So you've just won £1m on Premium Bonds - what next?

It depends on whether you want to give up work or not. If I won a million I'd buy a decent house and a nice car, take a once-in-a-lifetime holiday and then invest the rest. I'd carry on working, because I enjoy what I do and, even if I left my current job (I might go freelance as job security wouldn't be so much of an issue and I could be more flexible with my time), I'd be bored without it. But with the house paid for and the investment income to cover basics like council tax (and a pool of reserves in case I need to spend money on an emergency), all my earned income can go towards things I like doing. Even though I wouldn't be earning any more, my disposable income would be hugely greater than it is now so I could afford a much more expensive lifestyle. So yes, it would change my life, but just not in the stereotypical lottery winner way.

Mark

I think for just 1M it depends too much on individual circumstances. I have no debts (inc mortgage) and a fairly healthy savings and pension balance but not enough that I could afford to retire now. An extra 1M would make all the difference.

Simplifying slighty, basically I'd put the whole lot into the 2055 0.5% index linked gilt.

Approximately I'd then be able to withdraw about 26K per year (in real terms) so that the capital was exhausted in 2055[1]. Given that most of that would be capital drawdown I'd also have no income tax liability.

I live on less than 26K now - with most of my income going into savings and pension - so this would mean I could retire "in the style unto which I am accustomed".

Tim.

[1] This would make me older than the age any of my grandparents survived to.

It depends on how old you are and how many dependents you have. And the sort of lifestyle needed.

Also on the size of your current assets, so perhaps there's already a property owned outright.

The £1m itself can just be put into a fixed-rate bond paying 5%, so it could generate an extra £50K per year right from the start.

Most people will not worry too much about inflation over the coming decades (for one thing, interest rates would go up and down, and there will be opportunity to do other things with the money), and anyway not all the £50K need be spent, so some can be reinvested.

No-one really needs to carry on working, unless they're someone like the director-general of the BBC on £600K per year, then it would it would only give him a year or so off work before the money's gone!

Ignoring both inflation and investment gains, £1m can pay someone about £20K per year tax-free (equivalent to a £25K salary), for 50 years. So it is still a substantial sum, at least for an individual and his immediate family. And it ought to make a big difference.

In message , Rasta Pickles writes

I would apply to become a member of the current Cabinet, a very junior member of course, because 26 of the 29 are multi-millionaires.

If I won £1m I would distribute most of it among my three children and 3 grandchildren.

I would not be moving far from the rail station, the bus stops and the motorway junction, all within 5 minutes walk or drive, and risk losing the social activities which I enjoy.

Then it would be utterly wasted, and I'm glad you haven't.

I won't, because I'm not daft enough to buy lottery tickets.

And, I guess, how much of the original million is actually available to be invested.

The husband (or wife) might turn round and say "I'm not going to Cyrpus, I'm staying put". So, if the other partner is dead set on the idea, he/she goes out there alone.....but now only has his/her £500k share of the million.

All of a sudden, you find yourself trying to eke together an income for life from about £100k.

I have a contribution to the Cameron Think Tank:

Why do we pay State pensions to the sods who have earned their money in this country and decide to piss off and spend it in sunnier climes? Worse: why do we pay them Winter Fuel Allowance?

Oh shit! I'm growing into a Tory in my dotage...