The Million Pound Question

The Million Pound Question! A thought experiment proposed by Saving Ninja.

This is a thought experiment proposed by Saving Ninja – what would you do if you suddenly inherited/won/whatever £1 million?? The only requirement he had was a stream-of-conscious style post, rather than something heavily edited. So here goes…

What would I do with £1 million??

First of all, I would keep completely quiet. I wouldn’t tell anyone, except for my girlfriend, and even then, not immediately! I’d have to take some time to process such  a huge amount of money. My initial thoughts are as follows:

• £250,000 would be set aside to buy a house in the near future. I figure the house itself wouldn’t cost any more than £200,000, and then the remaining £50,000 could be used to cover any legal fees, costs of moving, furnishing, any renovation, etc. We currently rent, and having to move every year or two is a massive pain! Unfortunately, the nature of university work, which typically offers fixed term contracts of 1-3 years to those early in their career (like me!) means that I can’t currently justify buying a house when we might need to move in another year or two. But, if I had a spare million quid lying around, I would be willing to take the plunge!
• Another £100,000 would be set aside for what I would call a visa fund. As I have mentioned before, my girlfriend is an American citizen, and currently in the UK on a student visa whilst she finishes her PhD. Once she finishes that, we need to go through the process of applying for a new visa. Thankfully it doesn’t actually cost £100K, but that money would provide us with some more flexibility. At the moment, in order to apply for a spouse/partner visa, which is necessary if someone from outside the UK/EU wants to move to the UK, I need to either earn over ~£19,000 per year, or I need to have around ~£70,000 in cash savings. As my income reports might indicate, I do currently earn more than enough to satisfy the earnings requirements. But what if I lose my job at an inopportune time? Fulfilling the cash savings requirement would just give us piece of mind. The remaining money could then be saved for the cost of immigration – I believe we’ll have to pay for the cost of application and the NHS surcharge, which could add up to £1000-2000. Annoyingly, we’ll have to do this three times! Once at the beginning, again after 2.5 years, and again after another 2.5 years, this time applying for Indefinite Leave to Remain. And then, if she feels like it, she can apply to become a citizen, and pay even more money. I’d keep the money as cash for all this time, and then once we’re clear of the entire process maybe I’d blow it all on something to celebrate! (Or, let’s be honest, this is a personal finance and financial independence blog, so I’d probably stick it all with Vanguard).
• I’ve worked out that £400,000 is my FI number (not including the house). So I would more or less immediately dump at least £200,000 into a low cost tracker, and then drip-feed the remaining £200,000 into the same tracker over a period of time. I then wouldn’t touch the money for another few years, other than moving £20,000 across to my ISA each year to save on tax. I would also consider opening a SIPP (a private pension in the UK) and look into how much I’m allowed to pay in to that in order to receive the tax relief from the government.
• That leaves £250,000 left to play with. I would probably split around £150,000 – £200,000 between my girlfriend and family, and then use the remaining £50,000-£100,000 to either help fund some sort of business idea, or to allow me to take time off work and begin something new. For example, pay myself for 6 months to write a book. Having said that, I probably wouldn’t quit my job immediately. I would be keen to finish my current contract, and then look at retraining. The remaining money would allow me to not have to worry about bringing in an income to support both me and my girlfriend. I could work part-time whilst retraining and use a combination of the part-time wage and savings to live. I’d also be safe in the knowledge that, if at any point our income decreased too much, I could just live off of the income from the passive trackers for a few months until we got back on track.

Overall, £1 million is obviously a huge, life-changing amount of money. It’s far more than my current FI number of £400,000 plus a £200,000 house. However, I wouldn’t want to completely retire early, even if the sums added up (even then, I’m not sure they do; £400,000 in stocks and shares should be enough, in theory, to support me and my girlfriend for around 25-30 years, which would only put us at 60 years old!). At most, I’d look to switch to a part time role, and then use some of the newfound time to set up business or some new way of earning money that would hopefully be more fun than my current job.

Looking back at what I’ve written, the first thing that strikes me is that I’m apparently a lot less generous than my fellow bloggers! I like to think that I’ve gone for the logic of “you have to take care of yourself first before you can take care of others.” I’d essentially be able to use the money to ensure my own financial independence, begin working part time, as I mentioned above, and then start to dedicate more time towards helping others. I previously mentioned that one of my goals for the next five years is to try to take part in more charitable or community work, and winning a £1 million would certainly propel me along that path!

In summary

I’m sure this is a question that we’ve all given some amount of thought to, no matter how unrealistic it might seem! However, it was quite interesting to put pen to paper (or… fingers to keyboard??) and actually think through in more detail about where I would put the money. Thanks Saving Ninja for coming up with the idea! Looking forward to the next one. In the mean time, check out some answers from several other bloggers below:

• Saving Ninja
• Ms ZiYou
• Quietly Saving
• The Fire Starter
• Indeedably
• Early Retirement Planning
• Steel Kitten
• Inspiring Life Design
• Good Personal Finance