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Original poster

If you had a million pounds

75 replies

Horsesandzebras · 30/11/2022 10:17

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?

OP posts:
Original poster
Horsesandzebras · 01/12/2022 13:05

Thank you. This is helpful.
I've contacted an Independent Financial Advisor, but my gosh they're expensive. I have a lot of sums and weighing up to do.

OP posts:
Bard6817 · 01/12/2022 23:07

Word of advice on the IFA….

Make sure they aren’t taking a % for thisbyear and every year thereafter.

Ask them how the fees for what they are recommended compare with the Vanguard equivalent, unless they recommend Vanguard. Of course if it’s higher, then the return should be higher too, so how does the return compare with the equivalent Vanguard fund.

How much are the platform fees. This will be how much you pay for the website where you can check profits/losses.

All these fees add up - and thus can be costly to the tune of 100000+ over the lifetime of your investments.

Yes IFA’s are costly, and SOME are worth it, but i’ve found if you know what you want to achieve and target the request, you will have a better response. If you nothing, then be prepared to overpay.

Confirm there are no other charges.

don’t sign anything right away, other than a commitment for them to do any work for a feee or %. When you get their recommendations, review it. Compare the funds they recommend with trustnet dot com where most funds are listed.

Don’t use a trust. Family’s have lost a lot of money to trusts, where the trustee, (the solicitor who drew it up) is the one who makes all decisions and decides very little is to be paid out, except their charges of course.

Good luck!!

determinedtomakethiswork · 01/12/2022 23:25

StarDolphins · 30/11/2022 10:24

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

That would be incredibly unfair to her partner though.

determinedtomakethiswork · 01/12/2022 23:31

In your situation, I would not marry. Your partner doesn't have a good attitude to money and that £1 million can disappear very very quickly, along with him if he was so inclined.

I would leave everything to my child and I would expect my partner to look after him, so I'm afraid.

I would spend as little as possible on getting the best possible house. I'd make sure it was one that I could live in for the rest of my life.

Avacadoandtoast · 01/12/2022 23:37

I really hope you have just won this in the lottery or something, well done op! I don’t know what I’d do, probably the renovated ready to move into property and then savings (ISA) etc

Cornishclio · 01/12/2022 23:39

I would buy a property
Marry your partner if in a loving committed relationship or make a will
Invest for your future and your child's if unable to work. Pension, stocks and shares ISAs or fixed term bonds. Keep a decent emergency fund in cash.

Cornishclio · 01/12/2022 23:43

Just read your partner has different attitude to money so don't marry. Make sure your child is financially secure if anything should happen to you by making a will though. An IFA is good idea. They usually do a free initial meeting.

Twinklenoseblows · 02/12/2022 00:05

@Bard6817 How does 500k straightaway into a SIPP work in terms of her annual allowance. Or am I missing something?

Original poster
Horsesandzebras · 02/12/2022 02:25

Avacadoandtoast · 01/12/2022 23:37

I really hope you have just won this in the lottery or something, well done op! I don’t know what I’d do, probably the renovated ready to move into property and then savings (ISA) etc

Not won the lottery 😕 it is much more boring that. It's a combination of ill health insurance/ pensions and savings.

OP posts:
PiggyInTheLidl · 02/12/2022 02:39

The £1m includes current pension pot?

That changes things quite a bit.

I wouldn’t marry the partner. Not unless they have as much or more than you in assets / pension / income.

My Will would leave my assets to
my child, but lifetime interest in the house to Dp.

SueVineer · 02/12/2022 03:12

Puppers · 30/11/2022 10:54

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.

Definitely don’t marry your partner if you want to keep the money for your child

BarbaraofSeville · 02/12/2022 06:26

Bard6817 · 01/12/2022 23:07

Word of advice on the IFA….

Make sure they aren’t taking a % for thisbyear and every year thereafter.

Ask them how the fees for what they are recommended compare with the Vanguard equivalent, unless they recommend Vanguard. Of course if it’s higher, then the return should be higher too, so how does the return compare with the equivalent Vanguard fund.

How much are the platform fees. This will be how much you pay for the website where you can check profits/losses.

All these fees add up - and thus can be costly to the tune of 100000+ over the lifetime of your investments.

Yes IFA’s are costly, and SOME are worth it, but i’ve found if you know what you want to achieve and target the request, you will have a better response. If you nothing, then be prepared to overpay.

Confirm there are no other charges.

don’t sign anything right away, other than a commitment for them to do any work for a feee or %. When you get their recommendations, review it. Compare the funds they recommend with trustnet dot com where most funds are listed.

Don’t use a trust. Family’s have lost a lot of money to trusts, where the trustee, (the solicitor who drew it up) is the one who makes all decisions and decides very little is to be paid out, except their charges of course.

Good luck!!

This is good advice.

With a smaller sum, such as £100k after purchasing a property, the answer would be very easy. As in making use of ISA and SIPP allowances to invest in Vanguard funds or similar, plus keeping a year or two's expenses in cash, maximising interest earned.

Above that, the value an IFA will give is how to use the rest in a most tax efficient way but it could be that your plan could be to move a lot of it into low cost passive funds like Vanguard over the next few years, so after the initial advice you can do all this yourself without ongoing IFA input. Or perhaps just a little check up every 5 or 10 years.

Look at meaningfulmoney.tv for a financial advisor who's not looking to scalp people. He does a podcast and videos plus a book telling people what they need to know and do themselves but you can engage his firm's services and I'd be confident that they'd advise you without seeing you as a long term meal ticket.

Aubree17 · 02/12/2022 06:53

Does your partner work?

I would buy a house - enough to meet your needs where you will be happy for the rest of your life but without blowing a huge amount of the cash.
Then invest the rest to have a small income for life. I assume this would be supported by a form of disability benefits?

QforCucumber · 02/12/2022 06:58

I currently earn 20k a year net…so I’d clear my current mortgage (180k) and pay myself that 20k a year (1750 a month) as a salary - that would cover me for 50 years without accounting for interest accrued on the balance. Without the mortgage coming from that salary I’d be more than comfortable

Original poster
Horsesandzebras · 02/12/2022 08:44

PiggyInTheLidl · 02/12/2022 02:39

The £1m includes current pension pot?

That changes things quite a bit.

I wouldn’t marry the partner. Not unless they have as much or more than you in assets / pension / income.

My Will would leave my assets to
my child, but lifetime interest in the house to Dp.

I've not made any decisions yet, but if I took lumps sums instead of regular payments I'd have roughly that to be financially independent.

There are some really good answers here. I've realised there is significant risk in taking on the investment side of things myself. I'm now thinking stick with regular monthly income and if I want to save just use my ISA allowance.

My partner is self employed. We both have similar annual income of about 25k
We put the same into a joint account to cover family/house costs
The rest is our own to spend /save.

If I took the lump sums and got married I pressume in the event of a divorce all assets would be split. That would be a bitter pill to swallow being a saver and him a spender!

What a can a worms dealing with finances is!

OP posts:
Closuretime · 02/12/2022 09:02

I wouldn't get married!

I would make a will and decide who you would like to leave money presumably your child firstly.

I would make sure you have a savings account for your child to gift them money for driving lessons/travel as a memorable gift.

parietal · 02/12/2022 09:22

As others have said, step 1 is to buy a house you can live in long term so you have complete security of having a roof over your head. if you can get that for 500K, that would be good.

Step 2 is to invest the rest for long term income. 500K is at the bottom end of what most IFAs deal with and they can be expensive. So if you want a DIY option, look at

  • max out your ISA allowance every year
  • put money into a SIPP
  • the rest in a general investment account
The ISA and SIPP are just wrappers that have various tax advantages. for all 3 accounts, invest in general funds like Vanguard that have low fees and pay out an income each month.

I would not tie anything up in a trust - they can be very inflexible if your circumstances change. DH has had a nightmare with a family trust set up to provide for a family member with disabilities who then sadly died at an early age. the money cannot be recovered to share among other family members.

Mia85 · 02/12/2022 10:06

Would you be able to explain a bit more about the pension and espcially this bit if I took lumps sums instead of regular payments I'd have roughly that to be financially independent. - is that in relation to the pension? Are the regular payments part of a DB scheme? Have you been granted early access through ill health?

It sounds as if the pension is a reasonable part of the sum you are discussing and decisions about what to do with a pension are quite different from decisions about what to do with an unexpected windfall.

BarbaraofSeville · 02/12/2022 10:16

I wondered about that too @Mia85 If the OP has been medically retired and is a member of a DB scheme, it could be better to receive a lifetime income from the pension scheme, rather than a lump sum, but that would depend on life expectancy, other assets, financial need both short and long term etc. OP, if you're in this position, you probably need advice before committing, from someone who understands the various scenarios and isn't in a position to make money from you taking money from your pension, instead of receiving an income.

Worst case scenario is that is you could end up in this sort of position:

www.nao.org.uk/reports/investigation-into-the-british-steel-pension-scheme/ (different situation, but a warning about taking what seems to be a large sum of money from a DB scheme that will otherwise provide an income for life).

oddsocksmatchifsamethickness · 02/12/2022 10:28

I'd buy small home in a nice but cheap location. So cheap part of the country but good location therein. (£300K)

I have debts which I would pay off (£20K)

I'd then invest and live off the rest.

Original poster
Horsesandzebras · 02/12/2022 10:54

BarbaraofSeville · 02/12/2022 10:16

I wondered about that too @Mia85 If the OP has been medically retired and is a member of a DB scheme, it could be better to receive a lifetime income from the pension scheme, rather than a lump sum, but that would depend on life expectancy, other assets, financial need both short and long term etc. OP, if you're in this position, you probably need advice before committing, from someone who understands the various scenarios and isn't in a position to make money from you taking money from your pension, instead of receiving an income.

Worst case scenario is that is you could end up in this sort of position:

www.nao.org.uk/reports/investigation-into-the-british-steel-pension-scheme/ (different situation, but a warning about taking what seems to be a large sum of money from a DB scheme that will otherwise provide an income for life).

Yes this could happen as the IFA will recieve a 3% commission on managing the lump sum fund. However, they are "legal oblidged to give sound financial advice", which I'm already skeptical about.

The majority of my income comes from income protection insurance. It will pay out for 27 more years. It increases each year by 4%. I currently get 20,000 net per year. How much should they be offering me as a lump sum to be equal to that kind of package?

OP posts:
Original poster
Horsesandzebras · 02/12/2022 11:01

The pension is a LGPS. They will offer a lump sum or roughly pay out £2k per annum for life. I'm not sure what the lump sum will be yet, but I've got 40k earmarked.

OP posts:
OatFox · 02/12/2022 11:01

I'd buy a house outright and potentially even move for more space at a smaller budget. Houses to suit our needs around here are under £300,000 so I would buy one around that price.

I'd marry so your partner has financial security should anything happen to you with the house and update my will to state that the house goes to your child.

I'd invest £100,000 for your child's future in premium bonds or just in a savings account.

I'd invest £100,000 as a fall back savings in premium bonds or a savings account for you.

Then I'd use the additional £500,000 to live off.

Luckydip1 · 02/12/2022 11:12

@Bard6817 what is a GIA

Eleusa · 02/12/2022 11:14

OP, if you're in this position, you probably need advice before committing, from someone who understands the various scenarios and isn't in a position to make money from you taking money from your pension, instead of receiving an income.

This is the best advice on the thread. What the right decision is is extremely complex and depends on a number of factors- you really need proper advice which is personal to your situation. I'd only caution that you hear a lot of stories of people losing out because they took the lump sum, so do be completely sure that you understand what a lump sum is likely to provide you with before agreeing to that. Please ignore anyone telling you to give money away- can only assume they have misunderstood the situation.