A cool £1 million landing into your bank account would surely be a dream come true. Millionaire status appeared unattainable for most of us once upon a time. Yes, you may work hard, working every hour possible but without that big break, being a millionaire always remained elusive.
That all changed when lotteries became mainstream. Not just any lotteries though. We’re talking about lotteries that could make you a millionaire (sometimes several times over) in an instant. If that £1 million finds itself heading your way, you’re going to need to know what to do with it.
The biggest lotto losers
So why are we telling you this and sharing what can only be described as horror stories? The hope is that these stories may strike a chord and make you realise that how you plan to invest any lottery winnings is essential. It is all too easy to be an overnight millionaire and then fall quickly to zero.
So where do we start to make sure that you’re not the next news story, yet another who has blown millions in record time?
Should you announce your wealth?
You may well find it difficult to keep your lottery winning quiet, or certainly do so for any period of time. Whether you want to tell family and friends the moment the balance hits your account is a personal choice, but one that can have consequences either way.
Telling friends and family can create certain expectations. Your sibling has been struggling with a bit of debt. Surely you can help out? Old uncle Joe, who you haven’t seen for 20 years, has always had a dream of owning his own business, surely you can fund this now? I’m sure you get the picture, and it doesn’t take long for all of these requests to add up and quickly drain your funds.
On the other hand, keeping your win a secret may lead to resentment from your family. They’re sure to find out at some point. How are they going to feel when they realise that you didn’t tell them?
There is no right or wrong here. Simply being aware of the risk involved either way is enough. You also need to be aware that you do not suddenly become your family bank; there is so much more that you could do with £1 million.
If you’ve been playing any lottery for a while now, maybe you already have your shopping list ready for that big win. A flash new car, that dream holiday (or maybe even a few of them), and that wardrobe overhaul that you’ve always promised yourself. A treat, or maybe a few, are certainly no problem, as long as there is an understanding that money, even £1 million, only goes so far. A car will quickly be worth less than you paid for it, possibly the second that you drive it from the forecourt. Holidays come and go and, although they can offer a lifetime of happy memories, once they’re done, they’re done.
Assets are different. Assets are something that you can use your money for that provide more than just a treat. Assets carry on producing value for you. Whether that be in a regular monthly income, or something that will increase in value over time. Examples of assets where you could invest your money include:
- Property – the possibility of monthly rental income as well as a long-term increase in value
- Fine art and collectibles – these will generally go up in value over time
- Stocks and shares – paper-based assets that can be readily turned into cash and have the potential to increase in value.
- A pension fund – growing in value to fund your retirement
- Savings accounts – interest being paid see the value of your fund’s increase
This list is far from exhaustive, but hopefully, this demonstrates the distinct difference between simply spending your money, and making your money work for you.
Seek out an expert
Knowing that you can use your new-found wealth to create yet more, longer-term, wealth is all well and good, but a reality check may still be in order. What do you really know about stocks and shares? Do you know the best areas to be investing in property? Do you have the slightest idea about setting up a pension fund? Maybe you do, but for the vast majority of us, this would all be uncharted territory.
The wealthiest people in the world all have something in common. Yes, they know what they’re good at, and yes, they know how to make money, quite a lot of it in fact. What they also know is what they don’t know! Those who are wealthy, and remain wealthy, realise that they don’t know it all. Who does? Their strength is that they will seek out help and surround themselves with experts. With £1 million sitting in your bank account and every man and his dog keen to impart their financial wisdom, now would be a good time for you to do the same.
Some of the expert help you’ll need will come from:
- Financial planners
- Tax advisers
Putting it all together
Managing a £1 million windfall isn’t as easy as perhaps we’d all think. It is often easier to spend a million than it is to acquire it in the first place. Treating yourself, treating friends and family, and enjoying the moment are all okay. Alongside this though, there needs to be the understanding that this money will not last forever. The wisest course of action is to seek out investments, with expert help, to make this money work for you and last a lifetime. Don’t be the next to join that list of lotto losers, the ones who frittered it all away.