The £1 Million Plan

Every Sunday, I send you something to THINK about, a question to ASK yourself, something to TRY and invite you to SHARE.

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THINK

“I have just three things to teach: simplcity, patience, compassion. These three are your greatest treasures.”

– Lao Tzu

You can’t believe what you’re seeing…

“What the actual Fuck!”

You rub your eyes, you squint, and you emulate Roger Rabbit when he first sees Jessica Rabbit.

“Why have I got £1,000,000 in my bank?”

And then, out of nowhere, pops up this familiar-looking, ginger-bearded, four-eyed, handsome (in an unconventional way), blue-skinned man with a ponytail on the very top of his head, his jewellery is a little over the top, but it makes his modestly-muscular body really pop, and he seems a cheery fellow, so he’s probably worth listening to…

And then he speaks…

“My name is Huwphoria, the Wealth Whisperer. Once a century, I give one hard-working person a large sum of money to spend in a responsible way to test their financial understanding. You have been selected. You now have £1,000,000 to spend as you see fit. Spend it wisely.”

You can’t believe your luck!

You heard the rumours about the Wealth Whisperer, but you thought it was all hocus pocus.

You do what any normal person would do…

Ask him for a selfie and immediately set it as your new profile pic before he fucks off out of thin air.

Oh, and you think about how you’re going to spend £1 million. 😳

Spending £1 Million

You’ve come to terms with your overnight wealth. You’ve posted a carousel AND a story on Instagram to prove you met him.

NOW WHAT DO YOU DO?

How do you allocate your newfound wealth in a responsible way to provide generational wealth for your family and maximise life?

Here are some areas to get your juices flowing:

1) Destroy Debt

One of the first things to consider is clearing all of your high-interest debt.

You could consider eliminating student debt or even a mortgage to set a solid foundation. It depends on how big those liabilities are and how you respond to the suggestions below.

How much of the £1 million would clear your debts?

[You don’t need a £1 million to Destroy Debt. I’ve created a free course in my Community, so you can start now!]

2) Emergency Fund

Once the debts are cleared, you decide on a reasonable amount of cash to set aside in case of emergencies.

The generic online advice is 3-6 months of LIVING EXPENSES. If you work in a less established industry, are more risk averse or self-employed, you might consider boosting this to 6-12 months.

I recommend keeping up to 3 years of living expenses in cash for retirement.

How much is 6 months, 12 months and 3 years of living expenses for you?

3) Invest Wisely

You don’t want to fuck this up! You’ve been given a gift, and you want to make sure your money is working hard for you.

If you play this right, you could live on the investment returns AND grow your wealth over time.

4% Safe Withdrawal Rate: £1 million invested in stocks would grow approximately £100,000 after one year (based on 10% returns). You could withdraw 4% of £1,100,000 to live on (£44,000), leaving you with £1,056,000 in your portfolio. The pot could then grow around 10% the following year to £1,161,600, and you’d take another 4% out to live on (£46,464). As you can see, theoretically speaking, you could live on your portfolio as it grows over time.

Would 4% of £1 million be enough for you?

Property Investing: You could buy numerous single let investments or a couple of commercial units to rent out for semi-passive income. It will involve some work, but not too much.
- Single Lets – Range from 4-12% a year. (£40k – £120k a year)
- Commercial – More commonly found around 6-10% a year and more passive due to the FRI Lease. (£60k – £100k a year)
  - Plus, both strategies would benefit from capital growth and rent increases over time.
- Developments – You’d need to know what you’re doing or work with someone who does, but you could buy the land/building, develop on it, and rent out the units. You could get most, if not all, of your investment back out upon refinance or make a profit from flipping the whole thing.

Would you be willing to put the work into building a property portfolio for higher profits? Despite what “experts” say, property isn’t passive. It’s semi-passive.

Business: You could start or invest in a business to generate high levels of income or semi passive income. This is a much riskier way to allocate your capital, but the upside is limitless!
- You could start that business you’ve always dreamed of owning. Your very own coffee shop, campsite, gym, recording studio, etc.
- You could help a talented entrepreneur get started by investing in their business for a share of equity. Eg. “Huw, here’s £100,000 to hire a videographer, editor, and content manager in exchange for 20% of your business.”

Would you back yourself in business with the financial resources behind you? Or would you like a more ‘passive’ existence?

Crypto: You could allocate a chunk of cash into Crypto in the hope of it going to the MOOOOON! 🚀🌕
- Crypto is highly volatile, unregulated, not secure, and not tax-efficient, but it’s still the best performing asset of the last decade, so you want SOME skin in the game.

How much seems reasonable to you?

You know how much you spend in a year. What blend of investments would provide the income you require whilst ensuring you won’t risk losing it all?

4) Personal Development

You could Invest in yourself. 🫵

Financial freedom should support growth in both finances and personal fulfilment.

This could go towards further education, upskilling or learning new skills to enhance your entrepreneurial/investing prospects.

You might be open to financial coaching and working with a ‘Financial Huwizard’ (it’s a stretch, I know!) to ensure you’re not draining your cash pile but maximising your returns over time whilst minimising risk.

5) Luxuries

Can you afford it twice?

“Back off Huw. Let me buy a Lambo.”

There might be a little ‘something’ you’ve always wanted. You know it’s not a good financial decision, but you need to scratch that itch. And let’s face it… since the wonderful Huwphoria entered your life, it’s REALLY started to itch.

What percentage of your £1 million seems reasonable to allocate to guilt-free spending?

5%? 😄

10%? 😊

20%? 😐

More? 😳

6) Giving Back

You could consider giving a set percentage away to a charity, a cause you really care about or family members in need of help. The emotional fulfillment that comes from making a positive impact on others is unmatched.

Or the kids in Africa can just wait until Red Nose Day.

7) A Time Machine

Not the Marty McFly DeLorean type.

I’m talking about the world’s most precious asset. Your time!

How could you allocate your money to win back time?

Hire a Virtual Assistant to complete your online admin.
Hire an Executive Assistant to make business decisions on your behalf.
Hire a gardener and cleaner to do the jobs you hate.
Hire a chef to cook nutritious meals.

How could you outsource the lower cognitive, lower value, less enjoyable tasks in life to allow more time to be spent doing the higher cognitive, higher value and more enjoyable jobs?

£1 Million Isn’t That Much

£1 million might seem like a ‘huwmungous’ (I’m almost done, I promise) amount of money, and it is, but trying to live like a Baller on £1 million won’t last you very long.

Depending on your lifestyle and investment choices, it can last a lifetime or disappear very quickly.

I deal with coaching clients who live on £800 a month to £8,000 a month.

The former would be set for life.

The latter would more likely drain it in a decade.

I’m not here to lecture you on spending less and going ‘without’. I’m simply highlighting that if you control what you spend, managing large sums is a breeze.

If you don’t… it’s a bigger challenge.

It’s the difference between running a marathon at 9 stone (57kg/126lbs) after 12 months training, verses running it at 18 stone (114kg/252lbs) with zero training.

Financial speaking – How much excess weight and training deficiency do you have?

How I Would Spend £1 Million

Let’s suppose I was gifted this amount from ‘Huwphoria’, back when I was working as a sales manager and prior to starting my publishing, property and media businesses.

What would I do?

At the time, I was living very frugally (<£10,000 a year).

The quick and easy answer would be to invest that money in the stock market and live on the 4% SWR. I could expand my means and still take less than 4%.

In fact, the average annual expenses from people I work/talk with is somewhere around the £35,000-£40,000 mark, which would ALSO fall within the 4% SWR.

So, I’d just do that!

But that would make for a pointless section, so let’s change my circumstances a bit…

… Let’s say I was living in London, working in the finance industry. I had 12 kids, 12 Dobermans and a Lambo in the driveway. The £1 Million would barely last me 5 years with my current spending habits.

What would I do THEN?! 🤔

Supposing my shitty finance job covered my living expenses with nothing left over to invest, and Lou was not the frugal, supportive person she is, but an entitled, spendy so-and-so who refused to lower her lifestyle, and I wasn’t allowed to leave her, the job or London…

I’d likely invest in property developments and fund the work 100% in cash (ie. no borrowing from finance companies or investors). I’d attempt to flip the developments as many times as possible to grow my cash pile.

There’s a level of risk to this choice, but having completed 3 x developments, I’ve gained experience and knowledge and know what’s possible.

I would NOT invest in property to rent right now because it would take me too long to cover my shitty finance job’s income.

I might slice off 10-20%, depending on the property deals, to put into ISAs and SIPPs. I wouldn’t go too crazy with stocks because it would take too long to cover my £200k a year living expenses (£5,000,000 portfolio in stocks required!).

With each flip, I’d put a little away in stocks to compound in the background.

I’d slice off 5% for Crypto. I believe in the technology and I’m prepared to risk that money. I might lose it all by someone hacking into my account, the broker liquidating or backing a shitcoin (unlikely as I only invest in Top 10 coins), but it’s a gamble I’m willing to take for the potential upside.

Development’s take time. My third development has taken over 2 years. I know the ROI will be good but it’s going to take some time to flip multiple developments to eventually cover my living expenses in rental income or stock returns.

Once the cash total I’d generated from my flips was getting closer to £5 million, I’d consider putting more of my capital towards stocks and earning more passively.

The obvious challenge that my Davies Dozen family have is their inability to control expenses. With a high cost lifestyle, they make financial freedom far harder than it needs to be.

Expenses aren’t the be-all and end-all, but they’re significant.

Re-read my first answer for a more simple approach.

You Don’t Need £1 Million

First of all, you’re closer to £1 million than you think.

If you invest £250 per month into a low-cost global index fund, which grows at 10% a year, you’d have £1 million in 36 years.

…If you invested £500 per month, you’d get there in 29 years.

…If you invested £1,000 per month, you’d get there in 23 years.

…If you invested £2,000 per month, you’d get there in 17 years.

But more importantly, most people don’t need £1 million.

Financial Freedom is achieved when your living expenses are covered by your investment returns. If you live on less, you require less. Much less!

We’ve already established with the 4% SWR that you’ll need £1,000,000 if you live on £40k a year.

…if you live on £30k a year you’ll need £750,000.

…if you live on £20k a year you’ll need £500,000.

…If you have a workplace pension, qualify for a state pension or invest in property/business, you’d need even less.

…If you had a fun part-time job earning £10k a year, and you spent £20k a year, you’d only need £250,000.

Here’s my simple formula for Financial Freedom.

There are 3 variables that help you achieve Financial Freedom:

Income – You want to make this as high as possible.
Passive ROI – Invest your disposable cash into passive investments that outstrip inflation. Stocks are the highest returning passive option. Property involves more work, but can yield bigger returns than stocks if optimised. Many property investors do not outperform stocks.
Expenses – If you live on less, you require less money invested to cover your living expenses. Find the balance to maximise life, whilst living on less.

You don’t need to live like ‘poor person’, get a six-figure job or understand day trading to become financially free.

You can get there by making progress in all three areas of the ‘Financial Freedom Formula – controlling expenses, earning more and investing wisely.

Start with your biggest bottleneck, and work on it over time.

Seek progress, not perfection.

You don’t need ‘Huwphoria’, and you’re closer than you think.

Reflect and share this with someone.

ASK

“How would you allocate £1 million today?”

“How much do you ACTUALLY need to become Financially Free?”

Write down what comes to mind.

TRY

I think it’s interesting to play around with exercises like this.

Give it a TRY.

How would you allocate £1 million today? Would you…

Destroy Debt
Build a cash pile for emergencies
Invest in stocks, property, business or crypto
Invest in yourself
Luxuries
Give back
Outsource tasks for time

Do you know what your Financialf Freedom number is and how long it’ll take you to get there? (The Financial Freedom Planner, will work all of that out for you)

If you want to get there faster, focus on the 3 areas of the Financial Freedom Formula – Controlling Expenses, Earning More and Investing Wisely.

Change your environment. Get around people want the same thing or ideally, who’ve already achieved it, like the ‘Financial Freedom Fighters‘.

So, if Huwphoria popped up from nowhere and gave you £1 million, how would you spend it?

HIT REPLY and tell me your plan.

I read and reply to every email, and remember, I’m rooting for you!

Remember: Little by little, a little becomes a lot.

Reply to this email and share how it went for you. Let me know if you’d prefer to remain anonymous.