If you had a million pounds

[Horsesandzebras]

If you were 40 and had £1 million pounds how would you cut your cloth to financially secure your future? These are your circumstances

1. You have ill health and will never work again. You are 90% housebound
2. You have one dependent child (2)
3. You have a partner, you are in a committed healthy relationship, but not married. He is father of child.
4. You have no other assets or income. You have £1 million to house and income yourself
5. You live in the UK

What would you do?

I would-

Marry my partner so that they have financial security to house themselves and my child should anything happen to me.

Buy a house outright- as you’re not going to be in a position to earn, id go with something small and comfortable that meets your needs for minimal budget.

Consult an IFA to understand how to invest the rest to eke out an income and provide future security.

I would keep £500,000 then give the rest to animal charities if I won 1million.

If you could never work again?

Where do you live and how much do you need to buy a suitable home?

What is your partner's income?

Yes. I don’t need/want a lot of money. I don’t have a mortgage so that would easily last me.

I would keep £500,000 then give the rest to animal charities if I won 1million.

I wouldn't keep it all either. But the OP has no other assets or income. In those circumstances, 1 million pounds is not all that much for life!

Depends on your partner's assets and income to some extent. And indeed their preferences. Assuming they are a genuine partner in life.

I would buy an adapted bungalow and let out the house I live in now to provide me with a small income. I would also speak to an independent financial advisor about investing the rest.

Invest in a pension as well.
@StarDolphins you're underestimating how much retirement income & social care needs you'll have as an OAP. Give £50k to charity, stick the rest in a pension and you can gift an amount in your will after your death.

What a stupidly unhelpful answer. The OP can never work and has a child.

Buy a house big enough to rent part of it out - self contained annex if you dont want to have lodgers. Or buy 2 small properties. If your partner does not live with you currently maybe he could be your tenant. Get landlords insurance and choose your tenant carefully. Get professional advice on how to be a landlord.

Spend £200k on a house
Put enough in a fund for child for future education.
Marry partner (for reasons mentioned by PP)
Work with advisor to make the rest of the money work long term.

I'd buy a property suitable for my lifelong needs - bungalow?

I'd invest a hefty amount for my child.

I'd investigate the possibility of ensuring that, if something happened to me, my partner was not able to leave the money to a future partner/spouse or to further children he may have with someone else. Basically I'd want it protected for my child in the future.

I have a moral aversion to becoming a landlord as a way to make cash, so I'd be looking for another way to invest and receive an income.

You need to speak to a final advisor really.

In the OP's circumstances? That would be absurd.

OP does the partner have assets? Do they work and could they afford to run a household?

I'd buy a modest house, marry the DP, set up a trust fund for DC.

Is there anything medical that would improve quality of life? If so, I'd pay for that for sure.

Great question. Alas, i wish i’d known the answer to this when i was in my 30’s and 40’s and was stupidly well paid.

The old addum of Money goes to Money is very true.

Open an ISA so you can benefit from Tax free growth of investments.

Open a SIPP so you can benefit from Tax free Growth and a sum which is not subject to IHT.

Open a GIA so you can make profits from money not in a Tax Wrapper as above.

Open a Savings account.

Open a bills account.

Keep a Current Accoubt and Credit Card.

Clear any debts, excluding mortgage.

Get 50% of the amount into the SIPP right away.

Fund the ISA Fully every year from the GIA.
Put about 10% maybe 20% into savings.
The balance into the GIA.

Monthly - service your current account from the savings account or GiA (depending if you have profits from the GIA) so you keep control of the flow and don’t go mad.

Monthly service the bills account from the saving account and keep a close eye on bills.

In terms of investments - steer clear of FA’s and be vary wary of IFA’s. Stick with Vangaurd who charge incredibly low fees. Focus on S&P 500 equities 80 to 100% and just buy and hold.

In essence your savings and the GIA are how you live day to day. GIA when you are in profits, ideally you want a 2 year buffer of cash, in your savings account to help ride out the markets bad times. Ie. You don’t sell anything in the GIA when times are bad.

Ultimately you are seeking to get everything into the tax free wrappers, so that you have more profits kept and not subject to income or lifetime allowance, hence it’s a 1 time sipp payment and nothing more. The isa has a 20k annual limit, use it every year. You can also consider junior Isa for the kids, and fill them annually too.

Ideally you should be able to make more from the ISA and the GIA than you pay towards the mortgage. If not, and you take a more cautious approach, clear the mortgage.

£1m is only life changing if you invest it and treat it as a 1 time event and not for splurging. Invested sensibly, with Vanguard or someone else low cost, it will make a huge difference to you and your kids life. Spend it quickly, and it will give you a lovely decade and it will be back to normal worrying about bills for everything.

To sum up, that £1m can reasonably give you an income of about £30k a year and leave a sizeable inheritance for the kids.

Financial adviser here:

£500k Buy a property outright in joint names & marry partner for inheritance tax planning. Buy a vehicle if applicable to make life easier and adapt the property for longevity

£150k cash across 2 different financial institutions

£150k in trust for the child

£200k invested in medium term investments for a regular monthly income

A medium sized bungalow in a good area with outstanding state school where I live is around the £450k mark, but you can easily pay much more for one that's completely renovated - about £625k

My concern about marrying is about his entitlement to half my assets if our relationship breaks down. My partner and I have different attitudes towards spending. He is yolo and I'm frugal and concerned about good financial housekeeping.

I have considered bungalows with annexes, so it was good to get that reaffirmed here by others thinking.

Anybody know about stocks, bonds etc? I don't have a clue where to find a good financial advisor.

Oh there you are, nice to meet you 😀

This except don’t put anything on trust for your child- I would put all that into medium term investments). If you can’t work again, you need to minimise risk. With a pot of £500k to live on, you wont have a huge income but it’s doable. £350k is a lot less doable especially if your investments do worse than expected. If all goes well you can always give your child some money down the line.

Disadvantage is potentially a slightly bigger IHT bill when you die. I’d value the additional security much higher than that.

Make a will!

For the amount you're investing, I'd find a local IFA who can do a home visit. Try and find recommendations through Money Saving Expert or local forums.

If you marry him you can have a 'deed of trust' drawn up which is kind of like an American prenup. Not fully binding but helps you to protect the cash, the investments can also be in your sole name rather than joint and marriage will avoid an IHT bill.

The money in trust for your child could be managed by 2 beneficiaries if you're worried about your partner spending it/being reckless.

And absolutely make an iron clad will with provisions for your partner and child. Also think about medical and financial power of attorney depending how poorly you are.

I have a letter of wishes stored with my will which suggests what I'd like to happen upon my death with regards to funerals etc.

Op please see a good solicitor BEFORE you do anything, that will be the best money you can spend.
It is a huge red flag that your partner had different financial priorities to you, you must be ruthlessly unemotional to secure you and your ( very young )childs future.
Lots depends on whether your condition will deteriorate too.
Please speak to a solicitor and possibly two, to ensure you learn all the implication before marrying.

Buying a house is of course essential but leaving say £500k will not necessarily give you a high enough return if you have complex needs, and need to raise a child to 18.
Buying a house that needs to be cheap to run long term, think what it costs in energy and council tax etc, close to all facilities, walking distance to schools etc is key.
Maybe space to have a live in carer may be necessary, or an annex to gain the tax free allowance for a lodger to boost income.

I would speak to a good solicitor to fully understand the issues around marriage.
Then work out the home, school requirements for my child
Then same for myself
Then look at affordability of a home in a suitable location.

Armed with this l would see several accredited FAs and carefully consider the options.

Good luck but please don't take the advice of non professionals here.

I'm with Diamante here. Invested, at 0.03 withdrawal, 500k would get you 15k pa. Hopefuly that rate of withdrawal would maintain your capital. You can increase that with amount with inflation, roughly speaking. It's tight but doable. I'd be moving your allowance into ISAs every year, all invested. Anything you can save from the 15k into pensions I would, but your priority has to be living now. Your pension could be inherited tax free.

But YY to marriage and will.

Realistically, what is your life expectancy?

If you expect to live until 70/80 etc so need the money to last, is there any option to move somewhere where you could spend less on housing?

Is your partner working or will he be your carer/SAHP?

I too recommend talking to an IFA/financial planner, plus a solicitor. However, I would be cautious about marriage unless your assets can be protected, as they are needed to provide you with an income/housing for life, and if inflation continues as is, £1M might not look so substantial in a few year's time.

£1,000,000 - £625,000 bungalow leaves you with £375,000.

The general rule of thumb with living off investments is that you can have a withdrawal rate of 3% to have a reasonable chance of living off the investment without depleting the capital.

3% of £375,000 gives you £11,250; or £937/month. You would presumably be entitled to PIP as that’s not income assessed; would this be enough for you to live off? Remember you won’t have a mortgage or rent but would have bills and potentially care fees to think about. You may need to think about dipping into the capital as life goes on.

Investments would tend to be in things like index funds rather than individual stocks as this helps spread the risk. I’d also recommend having cash savings in premium bonds or

As others have said, look for an independent financial advisor who will give advice for a one off fee rather than one who will work on an ongoing basis for a % - they rarely outperform bog standard index funds and then you have to pay their fee on top. The financial advisor can also guide you through the best way of maximising tax etc.

Spend some money on a solicitor who you can talk through your wishes regarding care of your child, power of attorneys etc; and will help you get all your documentation in order.