June 2017 – FIRE v London

One of my readers, Peter, liked my post (or its readers’ comments, more to the point!) about Jane and her £10m quality problem. He’s shared with me his attempt to find a new IFA. Below is his initial introduction email, suitably anonymised, to an IFA he’s been intro’d to.

Peter is very well informed about FIRE. He’s thoughtful and articulate, and lays out a pretty clear strategy.

I’d love comments on this blog about what you think of his approach. I will comment myself, below this post.

In the meantime, it’s over to Peter.

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Dear [Ifa]

Below is a summary of my situation. I’d be interested to hear how you could help.

Best wishes

Peter

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My background:

I am 39 years old
4 children (all under the age of 10)
I am not (yet) married
I am UK domiciled and resident

My work background:

I have been an entrepreneur for well over 10 years.

I’ve built and sold one business. I made net proceeds of around £10m (and exhausted my lifetime entrepreneur’s relief allowance).

I am now running my second business. I would anticipate my ~40% stake is currently worth around £10m. However, as with my previous business it could be worth zero (in an unlikely scenario though) up to a potential £30m+ in a ‘home run’ outcome 2-4 years from now. This is completely illiquid and high risk. I don’t count it at all. CGT would be due on the proceeds.

My investment history over the last 5 years

When I had my big ‘pay day’ from my first business a few years ago, I immediately bought lots of property. Mostly residential. Total deployed was just under £8m in/around London.

At the time, I knew zero about ‘conventional’ investing. “Sharks trying to sell me something I don’t understand”, etc was how I saw it. Thankfully I didn’t fall into the trap of immediately putting it all into an offshore bond and all into high-fee funds (as suggested by the private bank who was trying to become my new best friend back then…)

I did what a lot of people do when they have zero understanding of ‘conventional’ investing and turn to property. The (flawed) logic being “you can touch it”, easy to understand it (or so I thought), you can gear it up with debt to accelerate gains, “you can’t lose in property”, etc.

Fast forward a few years and to cut a long story, I absolutely hate being a landlord. Even with a competent property management company, it’s a constant head ache, so many hidden fees which lower the return, ongoing damage to property, constant management required, a big time sink, etc.

I hate being a landlord so much, that I’ve taken the decision to sell everything (apart from my principal residence, which is debt-free but has significant running costs). Not only do I not want to be a landlord, but I also don’t want to own the assets long term. I don’t want to be trapped in the assets if I change my mind at a late date and there are large inflation-linked gains with CGT due on switching, etc…

So what now?

Continue reading “How can an entrepreneur start investing £10m for FIRE?” →

The punning opportunities last month are almost behind us.

In fact election polls have suggested that even May might be behind us. The Prime Minister that is. If she ends up with a reduced majority, or even just a marginally higher majority, then she’ll have the Tory attack dogs at her heels in no time.

The big news in geo politics was Macron winning the French Presidential election. Markets had mostly priced this in, but the Euro climbed slightly and the Eurozone equity markets rose over 2% too. Over two months a Brit investing GBP in Eurozone equities has returned almost 10%, including currency movements.

In the meantime, with Labour’s goalkeeper being almost absent from the pitch, Theresa ‘week and wobbly’ May has suddenly looked like she could even miss an open goal. Markets have marked the pound down. For FTSE-100 this has been a bonus, as it has heavy exposure to the Eurozone, so FTSE-100 is up 4.4% on the month, reaching record highs.

In other news Australian equities continued their slide. And Fixed Income had a slow and steady month – as it often does.

Continue reading “May 2017: Markets voting against the UK” →