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.
Below is a summary of my situation. I’d be interested to hear how you could help.
- 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.
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?
I am fortunate to know a lot of smart people. Many of these smart people are successful, and make decent money. Many of those have significant positive net worth. But a surprising amount of them – I would guess over half – don’t choose to invest in publicly quoted equities. They are investing novices, and proud to admit it. This blog post is for them, and their friends/family.
Imagine you are under 50, and have £1k to add to your savings. I don’t mean in your pension, which I think most people handle differently to savings. I mean ‘put aside’ but retrievable on a rainy day / for a house deposit / for school fees / similar.
Where would you put your next 1k of savings? Or more to the point, £10k of savings? Or £50k of savings?
I caught up with a very successful friend of mine this week. She sold a big chunk in her business a year ago, clearing >£10m of cash. She has been meaning to decide what to do with the funds but has been too busy / fearful / etc to decide. So the money has been sitting in cash in her bank account. But she told me today that she’d decided to go with a Swiss Bank and use them to open an offshore bond, putting £5m into it.
I sighed, rolled my eyes, and generally acted in a not-very-empathetic manner. Then I asked her to consider taking £1m of her £5m, doing a simple Do-It-Yourself approach instead, and comparing the difference over a few years. She asked me to drop her an email with some details. So today I sent her an email, which I reproduce below. Please note that this is not financial advice, just encouragement.
Any comments/improvements would be very welcome. For reference, Jane lives and works in the UK, has several kids, and has a husband who works in the public sector. Jane has a net worth of at least £20m.
As promised here is what I would encourage (note – not advise) you to consider as you deploy your funds.