decided to do with the extra money so far sounds very sensible indeed. It's best not to talk about it unnecessarily - you've obviously learned that - but don't feel guilty (or 'weird') for having and enjoying the money. It's not your fault if people are a bit jealous, a pity they can't just be glad for you. If they are good friends, they'll come round. They may suddenly come into money themselves later on and I expect you'll be pleased for them if that happens.

I came into some money this year, not a fortune but a decent amount (£34,000). Husband and I are older than you, I'm retired and he's semi retired so the money was 'extra'. I didn't tell anyone who didn't already know I was getting it, like you I'm not 'flash'. I've spent two thirds - son needed a new car, bought something for husband, treated my cousin, paid off Barclaycard, that sort of thing. I have a third left and that stays in the bank for now, it's not enough to really splash out but it was nice to receive it - would have meant a lot more when we were young.

In your case, it's great because you are young.! It will ease your life meaning you won't experience the financial worries so many young people have and your children will benefit. Do take some good financial advice about investing, etc. The last thing you want is for the money to just disappear.

Money can't buy good health, well off people still experience hardship in various ways and those who resent them would do well to remember that - I was in hospital earlier this year and it was dreadful, really sobering. I'm quite OK now thankfully but I'm aware that it could have been much worse.

All the very best to you and thank you for sharing such good news.

Thank you Rachel for your kind words and sharing your experience too

How lovely! Should you not get the rest of the cash out now if there's a chance of it disappearing if the economy changes?
And thank you, you've just reminded me to buy a lottery ticket!

If we could I probably would prefer to! But it's not all that simple and I think that's part of the anxiety. Almost feels like having won the lottery but cannot cash out, and the prize could be withdrawn any moment.

Good luck with the lottery ticket - you never know, it might just be your luck

Seeking professional investment advice is the right thing to do but you need to know when you are being advised badly. So you need to learn about investing.

Podcasts and websites are great as you can learn the basics and then combine that knowledge with what your investment provider teaches you - you want an advisor who will teach you, not someone who sells you expensive products.

A good podcast to start with is Meaningful Money. There are over 300 past episodes some of which are collected in Seasons so you can for example listen to a series about pensions or a series about starting to accumulate wealth.

I have not got lots of money, I've been recently made redundant from a job so am far from being wealthy. However I have read things like you have about people who came into wealth quickly and then lost it all over a period of time. You want to avoid being them. For now you want to stick with how things have been - pay off any debts, have a good emergency fund, then sit on the rest of the money - do not blow it on expensive holidays, cars, boats, helicopter etc.

Thanks nannynick. Yes definitely it's important to be careful. Luckily we are both pretty financially literate, having studied/worked in related fields, so we are okay with the basic concepts. don't think we would be the type to blow it all but have seen some really tragic stories

Wow brilliant! Enjoy the freedom from paycheque life that it brings.

I'm sure I've seen this story on here before. Spooky.

Well, Autumn, swsyndrome cannot be the only poster in the history of Mumsnet who has come into a small fortune.

It is so nice to read a 'good news' thread and the fact that the op and husband are still fairly young with children makes it even better because, so often, such windfalls come too late for the beneficiaries to enjoy to the full. It's lovely, the op can buy a couple of properties for her children to do whatever they want with when they're grown up - and all sorts of other things. If carefully managed she will never have to worry about money ( leaving room for her to worry about other things :-).

AutumnCrow, I thought so too, but that was a different (and quite bizarre) scenario.

1. Maximise your pension contributions for the last 3 tax years.
2. Pay off/pay down mortgage/upgrade your house.
3. Utilise ISA allowances, JISA's & Junior SIPPs.

If there is any left over, put aside the amount of next year's ISA's, JISA's & SIPP's & full pension contributions.

Remember to have a fantastic family holiday.

My guess is one of you received a bonus of shares some of which have vested now and some which will vest in the future. We would have been similar.

First of all it is perfectly ok not to tell friends or family about your private financial situation. People don't generally share details of their income/mortgage/savings/debt with others so no reason why you need to tell them.

In your situation our priorities were to fund our retirement, pay off our mortgage, fund our childrens' education and donate to charity. No one looking at our cars or my handbags or our regular restaurants would have any idea how much savings we have. Your plans for your money sound very sensible. You don't actually have to change your lifestyle if you don't want to. Eventually you will get used to the feeling of having a good cushion of money behind you.

Along with this advice, if you have money left over your bank would be delighted to have you as a "special" customer. They offer all kinds of advice for free to higher net worth individuals. As you have indicated, other than savings accounts (where there's poor interest rates) most investments are risky - I would save up to £100k in a variety of accounts before I trusted the more risky investments. If I were you, once money exceeded that I would invest in property, not in the next 6 months, bit volatile! but once prices settle it's far more secure than shares

Are you married? Do you have children? Have you written your wills?

I agree with you - it sounds a lovely problem to have but I'm sure it can bring more problems with it.

Thank you all for the advice.

We haven't done further pension contribution. We have been solidly contributing since our early 20s and the company-matched contribution had been generous, so our current pension pot will apparently hit the 'life allowance' by the time we retire. We have been advised by an IFA not to contribute further to avoid tax.

We have not paid down mortgage further because we have a low rate fixed mortgage, and paying it down doesn't seem to be beneficial, when we can probably invest the money elsewhere for better returns. The challenge, of course, is not to spend it!

We have maxed out on the ISAs. DH doesn't like the idea of JISA not accessible until the children are 18 so we haven't done that.

We have considered doing an extension to our current house, but 1)I'm not convinced it's a good investment as the area's house prices are not growing very fast, and 2) it would be too disruptive and stressful on family life at this point with two small children. Tbh I would prefer to move to a larger property in a few years' time if/when we can cash out more shares.

We have put away about six-month living cost (including children's education fees) should there be an emergency situation. This is saved in a series of staggered fixed-rate saving accounts, maturing every 3 months to give us liquidity.

Still trying to figure out how to invest the rest.

But have made a significant donation to a worthy cause, which is very satisfying. And booked a nice holiday and look forward to it :)

I can't advise on the investment side of things but I did want to comment that it is so lovely for you that this will give you options over the next few years. I would maybe have another baby or go back to University or travel in late middle age (or all the above!) - you have so many options!!

Lovely you sound very prudent, SWS.
I had £100k windfall from my London flat sale a few years ago, not on your level but still life-changing. I gave my nieces and nephews a share, maxed out my S&S isa for the year in vanguard 80% equities and used the rest to reduce the mortgage on my new house and buy things for it and to pay half towards our wedding (and the rest went on funding my first maternity leave). I would say that lifestyle creep was definitely a thing and now the money is gone or tied up it takes a bit of getting used to budgeting properly again

Well done OP, take things slowly. I agree with you re the extension, it would be easier to move house.

I’m in a similar situation from an unexpected inheritance windfall. It’ll be life changing for me but I’m grieving so much in struggling to think straight. I was in the process of completing on a property which was fairly modest and I’ve pulled out because I think I’d like to invest a large chunk in bricks.

I have a meeting with a financial adviser later this week but have been thinking of purchasing a higher value property and doing a double extension, pick some relatively low risk shares, some crypto currency shares, , ISA’s, bonds etc.

I have a thread on AMA: I can into a lot of money when I sold my company. Things had been going well but the shock of having huge sums in the bank still lingers.

Best advice is take things slow. However within reason I think a bit of frivolity is good, a sort of get it out your system!

Enjoy!

Get on Amazon and buy some basic books on personal money management, Which? do a useful guide. You are absolutely right that you need to educate yourself to know if the advice you are getting is any good.
Most IFAs make their money by selling insurance, nothing wrong with that, but they don't have experience of managing substantial wealth. Never rely on advisors who work for your bank as they are aiming to make money for the bank.
The basics are straightforward to learn and beware of any advisor who can't explain their advice in plain language as they may be trying to bluff you.
It sounds like you have done the right things so far in ensuring you have a cash buffer for emergencies and using tax free allowances for pensions. You've said you don't think it's worth paying down the mortgage but are you on a fixed rate for a certain term? Would other investment options give you a better return than the money saved in interest?
You also need to think about your personal goals which might include saving for private school, university or house deposit for your DC.

LaPufalina congratulations to you too! Sounds great to be able to fund your wedding and maternity leave.

Leftielefterson so sorry to hear about your bereavement. Must be such a bittersweet feeling to receive the inheritance.

LivingAllTheDreams Congratulations! I found your AMA thread and enjoyed reading it we are in a similar situation except that we still own shares that haven't been bought yet. Hopefully, we will be in your position in 2 years time :)

You've said you don't think it's worth paying down the mortgage but are you on a fixed rate for a certain term? Would other investment options give you a better return than the money saved in interest?
Yes, we are fixed at a good low rate for two years. If the interest rate goes up significantly (which I think it probably will in the next few years), we might pay our mortgage down more.
We are currently thinking about putting a lot of it into an index fund on somewhere like Vanguard. I think it will give us a better return than the savings on the mortgage.

In terms of personal goals, we are both still on a good career trajectory and can pay for school fees out of monthly income, so we have buffers put in but not locking that in a separate account specifically.

I'd like to move us to a bigger house as two growing DCs will need more space, so the main goal is to invest and grow the pot as big as possible to allow a larger deposit. The dream is to sell the rest of the shares in 2 years and buy another large property outright, but as I said, in the worst-case scenario it could all be gone. So will prepare for both the best and worst scenarios.

I'm watching with interest as I (sadly) will be coming into a large amount of money in the future and I've been looking at ways to invest it.

This happened to us although the total was smaller (450k received over a 3 year period). We did move to a larger house which used about 175k. We took a couple of big holidays. We put some aside for tax. We gave a big chunk to charity (around 10%). We still have 175k in cash and investments and there's definitely a feeling of not knowing what to do with it and feeling a bit weird about the whole thing. We have a small mortgage of 125k on a low interest rate so you could say the net amount is more like 50k but we're not rushing to pay off the mortgage because we both work and can afford it comfortably. In fact we're saving £1000 a month on top of this. 10 years ago money was tight and we haven't changed our lifestyle that much since the money. I think we'll probably use it to fund early retirement and help our children through university and anything else they need but we're in our 30s so it's just sitting there for now. Interesting to hear experiences from someone in a similar position. I often feel like I'm lying by omission when money comes up in conversation but you don't really advertise how much you have in the bank do you?

You need a proper financial plan, not just investment advice. Investing with goals, timescales and purpose. The investments are then easy. Finding the right IFA (a Chartered Financial Planner is best) is a challenge though. Whatever you do DO NOT give your money to St James’s Place, their charges are verging in criminal and will eat the ‘real’ value of your money.

Tax planning and some inter generational planning (dare I say some off shore, depending on amounts) is also key.

I would start looking for Chartered Firm and a Chartered Planner, talk to/meet a few (women are particularly good in this space IMO).

Depending on the actual amounts (£10’s of millions really is very different to £2M) you will find someone that does a lot of this work.