Lotto 2

What would you do if you won € 13.7million in the lotto ? That’s the interesting question that someone in the west of Ireland is going to have the pleasure of answering this week.

My advice is simple

  • Sit on it for at least 3 months while you deliberate what you are going to do
  • Take independent financial advice but remember too many cooks spoil the broth
  • Preserve and grow your wealth – and in that order should be the philosophy.

Placing the monies on deposit poses issues …

  • Deposit takers are only guaranteed via the Deposit Protection Scheme within Europe for € 100,000 per person per institution (remember what happened in Cyprus… )
  • Even the current best deposit interest rate on demand from Rabo Direct, the only AAA rated bank in Ireland, has limitations…
    • 1.25% up to € 50,000.. that’s a net 0.885% after DIRT tax ( deposit interest retention tax of 41%)
    • Over € 50,000 it drops to 0.5% (net 0.295% after DIRT)
    • Over € 5,000,000? They offer a whopping 0% … at least there’s no DIRT
  • Let’s assume they can obtain a rate of 1.15% ( currently the best 1 year rate in Ireland from KBC Bank ) equivalent to a net 0.6785% after DIRT, this will yield € 92,954.50 per annum or € 7,746.21 per month… certainly enough to live on and not disturb the capital…

But what other options are there – here’s a few ideas for the lotto winner :

  • Property ? The average Dublin south – the most expensive area in Ireland to buy – price of a house is € 337,411 …the lotto winnings would buy 40.6 of these “average” properties.
  • The world’s most expensive home is of course Buckingham Palace (for virtual tour – ), worth an estimate £1.56 billion or € 2.08billion. Our lotto winner could buy 0.66% of the Palace if they were allowed !
  • Cars ? The Aston Martin DB10 was made specifically for James Bond in “Spectre” – you may remember the car chase around St Peter’s Square Rome in the film – and there were only 10 made, hence DB10 at a cost of £1.25million each. Our lotto winner could buy 8 of these cars!
  • Gold ? They say that 10% of your wealth should be in a precious metal. With huge volatility and uncertainty raging on the stockmarkets at the moment, plus the price of gold at a relative low level now ( in 2011 it reached the peak of $1,913 per troy ounce while today it is c. $1,090 per troy ounce ) investing in the yellow metal commodity could be considered a prudent move as part of a balanced portfolio… our lotto winner could buy nearly 880lbs of gold.. equivalent to 6 Lionel Messi’s – weight wise – running round your back garden ( if you had to buy him for your football team, you would need at least 10 times those lotto winnings ! )

No it’s not easy but it is a nice problem to have. I would certainly welcome the opportunity to advise and would ask the lucky lotto punter to remember the wise words of Mark Twain’s definition of a bank manager …someone who gives you an umbrella when it’s sunny and as soon as it starts to rain, wants it back… .. Caveat.

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