What caught my eye this week.
A lot of people daydream about what they’d buy if they won the lottery. This chance to fantasize is probably the most tangible benefit of a lottery ticket.
Not me, though.
I appreciate this is almost-too on-brand – but I daydream about how I’d invest it.
I’ve told friends and family they wouldn’t even know if I won the lottery. I’d simply scale up my investing, and maybe slack off the little paid work I still do.
Eventually they’d see me spending more – hopefully on experiences we can share, as much as mere ‘stuff’. But nobody would know it wasn’t just from my portfolio finally paying off.
Nope, as a closet/Bohemian investor for decades, a run-of-the-mill lottery jackpot (low seven-figures say) would first just make for some chunky extra entries in my return-tracking spreadsheet.
In it to win it
Perhaps you think this is desperately sad?
Fair enough. But do consider the surprisingly terrible track record of lottery wins ruining lives.
Against that danger, I believe my strategy of turbo-charging my existing way of life with an extra million or two – rather than racing to build a hot tub on my shed or to buy a pet tiger – has psychological merits as well as financial ones.
Indeed, you should be careful what you do if you receive a windfall of any size.
That’s because a significant lump sum has the potential to compound meaningfully for the rest of your life – with all that possibility for more freedom and independence – while at the same time a big windfall can easily implode your current cozy way of life like a fiery meteor landing in your living room. Upsetting all your arrangements and generally freaking you out!
Anyone who gets a big lump sum out of the blue has had one of life’s luckiest financial breaks.
But it can cause – and may come with – mental issues that need to be worked through, from guilt at sudden wealth, to sadness about where the money came from (the death of a parent or spouse, for instance).
It could be you
For these reasons, Advisor Perspectives this week also urged doing nothing fast if you’re fortunate enough to get a windfall:
Whatever the situation, I always tell clients who receive a windfall to do nothing for an entire week. Absolutely nothing. They must give themselves time for the reality of their new circumstances to settle in.
That’s because windfalls are usually the result of something that has happened. And that, in turn, can trigger our emotions.
Stepping away from the fray and doing nothing is underrated in many areas of investing. This is another one.
Now you might think that as a regular Monevator reader you’d be a rational Vulcan if a life-changing lump of dough was suddenly bunged into your financial oven.
And perhaps you would be, long-term.
But in the short-term we’re emotional creatures. Which can make you temporarily crazy. And once you go the wrong way, things can escalate.
So let’s have some fun…what would you do if you won a million pounds?
Buy a boat? Abandon a life of frugality and speed past the Jones’s? Start betting on risky growth stocks to aim for ten million? Spread the lot across a dozen (FSCS-protected!) bank accounts to ensure you were set for life, at least if you ignore inflation?
Share your fantasies in the comments below. And have a great weekend.
From Monevator
Can you smell financial bullshit? – Monevator
Best savings accounts rates – Monevator
From the archive-ator: Why your house is an investment, and an asset too – Monevator
News
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UK house prices hit record £289,099 but market set to cool… – Yahoo Finance
…and house-building has already slowed to May 2020 levels – Reuters
Why it could soon cost over £100 to fill a car with petrol – BBC
UK to see slowest growth of developed nations – BBC
Covid infections rising, third wave of 2022 predicted – Guardian
Treasury’s failure to manage rising interest rate risk has ‘cost’ £11billion, claims think tank – NEISR
Taser-maker Axon abandons plans for an armed drone after its ethics board resigns – NBC News
Is the global housing market heading for a downturn? [Search result] – FT
Products and services
How to pay off ‘buy now, pay later’ debts with Klarna, Clearpay, and Laybuy – Which
Open an account with InvestEngine via our affiliate link and get £25 when you invest at least £100 (new customers only, T&Cs apply) – InvestEngine
How will the government’s Universal Credit mortgages and new Right To Buy work? – ThisIsMoney
Ground rent on new leaseholds to be banned from 30 June – Which
How to make your expensive petrol go further – Guardian
Tesco Clubcard Plus review: is it worth £7.99 a month? – Be Clever With Your Cash
Raisin platform launches four new Best Buy savings accounts – ThisIsMoney
Homes for sale with an orangery, in pictures – Guardian
Comment and opinion
Why one passive investor says it’s time to eschew the Chinese market – Humble Dollar
Money is emotional, but personal financial advice rarely accounts for that – Vox
Solve life backwards – Of Dollars and Data
History tells us UK interest rates will go up and up [Search result] – FT
Can we get more positive about getting old? – A Teachable Moment
Facing the fear of running out of money in retirement – Compound Advisers
Growing up poor messes with your mind – Get Rich Slowly
Cash flow is not always king in real estate – Banker on FIRE
Complacency – Indeedably
The problems with market-cap-weighted index funds [Nerdy] – Advisor Perspectives
Crypt o’ crypto
An investor’s guide to crypto [Research, PDF] – SSRN
Do connections pay off in the Bitcoin market? [Nerdy] – Alpha Architect
Private equity ‘liquidity laundering’ mini-special
Cliff Asness asks whether private equity really rewards you for illiquidity risk – Institutional Investor
Avoid funds that just conceal the underlying volatility – Aleph blog
Naughty corner: Active antics
Short-term performance is everything – Behavioural Investment
UK small cap stock-picking legend Simon Knott retires after four decades – The AIC
The most shorted stocks on the UK market – Morningstar
Everything investors need to know about risk parity [Podcast via YouTube] – Validea
Biotech returns: 30 years of disappointment – The Evidence-based Investor
Extremely successful? Extremely lucky! – Enterprising Investor
The work-life struggle continues mini-special
Four-day week could be within reach for British workers – Guardian
What is life like when we subtract work from it? [On sabbaticals] – The Atlantic
Staff still not up for returning to the office… – NPR
…even as some studies suggest remote work might be hitting a wall – Axios
Kindle book bargains
The Dealmaker: Lesson’s From a Life in Private Equity by Guy Hands – £0.99 on Kindle
Think Like A Rocket Scientist by Ozan Varol – £0.99 on Kindle
Stuffocation: Living More With Less by James Wallman – £0.99 on Kindle
Creativity, Inc. by Ed Catmull – £0.99 on Kindle
Environmental factors
After years of expansion, the world has passed ‘peak agricultural land’ – BigThink
Wild mammals are making a comeback in Europe, thanks to conservation – Our World in Data
Off our beat
Once in a lifetime – Morgan Housel
What one chap has learned about growing old as he approaches 60 – Guardian
Kermit the Frog imagined in various movies by the DALL-E AI [Images] – via Twitter
In the future, every business will be a Ponzi scheme for 15 minutes – Dror Poleg
The world began getting rich 200 years ago in England. Why? – Vox
This week’s confidence vote showed the merits of the UK’s unwritten constitution – Prospect
How harmful is social media, really?- The New Yorker
Design expert says new tube map with Crossrail is garbage – offers reworking, via PostImage
And finally…
“Stock prices express the collective expectations of investors, and changes in those expectations determine investing success.”
– Michael Mauboussin, Expectations Investing
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I think I’d fill up my car with petrol 🙂
Good post on an interesting subject. I’ve often wondered how I would handle a significant lump sum windfall. Mindful of making too many drastic changes, I think I would ask to go two days a week at work. If refused I’d FIRE instantly. That type of sum would take me way past my number. I don’t think I would buy anything significant. I’d need some time to digest how it should be invested. Hoping the ISA allowance gets increased from £20,000 to £1M in the next budget we’ll call Plan B.
I am in need of some new socks, and my window cleaning cloths are a little worse for wear, but I don’t think that’s what you meant by going “temporarily crazy.” Perhaps buying socks and window cleaning cloths after winning £1M would be crazy. I don’t know. I think I would be fine at not spending on anything outside of my values. So I’d probably appear the opposite of how most lottery winners look. I think I would go very quiet and thoughtful as the money would be a distant second in my mind compared with answering the question of how should I now spend my time.
Nothing exciting: half to family who need it more than I do, a modest home somewhere I’d like to live eventually, and topping up retirement to where it probably needs to be for my age. More of a lifeline than a windfall.
A million ain’t what it used to be. 1 in 10 brits have over a million GBP in wealth according to ONS. In the US (USD) it’s more like 1 in 7.
I still have around £300 in premium bonds, originally bought when I had few savings other than a small emergency fund because it allowed me to dream. Things have moved on, and we are now retired having planned adequate but not huge finances – and then getting an inheritance (which wasn’t factored in) after my mother died.
So in the highly unlikely situation that I won the Premium Bond £1M prize, I would be looking to create a charitable fund out of most if not all of it. On a modest level I am already contributing to causes I feel strongly about at levels that fit my current finances.
A property me and my partner were interested in, viewed, had offered-on, and then lost, just a month ago, has just come back on the market. The winners had bid just 0.5% more than we did, but have now pulled out because they can’t afford the mortgage.
They had presumably acquired quotes a few months ago when rates were lower, and have since been forced out by the rises.
Our own budget (determined by a limit on the monthly payments on a 5 year fix) has fallen £50K since February.
Interesting times ahead.
Long time reader, first time commenter.
This is very timely for me. I’ve just sold a business I’ve spent ten years building with some friends, and received a (only just) seven figure sum for my shares. I’ve planned the next steps already, though, so it’s not quite an unexpected windfall.
Plan is: put the cash that is what my accountant says will be the capital gains tax on the payout into multiple savings accounts, keeping comfortably below the FSCS limit for each. Max out this year’s ISA. Top up my six month cash buffer to make it a whole year. Once that’s done, buy a new home — nothing fancy, but enough to feel like I’ve had a step up in life. Rent out the old place (tiny but I own it outright), which will be enough to cover the utilities, council tax and service charge on the new one. Get a mortgage for some of the new place — I don’t need it but I feel like pound averaging a chunk of the cash into index funds will make more than the interest rate right now. I could be catastrophically wrong on that, of course, but if so there’s more cash coming from the acquisition which will allow me to pay off the mortgage if necessary in a year or so. Property feels like a decent place to park cash right now though, so at least 50% ownership, maybe more.
My goal is not FIRE because I enjoy my work, at least right now. What I want to do is be in a situation where I have a stable base so that if I don’t like a particular job I can walk away and live in what they used to call genteel poverty until I find a new better one. Or start a new company. Or something. I have very cheap tastes. My other half took me to a fancy mall saying that I had to buy something to remember the day I sold the company, and I literally couldn’t find anything I wanted. I left with a £50 bottle of scotch, because that was all I could find there that actually felt like it would make my life better 🙂
Critiques welcome! What am I getting wrong?
Mulled over this a lot since April 2020. MINI for my wife, new static caravan when current one wears out, Canon image stabilising binoculars and/or Swarovski spotting scope.
Gift/invest the rest
In the event of a £1 million pounds windfall I would splash out on a few pairs of bespoke shoes. The rest would be boringly spread around index funds and commodities.
I have to wonder though, who would admit on this site to rushing out to buy the shiniest Swiss watch imaginable or its automobile equivalent!
A childhood recurring dream was discovering ill-gotten buried gold. Loads of it. And the problems of keeping it secret and laundering it. As a 9 or 10 year old I couldn’t really work it out completely. But I knew I wouldn’t tell anyone.
I think my fantasy then was the equivalent of a private jet probably with stickers on. Maybe taking me to a private island – James Bond style.
More up to date would be 50% on the boring stuff in a globally diversified portfolio to run by yours truly (no angel investing) to keep me busy and something like 25% on desirable property I’d actually want to live in. With the loose change maybe a small feature piece of art to admire (maybe a Francis Bacon) and some small secret millionaire gifting.
Absolute nightmare to win a fortune. Opens up possibilities and options you wouldn’t have had but at the price of missteps, retrospective recriminations and regret. Give most of it away would be my counsel of perfection ( but don’t forget IHT).
However, at odds of what, 43 million to 1 against for lotto the chances can’t even be described as ‘slim’. Think if you lined up 43 million people from here a metre apart, the line stretches around the world back to here and then continues deep into the Atlantic. And you think you’ll be picked ?
At the risk of becoming one of those “Fat FIRE” windbags from Reddit, having a couple of kids has shown me that a million is not what it used to be.
A nice well maintained 4 bed detached house in our neck of the woods is now approaching £500-600k. I’d probably buy one of these, inflation proof us by installing oodles of solar panels, insulation, triple glazing and by buying a good electric car and sell our current house. This would free up c. £125k of equity (which would cover the inflation proofing). The remaining £400k would be paid into pensions and ISAs until we could FIRE (maybe 5 years later).
As an older investor (75) I have had a number of “windfalls” over my life
All inheritance based -unexpected parts of property sales-two well into six figures
I had an investment plan already in place and these unexpected monies just slotted into the plan allowing it to achieve its goals sooner than later
A already agreed investment plan with your partner means fanciful purchases because you seem to be suddenly “rich” don’t occur
The aims of a long term investment plan mean that the large sums of money required for kids education and pensions are already known
Just getting there sooner is a real bonus
xxd09
For those saying a million isn’t what it used to be, I agree. It’s pretty much a minimal sort of target for a conventional FIRE, I’d argue, for instance.
However a million *on top of* your ongoing plans is an absolute boon of a windfall.
It’s either a splurge of materialism that’d take most of us 20 years to fund, or it’s financial independence many decades early, or it’s an enormous safety buffer or a far higher sustainable annual spend.
Even just £100,000 can be a pretty confident £5,000 per year up-rated by inflation if you don’t mind volatility of income and potential to do worse.
And £5,000 a year is eating out somewhere mildly fancy with someone every fortnight for the rest of your life.
‘Life-changing’ is a moveable feast. 😉
I did get a windfall of just over a million usd last year, a vest of company stock I wasn’t expecting
We didn’t do anything exotic with the money; paid off the remaining mortgage (which wasn’t optimal but has been a nice peace of mind and frees up monthly cash flow), maxed out family isas (private school fund) and remainder into pensions. Plus some £30 Easter eggs. I still marvel at how that money went with barely a trace though
It must happen quite a lot – with house prices where they are now, an only child inheriting a house in London will end up with a Lottery-win sized lump of cash (at least before tax…)
The only luxury I’d allow myself would be a Rolex Submariner, as I’ve always liked good watches. They are not a bad investment actually: they don’t depreciate rapidly like some luxury items and there’s a thriving second hand market.
Meanwhile I’ll ‘keep on plugging at the four aways’ like Mr Bleaney in the Philip Larkin poem, and remain content with my £40 Lorus which has kept good time for 20 years
It’s a good question.
My primary goal would be to bolster my savings to the point where they could allow me to stop working. I would then have the freedom to choose what job I do, a nice position to be in. The problem is that it would take many years as an individual to get £1m fully tax sheltered, and in the meantime you would be handing over a big share of income to HMRC (assuming you keep working) and developing a future CGT problem.
Once I am in the fortunate position above, I would then look to gift surpluses to my children, ISAa and Sipps, equally.
As a lean FIRE’ee it would have to be a chocolate box cottage nestled in the Surrey hills somewhere. Probably not much change from that, so I’ll just add on the purchase and servicing costs of a golden retriever and dedicate any remaining to gas and electricity.
Interesting question, I confess I think my first emotion would probably be frustration that I had not come into the money five / ten years earlier when it would have more of a difference. It would basically over achieve my number and then some, so it would speed up what I’m already planning by a few years.
I’d retire, our version of FIRE is already planned to be comfortable / FAT depending on how you look at it. I confess I would probably blow a bit of the extra, we are already planning to move to Cornwall and would ideally like an annex for holiday let (partly for something totally different to do and also for income diversification) so it would make this definitely achievable, with no compromise on our main home.
Ultimately for us as a couple not that much different from the plan apart from the speed it would be possible. However definitely more certainty for Mrs Whettam if something were to happen to me, she would not need to worry about drawdown, flexible asset allocation and all that, she could just buy an annuity.
Fingers crossed 😉
I would build an eco cabin with a bit of land and out buildings somewhere near a good windsurf beach. Bit locked in with schools though to do that right now. Have also been fortunate with various windfalls, so have substantially less excuses not to do this sort of stuff than others. Remind me of the Lawrence of Arabia quote.. “All men dream: but not equally. Those who dream by night in the dusty recesses of their minds wake up in the day to find it was vanity, but the dreamers of the day are dangerous men, for they may act their dreams with open eyes, to make it possible.” The thing about money is you get to wake up in the day, if it was vanity then that can be difficult to accommodate.
On windfalls, I think it depends where you are in your life journey when the windfall happens and the amount.
£100k – not very much. Top up ISAs, do some serious energy efficiency work on the house that I want to do but does not really make ‘economic’ sense.
£1m – as above, plus some experiences, more hours of a gardener for my partner, sock away a chunk for vulnerable adult son.
To explain – we both are into natural history, geology, archeology and other things in the world around us. The best trips we have done have been just the two of us with an expert guide. That means we get to control the itinerary, and don’t get dragged through more rain forest/mountains when we are exhausted, and don’t get dragged away for the next stop just as things are getting interesting. When we have paid for a personal guide it has been worth every penny.
The gardener is because my partner’s vision and ambition expands over time, but the capacity doesn’t. Her imagination is writing cheques her joints can’t pay.
£10m – as above, plus buy my mother’s home in London where she has lived most of her life (one in the next road recently went for £2.3M), adapt it for her age and pay for live-in care. Adaptations to our house so we live in it longer. The rest handed down to the next generation or donated.
If you had asked me at 20, 30, 40 … (with equivalent purchasing power), the answer would have been different every time. Not better or worse, just different.
I also reacted strongly to the ‘growing up poor messes with your mind’. Those early experiences stay with you. I still struggle to spend money on myself, because I don’t deserve it. I remember the shame and frustration vividly. My ambitions were equally modest – to be able to have a bath whenever I wanted and however many times I wanted. I am now fulfilled!
@far_wide – appreciate you are lean FIRE’ee, but my advice would be to try and fund the purchase and servicing costs of a golden retriever anyway. We have two labs and I can’t imagine us ever living without dogs, they just bring so much, they are just an essential family cost.
First thing I would do is get a whole body scan and every test their is at one of the top hospitals in the world. Just in case a nice bit of luck wants to balance itself out with a health condition if caught early would save me or at least let me live a bit longer so I can spend my windfall!
There is an absolutely classic reddit article on what to do if you win a substantial lottery prize. Not sure if I am allowed to post the link here but you can search for reddit blakeclass lottery. Written for US audience, but still an amazing read.
CC : I used to think the same way, am a bit of a hypochondriac, and love the quote by Billy Graham’s : “When Wealth Is Lost, Nothing Is Lost; When Health Is Lost, Something Is Lost; When Character Is Lost, All Is Lost”.
But the problem with too much testing is risk of false positives, which can lead to more worry. Tricky one …
@Bluejeansman (#23):
The false positives/overdiagnosis point was made very well in the recent BBC Horizon programme: Making Sense of Cancer with Hannah Fry – which IMO is well worth a watch.
@Whettam (#17):
Could you say a bit more about what you mean by “income diversification”?
@Anon12345
Sounds like a good plan to me.
Probably spent £10 too much on the Skotch
A windfall of £1m (or even half that) would mean that I could FIRE immediately but I don’t feel mentally ready to give up work yet. I would however see if I could go down to a 4-day week.
20% of my winnings would go to my siblings – they don’t need the cash but I’d like them to enjoy the win too. A couple of expenses paid holidays with close friends, with small gifts going to them too.
10% put aside to go to charity – rather than blindly donate, I’d probably spend time researching and be more selective on where the money goes to make a real difference.
Max out my ISA for the first time and max out premium bonds.
Having just moved home, I’m in no rush to move again or get a bigger place. However, getting my garden fully landscaped could be on the cards. I might be tempted to replace my 10 year old car with an EV.
The rest will be mostly invested (equities and/or property) to fund a fatter FIRE than I’d planned for, one with more travels!
@Al Cam – just another income stream not coming from our portfolio, all of our income will be coming from our portfolio, until our state pensions kick in (if they do!). So I like the idea of approx. 5 – 10k income coming from another source eg the holiday let. I might try to do something else, but I don’t want to be a consultant for my current industry once retired, so options might be limited. Unless I can turn a hobby into income stream, but I’m not relying on that.
Ultimately we will not compromise our home and the home purchase will largely be an emotional decision not just a financial one. But a lot of the type of houses we are interested in have annex’s, so it’s definitely an option and would be daft not to use annex.
More importantly we like the idea of having something to do by running a small business (I’m well paid but have always worked for someone else), this would also hopefully help integrate us with community, because some of the choices we would make would be about supporting Cornish economy, not just our own pockets.
Interesting discussion and some nice replies. I hazard that most of us on here wont go out and blow the lot of superyachts and the like, rather a windfall would simply accelerate goals. I honestly don’t think my current lifestyle would change too much from what it is now. Cheap walking/camping trips, days at cricket, pub trips, time with friends and family, all with value in mind. Would speed up the FIRE plans and allow frugal freedom to do it more often rather than be stuck at a desk.
A million windfall would allow a quicker house move (ideally to a three/four bed with a small garden in a mid-sized town on the edge of countryside with decent transport links to London), or allow a move to elsewhere with an outbuilding or two. Like @whettam I like the idea of a holiday let appeals, but perhaps that boat has already sailed. Certainly would pay off or down the mortgage, would probably buy an electric car, heatpumps, perhaps a treat ourselves to a slightly bigger campervan. All mid to long terms goals anyway. In many ways I am already incredibly fortunate.
As for several other commenters here, a million pound windfall would dramatically accelerate our FIRE journey, and allow us to live much less frugally until we decide to stop working.
Other than that, we’d probably splurge on a top-quality e-cargo bike, sell our car and join a zipcar-style scheme, and install things like solar panels, a heat-pump, and under-floor heating.
I’d also be tempted to hire a personal trainer for long enough to ensure that I can do the strength-training exercises I want to do with perfect form.
@Whettam (#27:)
Thanks got it.
I wonder if there is something like a pecking order of retirement income streams and if the characteristics of each such option (i.e. not just the £ notes value) compared to your previous earned income is important?
For example, some people (like you) would relish a change, some, I guess, would not, etc.
I’d guess that anyone who is a decent part of the way along the FI/RE path would be far more likely to deal with a large lump sum reasonably well. They are already used to seeing big numbers, and if they’ve done some SWR style calculations are painfully aware of how much income it does or doesn’t buy you.
Conversely, people used to having no capital are less likely to be prepared for dealing with million pound lump sums, and instead see it as money to be spent rather than a tool to be utilised.
@Al Cam – I guess so. As I said my ideal would be to make some income from my hobbies (art and photography) that from a satisfaction perspective, would be worth a lot to me. But ultimately the income figure itself is what I’m focused on achieving and I’d be perfectly happy if I have covered my comfortable FIRE income target from portfolio and then I can just have hobbies for enjoyment. The holiday let is a bit different in I think it would make good financial sense, if the right property were to come along at right time.
Also +1 for heat pump (if suitable for new property) and solar panels, I’m still holding off on the EV (already have hybrid) but Cornwall needs more range 😉
@whettam, oh I agree, but currently travelling here there and everywhere (no house whatsoever at present) so the dog will have to wait until we put down roots.
I couldn’t help wondering what made you write this piece today. I’m tempted to conclude that you must in fact have won the lottery and wanted to find some way to relieve the pressure of not telling anyone your good luck!
@TI agree, didn’t mean to dismiss it. Whether it grants early financial independence, or a luxe lifestyle on top of that security – life changing either way.
I think for me, with a £1m windfall I’d probably pay off the mortgage, take some fun money (maybe £50k) and invest the rest.
While I don’t play the lottery I sometimes think about the big winners that, for some bizarre reason, decide to go public. Like the couple a month or so back that bagged £180m. At that level of money I’m not really sure what I’d do, I think a lot of doors would open for you at certain financial institutions though!
I had a £100K(ish) windfall (thanks to a business I set up – and far less after tax) around a decade ago. It paid for a good chunk of our house – and a few renovations. Not finding rent each month acts as an accelerant on the journey to FIRE.
A additional million would probably see me buy a bit more land – ideally that immediately behind our house so the missus can extend the garden. Maybe it would be enough to finally trigger the RE bit of FIRE (I got to FI about five years ago). Maybe buy more land elsewhere, and grow trees on it. I always liked Forest of Dennis.
I echo what CC – health is wealth. Brought home to me recently by a friend who has had an incurable terminal cancer diagnosis in his early 40s. He’s spending all kinds of sums on scans etc to try to find any kind of hope in his situation. Maybe the human longevity people can avoid the false positives (discussed by Medlife youtuber too – it turns out human bodies are as a distinct on the inside as they are on the outside). If you are the kind of person who likes biohacking for health, fitness and lifespan, then £1m would probably go less far than you imagine.
Retired on small teachers pension. What would I do with a windfall? Give it to the kids so they are mortgage free. I need nothing and want nothing.
I will slog on with the DIY, investing in ethical stuff and building that kitchen!
@ Fudgecat.
I need nothing & want for nothing – a truly remarkable observation.
One I hope to follow
ThisIsMoney podcast putting the boot in for the middle-aged today. Too young for DB pensions, too old for enrollment with employer matching.
Sort of on topic, they did a bit last week on what to do with a lottery size (add a couple of zeros) win. Thought it was a bit daft – “you’ve got to decide how to spend it” instead of just realizing that money just doesn’t matter any more. You could buy a new Ferrari every month for the rest of your life and still not run out.
A £1m windfall (on top of adequate savings) would allow me to buy a nice 45ft yacht+running costs. Yes please.
@Kraggash, depends on how good a sailor you are. I would have thought 45ft is getting near the size which would need professional crew, and your £1M would vanish very quickly.
@Bill – “I have to wonder though, who would admit on this site to rushing out to buy the shiniest Swiss watch imaginable or its automobile equivalent!”
If I won a million then there would certainly be some frippery involved; not least because like most readers here, I expect, I have a financial plan that didn’t rely on those winnings. Probably ~£200k over the next 4-6 years would go on things I certainly wouldn’t have paid for otherwise. I don’t know if I’d buy a Lamborghini (2nd hand mind) or lease it but I know I’d be driving one for a bit for example.
@Jonathan B
I have Yachtmaster Offshore, and a lot of experience. A good 45 footer would be fine without paid crew.
@Kraggash, respect for that from a humble Coastal Skipper. We all have to dream according to our capabilities.
I made the some question once, while drinking a Spritz with some friends here in Italy. And I got the typical answer: “With 1m you can’t change your life”…I didn’t reply, but I knew for sure they will never put together that amount of money. Therefore I tend to agree with other readers’ comments: when you are in the FIRE path, you have already spent a lot of time in understanding the meaning of words like savings, interests, investing, generating value…and you cannot expect others see this matter in the way you do. I would need less, really less than 1m to achieve my number, my target. But I decided not to give any additional explanation, why to confuse my old friends? We ordered another Spritz and started to talk about the weather… 😉 🙂 Ciao all!
A windfall would come too late for us. We have all we need all we need and would give away any windfall. A 7 figure inheritance is likely coming to my wife when her uncle passes away (he has no children) and she has already decided to give it away.
£1m strikes me as way OTT for a 45 footer. Ours is 45 feet, in good order, but I would not get more than £100k for it. My wife and I can handle on our own by the way, although we have been looking for a smaller boat.
@Naeclue:
I can see the logic.
If I may, has your wife’s decision on this matter shaped your own gifting approach?
£2,000,000 as above, but also help out family
>£5,000,000 as above, but secure a £120k income, resign and look for alternative things to keep me busy
Seems like wordpress deleted half my comment
Up to £100,000 trip to see family in Oz, the rest spread into family ISAs over 2-3 years following my existing investment strategy
Up to £2,000,000 as above, plus pay off the mortgage, renovate our London terrace, top up SIPPs, invest through a family trust to protect wealth and pay for education
Above £2,000,000 as above, but also help out family
Above £5,000,000 as above, but secure a £120k income, resign and look for alternative things to keep me busy
My risk profile might increase as my capital base increases, but only insofaras my fixed income/equity ratio in passive investments.
It’s interesting re-reading this post now I’ve actually received a significant windfall at the start of last year IE since reading it originally!
having sold a business at 46 yrs of age and suddenly markedly exceeding my FI number, the points you outline are so so true !
Especially the ‘upsetting all your arrangements and generally freaking you out!’ line . . . . . . . .
actually the reduced ‘direction’ one feels when not actually needing to work so hard on the day job to pay the bills, (or at all potentially), and the stress of how to best invest the lump sum with a very different perspective, have suprised me . . . . . . OK, a nice first world problem to have, but it has been a journey.
I suspect the reduced ‘pressure’ / cortisol & decompression since (almost like post traumatic stress disorder – as we had a very stressful 2 years getting to the sale etc.) have also made it difficult at times the last 6 months or so . . . . . . .
I have adhered to much of your advice to be honest, by doing actually very little different! except:
– paying off the mortgages,
– cutting down from around 70 hrs / wk to 49 hrs / wk for sanity reasons as I actually used to love my job in the distant past, and want to keep doing it i think!
– I’ve filled up my own, my wife’s and my kids ISAs and my SIPP and plan to yearly for the foreseeable
– piled a seven figure sum into NS&I bonds at 6.2% for a year to give myself some time to breath!
I’ve told no one but close family and friends if they have asked, which almost none have directly, and none regarding any numbers.
I’ve purchased nothing except a bike (Mr Money Mustache might be proud at least!??) but I am hoping to pursuade my Dad to let me help him get a car as his is on its last legs literally!
I think when one is striving towards a goal, you just keep going because you have to, and you always have, but when you’ve won I think its takes some adjusting to for some, and perhaps only then you can re-set the goal posts once you feel ready to.