What to do - substantial investment?
Discussion
I've decided to log on under a different name for this one - simply because my original profile has links to my business website, and for the time being I'd rather my planning went a tad under the radar.
I am a majority shareholder (70%) in a business, and have begun my exit. The business will buy my shares, and existing other shareholders will inherit. The bank have given an understanding for the funding, and the papers have now gone before their credit team.
I have never had a substantial amount to invest before, and I am looking to set something up to see me right, provide an income, and generate a reasonable rate of return. So, I thought I'd consult you guys to see what your thoughts are.
Nitty gritty. I am 45 years old. The sums involved are anything up to £8.5m (£5.5m from immediate sale, after tax at 10% and a few quid to play with, and a further £3m due to be returned from EIS schemes in the next 3 years). I have had early discussions with a financial advisor based with our company accountant, who has suggested the bulk be placed in an offshore bond, with an investment portfolio within. In risk terms, I would say that I am middle of the road - 4-6 on a 1-10 scale. I have another income source, yielding between £100K-£120K before tax, by way of loan interest, and dividend - from a property company, that has just signed up a tenant on a 15 year lease.
So, how would you invest, if you were in my shoes? I am hopeful of release of funds this side of Christmas.
I am a majority shareholder (70%) in a business, and have begun my exit. The business will buy my shares, and existing other shareholders will inherit. The bank have given an understanding for the funding, and the papers have now gone before their credit team.
I have never had a substantial amount to invest before, and I am looking to set something up to see me right, provide an income, and generate a reasonable rate of return. So, I thought I'd consult you guys to see what your thoughts are.
Nitty gritty. I am 45 years old. The sums involved are anything up to £8.5m (£5.5m from immediate sale, after tax at 10% and a few quid to play with, and a further £3m due to be returned from EIS schemes in the next 3 years). I have had early discussions with a financial advisor based with our company accountant, who has suggested the bulk be placed in an offshore bond, with an investment portfolio within. In risk terms, I would say that I am middle of the road - 4-6 on a 1-10 scale. I have another income source, yielding between £100K-£120K before tax, by way of loan interest, and dividend - from a property company, that has just signed up a tenant on a 15 year lease.
So, how would you invest, if you were in my shoes? I am hopeful of release of funds this side of Christmas.
Well, you're certainly sitting pretty there. I'm a million miles (and several million pounds) away from your situation, but I think if you're looking to sit under a tree and read a book for a while then you might do well to work the other way - what do you need the money to do for you? - and then look at how much risk you need to take on to meet that target.
Hmm. What do I need the money to do for me.....
Well, I have a recently completely renovated house, without mortgage, that I am not interested in moving from. I like my cars (don't we all on here?), and currently run a couple that could do with a change - daily bigHack (5y/o), and a more sporty number (2.5y/o). Would quite like to change the bigHack every couple of years, and the sporty one - well, we all have a dream list, so once a year perhaps. Maybe swap the track car for a new one too. Very car greedy I guess.
Have a holiday home on a very nice island in the med, and a little speedboat that could do with an upgrade. Don't really feel the need for a 2nd holiday home as the one I have makes me feel I have to keep visiting - let's face it, I'd rather jet about a bit, and have someone else look after the cooking and washing!
So, aside from the odd vehicle upgrade, a comfortable annual income is all I really need it to do. Which to a large degree is taken care of by the property investment, along with the odd EIS to offset the dreaded.
Well, I have a recently completely renovated house, without mortgage, that I am not interested in moving from. I like my cars (don't we all on here?), and currently run a couple that could do with a change - daily bigHack (5y/o), and a more sporty number (2.5y/o). Would quite like to change the bigHack every couple of years, and the sporty one - well, we all have a dream list, so once a year perhaps. Maybe swap the track car for a new one too. Very car greedy I guess.
Have a holiday home on a very nice island in the med, and a little speedboat that could do with an upgrade. Don't really feel the need for a 2nd holiday home as the one I have makes me feel I have to keep visiting - let's face it, I'd rather jet about a bit, and have someone else look after the cooking and washing!
So, aside from the odd vehicle upgrade, a comfortable annual income is all I really need it to do. Which to a large degree is taken care of by the property investment, along with the odd EIS to offset the dreaded.
I'm in a roughly similar situation. I'd suggest:
You want to work with people who work with people like you. That means avoiding those IFAs whose typical customer is one with £50k to invest. I doubt that an IFA attached to an accountant qualifies.
I'd rather work with people making investment choices and not those who invest in funds who then make those choices or (in an example I know) the investments go into funds that buy into other funds and whose value seem to barely move from one year to the next.
You sound, like me, as though you have 'enough' in the sense that protecting it is actually quite important. So that does mean being diverse about it, keeping some very safe and some less so. I realised a while ago that it doubling in value would actually not be such a big thing for me. I like our house, I'm not going to move, I like...well, all I have being richer than I am wouldn't make much difference.
So personally I'd say no to putting it all offshore, you are going to pay tax, investing in things you don't know in places you've never been is at the higher risk end, sure maybe put some that way if you want to but it's not really where you want to be.
But mainly find yourself an advisor you are comfortable with. I've not worked with Blackstone mentioned, they may be good. I work mainly with the private bank in London called Brown Shipley - but try and see a few people and see who you like not, as I say, for wild and wacky means of doubling your money but mainly solid ways of protecting and growing what you have.
You want to work with people who work with people like you. That means avoiding those IFAs whose typical customer is one with £50k to invest. I doubt that an IFA attached to an accountant qualifies.
I'd rather work with people making investment choices and not those who invest in funds who then make those choices or (in an example I know) the investments go into funds that buy into other funds and whose value seem to barely move from one year to the next.
You sound, like me, as though you have 'enough' in the sense that protecting it is actually quite important. So that does mean being diverse about it, keeping some very safe and some less so. I realised a while ago that it doubling in value would actually not be such a big thing for me. I like our house, I'm not going to move, I like...well, all I have being richer than I am wouldn't make much difference.
So personally I'd say no to putting it all offshore, you are going to pay tax, investing in things you don't know in places you've never been is at the higher risk end, sure maybe put some that way if you want to but it's not really where you want to be.
But mainly find yourself an advisor you are comfortable with. I've not worked with Blackstone mentioned, they may be good. I work mainly with the private bank in London called Brown Shipley - but try and see a few people and see who you like not, as I say, for wild and wacky means of doubling your money but mainly solid ways of protecting and growing what you have.
BigInvestor said:
H
Have a holiday home on a very nice island in the med, and a little speedboat that could do with an upgrade. Don't really feel the need for a 2nd holiday home as the one I have makes me feel I have to keep visiting - let's face it, I'd rather jet about a bit, and have someone else look after the cooking and washing!
.
I never understand the appeal of holiday homes, with money you can travel and stay in really nice places without having to run them!Have a holiday home on a very nice island in the med, and a little speedboat that could do with an upgrade. Don't really feel the need for a 2nd holiday home as the one I have makes me feel I have to keep visiting - let's face it, I'd rather jet about a bit, and have someone else look after the cooking and washing!
.
If you do that a Centurion card is well worth having, personal concierge gets to know you, organise things for you, gets you invited to things. They are really good at organising flights and hotels with privileges, chauffeurs etc. they can often get you into places that seem fully booked and so on.
Only snag is I don't know how you would get one by choice, I got mine when they invited me some years ago when I didn't know they existed.
Visa Infinite seems to be the same, I have one as a reserve but it's not in the same league as the Centurion (from Amex).
BI,
You don't go into much detail about your personal circumstances and aspirations so my reply (yes, I manage wealth) will be light on detail. All I would say at outset is this.. you're 45, don't sprint into anything. If you park your money in cash for a year or so and lose a little through inflation while you reflect and make the transition.. then so what? Get the big picture right first, start wearing your new wealth like a new suit.. it can sometimes take months/years to become content and secure around it. In my professional opinion, it isn't about the nature of underlying investments at this stage, risk, wrappers, asset allocation - yes, getting them right is vital, but so too is identifying the bigger picture.
It's about adapting to a seismic and sudden change around your life.. but you though, will remain the same person at the middle of it - are *you* ready? You might decide to set aside wealth for ethical programmes, you might decide to establish trusts to help local people, young entrepreneurs etc or you might decide to start sketching out life over the next few decades and allocating wealth in different areas now, to cater for that. It isn't just about the best way of investing your money - certainly not yet and although I can see why offshore might work for some of it, leaping into anything is like buying a 33 Stradale and a partner then saying 'Great, nice colour (at the risk of being obvious, it has to be red!).. now where do the baby seats and the dog go?".
Use the time to find an adviser you genuinely get on with; that man or woman is going to become part of your life, however closely or distant you'd like to maintain your relationship with your money. You'll be surrounded by all manner of advisers, life can get pretty grim - I've seen it happen with other young and affluent clients. And that's one of the reasons why there's no need to rush anything - time spent in reconnaissance is seldom wasted. You're a young and successful man or woman and although you're retiring, you'll find that your mind will become only more active. Good luck, and I hope your hard work pays off handsomely. There are many other wealthy and succcesful people who linger here, and I am sure you'll find many valued and well informed perspectives.
The only thing that I think should be dealt with, with any sense of expediency would be legal, protection and estate planning.
You don't go into much detail about your personal circumstances and aspirations so my reply (yes, I manage wealth) will be light on detail. All I would say at outset is this.. you're 45, don't sprint into anything. If you park your money in cash for a year or so and lose a little through inflation while you reflect and make the transition.. then so what? Get the big picture right first, start wearing your new wealth like a new suit.. it can sometimes take months/years to become content and secure around it. In my professional opinion, it isn't about the nature of underlying investments at this stage, risk, wrappers, asset allocation - yes, getting them right is vital, but so too is identifying the bigger picture.
It's about adapting to a seismic and sudden change around your life.. but you though, will remain the same person at the middle of it - are *you* ready? You might decide to set aside wealth for ethical programmes, you might decide to establish trusts to help local people, young entrepreneurs etc or you might decide to start sketching out life over the next few decades and allocating wealth in different areas now, to cater for that. It isn't just about the best way of investing your money - certainly not yet and although I can see why offshore might work for some of it, leaping into anything is like buying a 33 Stradale and a partner then saying 'Great, nice colour (at the risk of being obvious, it has to be red!).. now where do the baby seats and the dog go?".
Use the time to find an adviser you genuinely get on with; that man or woman is going to become part of your life, however closely or distant you'd like to maintain your relationship with your money. You'll be surrounded by all manner of advisers, life can get pretty grim - I've seen it happen with other young and affluent clients. And that's one of the reasons why there's no need to rush anything - time spent in reconnaissance is seldom wasted. You're a young and successful man or woman and although you're retiring, you'll find that your mind will become only more active. Good luck, and I hope your hard work pays off handsomely. There are many other wealthy and succcesful people who linger here, and I am sure you'll find many valued and well informed perspectives.
The only thing that I think should be dealt with, with any sense of expediency would be legal, protection and estate planning.
ringram said:
Lots of diversification will be in there Im sure.
I would imagine capital preservation is more important than a high return depending on your plans.
Good luck with things, Id be interested to see what you decide to do.
Why diversify if you can concentrate on a solid investment?I would imagine capital preservation is more important than a high return depending on your plans.
Good luck with things, Id be interested to see what you decide to do.
Just because it's more money than normal doesn't really change the basic good advice at your age to have a 50:50 mix of bonds and equities, as diverse as you can, and as low cost as you can. What does change is you're going to max out your ISA allowance by just a tad, so you'll have to look for other ways to be tax efficient, and that you should make sure you pay for any financial advice you do get in £s and not %s.
Just because it's more money than normal doesn't really change the basic good advice at your age to have a 50:50 mix of bonds and equities, as diverse as you can, and as low cost as you can. What does change is you're going to max out your ISA allowance by just a tad, so you'll have to look for other ways to be tax efficient, and that you should make sure you pay for any financial advice you do get in £s and not %s.
Congratulations "Big Investor". You have really done well. Now you have to look after the wealth that you have accumulated. Sometimes it's easier to earn it than look after it!
It takes effort and you have to look in quite a few "shop windows" before you find the right service for you.
The only advice I would give you is look for transparency. Make sure you know the costs associated with whatever you decide to invest in. There are many different charges that can apply to an investment portfolio of that size. Ask the questions so that you know exactly what you are paying.
Preservation of what you have is obviously important so you must understand the nature of whatever investment you intend to invest in. I repeat.....you must understand what you are invested in. Promises of tax savings are usually achieved through expensive and complicated strategies. Aggressive tax planning is not suited to everyone and is usually expensive.
As Ginge explains, you will end up forming a relationship with whoever takes on the responsibility of managing your money so you have to be comfortable with that character and trust their capabilities.
I would suggest you should expect to pay an annual management fee of some 0.6% per annum plus vat for a blue chip service. Just beware the hidden costs and avoid the complicated strategies.
JB
It takes effort and you have to look in quite a few "shop windows" before you find the right service for you.
The only advice I would give you is look for transparency. Make sure you know the costs associated with whatever you decide to invest in. There are many different charges that can apply to an investment portfolio of that size. Ask the questions so that you know exactly what you are paying.
Preservation of what you have is obviously important so you must understand the nature of whatever investment you intend to invest in. I repeat.....you must understand what you are invested in. Promises of tax savings are usually achieved through expensive and complicated strategies. Aggressive tax planning is not suited to everyone and is usually expensive.
As Ginge explains, you will end up forming a relationship with whoever takes on the responsibility of managing your money so you have to be comfortable with that character and trust their capabilities.
I would suggest you should expect to pay an annual management fee of some 0.6% per annum plus vat for a blue chip service. Just beware the hidden costs and avoid the complicated strategies.
JB
Congratulations "Big Investor". You have really done well. Now you have to look after the wealth that you have accumulated. Sometimes it's easier to earn it than look after it!
It takes effort and you have to look in quite a few "shop windows" before you find the right service for you.
The only advice I would give you is look for transparency. Make sure you know the costs associated with whatever you decide to invest in. There are many different charges that can apply to an investment portfolio of that size. Ask the questions so that you know exactly what you are paying.
Preservation of what you have is obviously important so you must understand the nature of whatever investment you intend to invest in. I repeat.....you must understand what you are invested in. Promises of tax savings are usually achieved through expensive and complicated strategies. Aggressive tax planning is not suited to everyone and is usually expensive.
As Ginge explains, you will end up forming a relationship with whoever takes on the responsibility of managing your money so you have to be comfortable with that character and trust their capabilities.
I would suggest you should expect to pay an annual management fee of some 0.6% per annum plus vat for a blue chip service. Just beware the hidden costs and avoid the complicated strategies.
JB
It takes effort and you have to look in quite a few "shop windows" before you find the right service for you.
The only advice I would give you is look for transparency. Make sure you know the costs associated with whatever you decide to invest in. There are many different charges that can apply to an investment portfolio of that size. Ask the questions so that you know exactly what you are paying.
Preservation of what you have is obviously important so you must understand the nature of whatever investment you intend to invest in. I repeat.....you must understand what you are invested in. Promises of tax savings are usually achieved through expensive and complicated strategies. Aggressive tax planning is not suited to everyone and is usually expensive.
As Ginge explains, you will end up forming a relationship with whoever takes on the responsibility of managing your money so you have to be comfortable with that character and trust their capabilities.
I would suggest you should expect to pay an annual management fee of some 0.6% per annum plus vat for a blue chip service. Just beware the hidden costs and avoid the complicated strategies.
JB
BI
At some point you are probably going to get a bit 'bored' so consider taking a relatively small amount and investing it in a few small businesses that would also benefit from your occasional guidance. There are tax efficient investment methods available but most of all it's good fun and keeps the grey matter active.
Phil
At some point you are probably going to get a bit 'bored' so consider taking a relatively small amount and investing it in a few small businesses that would also benefit from your occasional guidance. There are tax efficient investment methods available but most of all it's good fun and keeps the grey matter active.
Phil
Edited by Phil. on Saturday 13th September 13:11
At that level of wealth, a top end IFA may be OK for tax planning, but their investment management skills can be lacking to say the least.
Some of the wealth mangers out there, the Brewin Dolphins, Cardales etc, can offer the stockbroking, investment knowledge etc, but not usually the other options required for full bespoke management, lending, banking, cash management, as well as the tax planning etc
If you want the full suite of options then the true Private Banks are where you should look, not the fancy cheque book and pen types! I.E. Coutts, Barclays Wealth, UBS etc
The Private Banks are used to multi-jurisdiction tax planning and advice around this, as well as getting you access to institutional levels of advice that is not available to many high street IFA/brokers. They also tend to have very close working relationships with the big four accountants and magic circle law firms as required.
I'd suggest seeing a few to get a feel for things depending on where you live I can pm you a few names at various places you could consider.
Some of the wealth mangers out there, the Brewin Dolphins, Cardales etc, can offer the stockbroking, investment knowledge etc, but not usually the other options required for full bespoke management, lending, banking, cash management, as well as the tax planning etc
If you want the full suite of options then the true Private Banks are where you should look, not the fancy cheque book and pen types! I.E. Coutts, Barclays Wealth, UBS etc
The Private Banks are used to multi-jurisdiction tax planning and advice around this, as well as getting you access to institutional levels of advice that is not available to many high street IFA/brokers. They also tend to have very close working relationships with the big four accountants and magic circle law firms as required.
I'd suggest seeing a few to get a feel for things depending on where you live I can pm you a few names at various places you could consider.
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