The other thread on investing your hard earned made me think, if you came into a lot of money, say a lotto win or even better, a euromillions win, what would the advice be to invest your money?
I seem to remember at the height of the bank crisis our savings were only guaranteed up to a certain amount.
So where would you be advised to put £160m safely that it was not at risk (I would guess at that amount you would be quite happy not losing any of it as opposed to wanting any interest on it).
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At the end of the day there is no absolutely safe way of storing wealth. Even government guarantees can prove worthless if the government cannot afford to meet them.
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One would need a great many accounts to shelter £160 million!!
The UK's level of savings compensation was raised to £85,000 in January 2011 by the Financial Services Compensation Scheme (FSCS).
The limit is doubled for joint accounts to £170,000.
However, you only receive this £85,000 coverage once under each bank or building society's 'compensation licence'. Each bank usually has its own licence.
Therefore it is best to spread your savings over as many savings institutions as possible - never holding more than £85,000 in each. Yet a series of mergers, takeovers, joint ventures and subsidiaries has created an impenetrable web for savers to negotiate.
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Dont recall too many swiss banks going bust in the recent crisiseseseses
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Swiss banks are extremely unlikely to fail but its not impossible. There is no absolutely save way to store wealth.
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Invest in land, they're not making any more of it unless you count volcanoes.
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...they're not making any more of it unless you count volcanoes...
And bird sh..., I mean guano.
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>> ...they're not making any more of it unless you count volcanoes...
Glad I dont own parts of the Norfolk coast - severe land depreciation!
Or a part of Mount St Hellens, it disappeared!
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A vicar I know bought a house on the Norfolk coast to retire to.
He joked he had the only house in England guaranteed to depreciate.
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>> Invest in land, they're not making any more of it unless you count volcanoes.
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Iceland would be a good place to invest then. Buy an island on the futures market.
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Iceland?Are you kidding Cliff vulcano's viking women you wouldn't last.:)
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Sexy? Come on Roger you and me would be running a mile.;)
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My £100m would go 10% into gold. And I would expect to lose money on it. But it would be there as a safety net.
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I'd go for property with 160 million. Buy 800 £200k houses in average areas and receive an income close to £500k monthly after basic fees/maintenance. Even if the market slips another 30% you'll still have the same income and a worthwhile £110 million or so of capital asset. Your name will be on all the deeds so unlike a financial markets disaster where your assets only exist as an electronic figure you will have your money in bricks and mortar... as they say.
And if it did all go wotsits up at least you'd have somewhere to live.... a choice of 800.
Last edited by: Fenlander on Wed 10 Aug 11 at 09:29
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...Buy 800 £200k houses...
Nightmare to administer, you'd need a large staff and a building/property maintenance company.
I think what we'd all end up doing is splitting the risk between cash, securities and assets.
The assets would include commercial and residential property, but also things such as gold, art, diamonds, and a few businesses.
Intellectual property is another possibility, a few pop stars have sold the rights to their back catalogues.
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>>>Nightmare to administer, you'd need a large staff and a building/property maintenance company.
Not at all. I have local contacts with a management company who have been looking after that type of stuff for decades and I've allowed for their fees in the net figures.
My point is you know where you stand with a house unlike so many other investment types.
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...Not at all...
My very rich friend has about 50 properties.
He uses management/building companies/professional advisers for everything, but still needs a small staff.
Twenty times as many properties would not need twenty times as many staff, but would take a lot of looking after, however you did it.
He tends to concentrate on commercial property because residential is much more hassle.
The guy's obviously good at what he does, so I think he knows what he's talking about.
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>>>The guy's obviously good at what he does, so I think he knows what he's talking about.
It's a poor assumption to say that just because you know someone who's doing something it's the only way.
In truth if you own property outright you don't need to be very good at anything... the money just rolls in. The management company I mention do the whole service for many foreign investors who never ever see the properties. You don't need any staff.. they do the lot.
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...It's a poor assumption to say that just because you know someone who's doing something it's the only way...
I didn't assume it's the only way.
I cited my rich friend because he runs his properties in the way you suggested.
He must be paying a fair bit for management, so I suspect he could make even more money if he brought some of it in-house.
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>> Intellectual property is another possibility, a few pop stars have sold the rights to their
>> back catalogues.
Getting pretty worthless by the day, the reason they have sold it is because its a diminishing return. Internet piracy has holed that one below the waterline. EMI thought they could rely on that and look what happened to them.
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The investment works very differently depending on how much money you have.
A retail investor (average Joe like most of us) will need to consider risk in a different way than a multi millionaire (say one with £160m).
With a hefty amount of cash, you have lot more options to hedge your cash. It is possible to distribute your portfolio such a way that even if some parts go down under, you will still have enough to recover that (well, exceptions always happen).
But with tiny amount of cash it is not easy to distribute the risk evenly.
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>>I'd go for property with 160 million. Buy 800 £200k houses in average areas and receive
>>an income close to £500k monthly after basic fees/maintenance. Even if the market slips
>>another 30% you'll still have the same income and a worthwhile £110 million or so of
>>capital asset.
With 160m you don't need to put all of it into something so (seemingly - I'm not sure it is) risk averse. Buying 800 2-bed properties in the same county would skew the market horribly. You could manage it in London, but you'd be better off paying to erect 10 80-flat dwellings rather than buying the properties.
Similarly no point in outsourcing the management, you would have your own employees.
And what if the market slips 70%? Nationwide's house price information says that the UK average house price is 170k. Between 1975 and 1997 that value, adjusted for inflation was about 70-80k. At that point the demand for rented properties would slump - don't imagnie that rent levels cannot go down. You have all your eggs in one slightly rickety basket.
Given that level of paranoia, I suggest: A 200 acre farm. Mostly arable, but with a few pigs/cows/hens and a fishing lake and a good shoot - and a nice walled kitchen garden and orchard(and a very large underground Diesel tank). Then it actually doesn't matter what happens to the rest of the world. Audley End would suit you.
Oh yes, and with your remaining 150m, £20m i.e. 100 houses as you suggest, 20m of gold and probably £20m cash/bonds and £20m spread across different classes of equities.
Last edited by: Mapmaker on Wed 10 Aug 11 at 10:01
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>>>And what if the market slips 70%?
Then you will be so much better off than all the other mortgaged houseowners you'd be in a very strong position still.
>>>no point in outsourcing the management.
What... for 12% I'd happliy avoid the issue of staff and premises.
>>>the demand for rented properties would slump.
That's fine just keep ahead of the falling prices so yours are the ones that are taken up.... still be happy if rental prices dropped by 50% with my £250k monthly.
>>>Buying 800 2-bed properties in the same county.
Agreed you'd have to spread the purchases over the country... and personally I'd tend to include a good proportion of 3/4 beds as well.
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Fenlander, that sounds like a very difficult way to earn a yield of 1.9% per annum after tax (0.9% in the event of your 50% reduction).
You might as well just put it under the mattress and spend the money!
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Ahh but you make the mistake of treating it like a business that needs to make money. For the purposes of an ordinary couple gaining such a huge sum they don't need to see every last percent when the actual monthly income would be so great.
Anyway it's what I'll do when my windfall arrives and you can all tell me I'm wrong then.
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>> Ahh but you make the mistake of treating it like a business that needs to make money
So why not just stick this fictional £160m in a bank? For an ordinary couple £160m is quite a lot of cash.
I know you're saying property to avoid losses.... I'd go for a lot of gold I think.
Last edited by: rtj70 on Wed 10 Aug 11 at 11:25
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Property is great: if you are not in a depression and buyers exist..
London house prices have been underpinned by foreign buyers..say no more..
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>> Gold.
Yeah, if you're comfortable with the risk of seeing your wealth reduce by 75%-90%
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Unless you bought it from G Brown.
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Meanwhile a caption summing up markest..
www.nypost.com/archives/covers/
(offensive to those with sensitivities)
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>> Meanwhile a caption summing up markest..
>>
>> www.nypost.com/archives/covers/
Not funny. If my portfolio drops any further, I'll be forced to turn to prostitution.
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Shares might be a good bet long term, shares are significantly depressed at the moment and may go lower but heres hoping they climb to their pre-credit crunch levels soon as I am £69k down at the moment!
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Copy of a post I made elsewhere...
"The FTSE's next target is 4524 or therebouts.. IS POG so highly regarded it will not fall too?
Hint: rhetorical question...
Hint: we are in a bear market.... A 25% correction from 6000 looks the bear sorry bare minimum likely.. In mid 1998 the FTSE corrected with LTCM.. that same 25%.. It took 2.5 months to do it ...Worth looking at and comparing.. time of year is similar...
"
and:
"Volvo
IF the EC had stiuck to enforcing its budget deficit rules (3% of GDP limit) AND policed the reporting of budget deficits (the world and their wife knew Greece lied about every figure under the sun).. and IF the ECB/EC/ECB could agree a common strategy to solve the crisis - of their own making - then I would agree with you.
But as they did not, what's going to happen is obvious... Melt down until a proper agreement is sorted out. I am not holding my breath.
This makes LTCM look like a picnic.. IF Italy goes, all French banks go too.. and then the German and the UK ones as well..
I read somewhere things are betetr than 2008. Rubbish . Then there was the scope to solve bank debt. We are now talking sovereign debt.
Any solution will mean Merkel loses her job.. so no solution is likely.."
www.advfn.com/cmn/fbb/thread.php3?id=23489086&from=8423
(requires registration)..
I think we are going to go lower than 4500.
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>> Unless you bought it from G Brown.
Indeed that would have been a bargain.
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>> Ahh but you make the mistake of treating it like a business that needs to
>> make money.
Not at all. You are happy with a yield of 0.9%. You might as well not bother and stick to a yield of 0% and spend the capital which is otherwise hidden under floor boards. Much less stress.
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>>>Much less stress.
Not really... did I say I like houses. I know where I am with a house. I understand the process, the rewards and the risks.
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Safe place for your money? - CGNorwich
