Where to park a million pounds...

[LooneyTunes]

bhstewie said:

LooneyTunes said:

Look very carefully at this sort of service before jumping in. Put it this way, I have money in a small number of banks in preference to using them.

Agree entirely.

I'd hope nobody would pile in with a million based off some random on the Internet but my assumption is they are named accounts literally in your name i.e. not dependent on Flagstone if "something bad" happened to them.

As important as that (which I is definitely worth checking) is understanding how their allocation algorithms work (if you go for max rates then some will exceed the 85k).

[TwigtheWonderkid]

jeff666 said:

Buy land,

they aint making it anymore.

They are in Hawaii.

[dingg]

Mr Pointy said:

Oh look, the OP has made one post & vanished.

He's made over 1000 posts, have you made a mistake?

[iphonedyou]

trickywoo said:

https://www.pistonheads.com/gassing/topic.asp?h=0&...

If you spend £1m a month isn't £1m in the bank simply operating capital?

This looks to have been glossed over!

[AndyC_123]

Terminator X said:

How does one set up such a business?!

TX.

Combination of timing, luck, experience and hard work I guess

markiii said:

on those figures it will take you 5 months to amass another £1mill in the bank, so i'd pay off the morgage personally

Any savings accounts I look at have a lower interest rate than the mortgage so that does seem to make sense.

Al Gorithum said:

Congratulations on the successful business mate.

If you're netting £180k-£200k per month, you can pay the mortgage off in 4 months without touching the £1m right? That's what I would do.

I've been in that position, and this is what I did:
1. Kept whatever monthly liquidity is needed in an instant access account.
2. Open interest-bearing 32 day notice accounts in as many different banks as poss and put £85k in each.
3. Open investment accounts with 2 or 3 fund managers, and let them do the work.
4. If/when any investment opportunities arise, give 32 days notice.

Good luck mate!

Thanks. What do fund managers cost and what sort of yields would you expect them to bring in?

Higher the risk higher the reward type scenario?

Mr Pointy said:

Will you marry me?

You'd probably be left disappointed

[Al Gorithum]

AndyC_123 said:

Al Gorithum said:

Congratulations on the successful business mate.

If you're netting £180k-£200k per month, you can pay the mortgage off in 4 months without touching the £1m right? That's what I would do.

I've been in that position, and this is what I did:
1. Kept whatever monthly liquidity is needed in an instant access account.
2. Open interest-bearing 32 day notice accounts in as many different banks as poss and put £85k in each.
3. Open investment accounts with 2 or 3 fund managers, and let them do the work.
4. If/when any investment opportunities arise, give 32 days notice.

Good luck mate!

Thanks. What do fund managers cost and what sort of yields would you expect them to bring in?

Higher the risk higher the reward type scenario?

I'd speak to folk such as Intelligent Money (this forum's sponsor), Vanguard etc. Personally I'm risk-averse so like to spread it around, but each to their own. Remember that investments can go down.

[AndyC_123]

PositronicRay said:

100 acre farm.

Would snap it up if one came up locally. Land at £15k an acre now though.

trickywoo said:

https://www.pistonheads.com/gassing/topic.asp?h=0&...

If you spend £1m a month isn't £1m in the bank simply operating capital?

Not sure. Sales last month were £1.25m. It's a trading type business, buy stuff and sell it for more. Profit in the middle, which is accumilating.

Scootersp said:

Is the business your life? I suppose I mean would you miss working, is it work that gives you the most purpose?

I only say this as it looks like you could step back (are you crucial in it's operation now?) and it'd largely run itself especially if you have employees you trust and could promote.

Basically it would mean you foregoing some money/profits to give you time? Even if that's for new business opportunities?

Yes I'd say it is my life and not a lot to do without it. Can never imagine retiring.

I could step back a bit as have a decent team now but don't really want to.

gotoPzero said:

This is a good point. I assume the business has only recently started to make this level of profit?

I would probably leave it as operating capital till the end of the year as the current financial outlook is not great.

Then early next year if we have had a soft landing I would then look at it by which point it should be closer to 2.5 million and I would be paying the mortgage down and moving the balance into the best account I could find that would allow multiple withdrawals.

Touch wood we seem ok, NP FY20 £400k, FY21 £500k, FY22 £1.5m, current FY23 projection (alhough only 2 months) in £2.4m. New site came late 21 hence the jump.

fourstardan said:

Yes OP your a dick but have you thought about being a bigger dick and buying some Bitcoin lol.

Thats some decent wedge coming in.

Property is one option but won't you end up spending more time managing them?

Definitely no bitcoin, yes wouldn't have time to manage them.

jayxx83 said:

Fill up a pension pot now no limits on size. Bit boring but good as part of an overall strategy.

To be fair I would be looking at property deals. Buying retail parks where they may be opportunity to build more commercial units / out of town housing developments etc.

All the higher end shops like gails etc are looking for sites to build their drive throughs etc.

Get a good buying agent to find you deals and have a solid planning consultant on board to explore angles.

A very very successful person told me many years ago. Buy first, think later!

As long as you can see things going on around your proposed purchase, then really it should all be an inevitability in time.

Pension is something accountant says every year, haven't got one yet.

I've looked at high street units but could be quite risky? Good idea to look at retail parks.

[AndyC_123]

R33FAL said:

If you need it to be low risk, you put it in government bonds with short-dated maturities that yield (at the moment) around 4%. The idea of spreading it around 12 banks to keep within the £85k cap is laughable and not a practical solution- sorry.

4% wouldn't be too far off savings accounts at the moment? Or would it be better?

jeff666 said:

Buy land,

they aint making it anymore.

Trying, hard to get hold of. Most folk sitting on it and renting it out.

Simpo Two said:

Buy a boat. There's sure to be one that will cope with an acceptable amount of that profit

One thing I did treat myself to last year, love it when the weather is good.

Deesee said:

Your Banks money market team should be able to place that on deposits to balance off Swaps/Sonia.. You should get some healthy 1/3/6/12 month quotes.. Spread the capital in segments so you always have cash maturity (just in case its required).

Or pay your corp tax in advance 0.5% pa..

NB, you could buy OEIC within the business (or groups of Businesses).

Start withdrawing cash personally and you'll have a tax bills like Rishi's.

Any hobbies, Horse Racing (buy a Horse)?

Edited by Deesee on Thursday 23 March 10:29

Thanks, will speak to bank.

Corporation tax is painful. Trying to max out annual investment allowance etc but end up buying machines we don't really need just to reduce the tax bill.

Just googled OEIC, looks interesting.

Friend has a race horse, looks a very expensive hobby!

dingg said:

Get yourself to portugal, gain nhr (its easy) , pay yourself in monthly dividends for 10 years, free of tax... result....

Leithen said:

Pay off debt, relocate to zero dividend tax country.

Do you actually have to move to these countries to do that?

[AndyC_123]

adamfawsitt said:

You didn't really explain:

1. Your risk appetite
2. What you are looking for in return for any investment - income / capital appreciation / etc.

If you want income I wouldn't mess about spreading the money across so many banks - buy T Bills, you will get 5% and it's bombproof in terms of risk

Edited by adamfawsitt on Thursday 23 March 14:53

I love a risk but only when I can predict the consequences... Some investments seem too easily manipulated by the big fish, although that could be my ignorance.
Income is nice but no real need for it, capital appreciation makes more sense to me. Rent some land out that yields about 1.5% but the land value increase far outshines that.

Will look at T Bills thank you

Mr Pointy said:

Oh look, the OP has made one post & vanished.

Been working sorry hun. This marriage will never work.

Al Gorithum said:

I'd speak to folk such as Intelligent Money (this forum's sponsor), Vanguard etc. Personally I'm risk-averse so like to spread it around, but each to their own. Remember that investments can go down.

Will have a look at them, thank you

[LooneyTunes]

AndyC_123 said:

I love a risk but only when I can predict the consequences... Some investments seem too easily manipulated by the big fish, although that could be my ignorance.

Take some time to understand the different types of risk, what you’re actually exposed to, and whether it can be mitigated (and how much it costs to do so) For example, T-bills are US treasury bills, some of the implications of which should be obvious.

[Zumbruk]

For those sorts of sums, seek professional advice, not a freeking car website.

But...

[2ono]

Give it to these guys for anywhere from 6 months to 4 years.....

https://londonesecurities.com/

[Simpo Two]

Zumbruk said:

For those sorts of sums, seek professional advice, not a freeking car website.

There's nothing about cars here. But there are some clever and informed people who are worth listening to. If nothing else, when you go to see the 'professional' you'll be better informed.

[Scootersp]

AndyC_123 said:

Yes I'd say it is my life and not a lot to do without it. Can never imagine retiring.

I could step back a bit as have a decent team now but don't really want to.

Ok so I get that, I would try as an aside to think of another passion that could occupy some time and money just as a counter to the work passion?

May be just something to work towards as the years go by?

In the mean time enjoy the success and just work on staying at that level of profitability, take some of your accountants advice, as with the above work attitude you aren't likely to ever be short!

[iwantagta]

2ono said:

Give it to these guys for anywhere from 6 months to 4 years.....

https://londonesecurities.com/

I initially read that as londonescorts.com ........

Maybe not a solid investment....

[jrb43]

With that sort of money, I’d be turning the thermostat up to 18 deg.

[dalenorth]

We have just opened a cash account with Insignis (Flagstone do one too). This is an account where you can spread deposits across many different banks with decent rates from instant access to a 5 year tie in, so at least you will pull 30-40k pa hands free.

[LooneyTunes]

dalenorth said:

We have just opened a cash account with Insignis (Flagstone do one too). This is an account where you can spread deposits across many different banks with decent rates from instant access to a 5 year tie in, so at least you will pull 30-40k pa hands free.

Out of interest, how did you get comfortable with using one of these?

The concept of cash management platforms is sound, but I’ve never been able to get over the fact that ultimately they ask that you put a significant cash balance on deposit, via a system run by a small/smallish company, where the funds are then placed in accounts where you are simply the beneficial owner. I.e. your instant access may prove to be less instant in the event of the hub provider/aggregator experiencing tech or solvency issues.

There are other similar players in the market but, based on most recent accounts filed, one of the firms you name is heavily loss making (to the extent that it looks like they may need to raise capital soon and/or trim costs), and the other has a total equity of only around £2m. I’d be much more worried about their stability than any UK banked I put money with.

Assuming you’re comfortable with the inherent lock-in, there’s nothing fundamentally wrong with the idea of managing via beneficial ownership if the deposit aggregator has their tech sorted. If they don’t, and either fail themselves or are unable to provide FSCS with the relevant data in the event of a bank insolvency, you could experience issues.

People tend get fixated on the banking risk and rarely look at the counterparty risk they’re introducing in using these services. If one went pop then things would probably get sorted eventually but in my view they shouldn’t be used for anything other than genuinely surplus cash.

[Phooey]

jrb43 said:

With that sort of money, I’d be turning the thermostat up to 18 deg.

I read somewhere that quite a few FTSE100 companies use short term money market funds to park cash. If it’s good enough for them..

This is a good guide “best places for cash”. Bear in mind it was created Feb 23rd so rates may be better than published.

https://www.foxymonkey.com/best-places-cash/

Money Market Funds can be particularly useful as a higher-rate taxpayer or for holding cash funds in an LTD company. Most FTSE 100 companies use them by the way.

Edited by Phooey on Friday 24th March 06:55

[Mabbs9]

soad said:

"Buy land, AJ, 'cause God ain't making any more of it" -Tony Soprano

Tell that to Iceland, Hawaii etc.