magic lamp

The phrase "winning the lottery would solve all my problems" is the most throw-away of sentences. It's a statement that's nigh-on impossible to contest because to even test it out you'd need to win the lottery and see for yourself. It's also very easy for someone in the middle class to scream "money doesn't make you happy" from their ivory tower, oblivious to the people living on the breadline or below who are struggling to make ends meet. Give a single parent or a struggling student a million pounds and then tell me that money didn't solve their problems. Contrary to popular opinion though, it is possible for two statements, two sides of a coin, to each be both correct and incorrect. Just as beauty is in the eye of the beholder, so too does money both solve and create problems. There's a reason why new-money people often become alcoholics and drug addicts. When money is the goal, you'll never have enough. And when you don't have enough money, your goal will always be to make more. The idea that both of these sides are somehow opposites seems strange to me. Whatever side you look at, you'll see money causing anxiety and discontent and ill-health.

If you had a magic lamp, what would you wish for? You've probably never thought about it because, let's face it, it's never going to happen. What about if you won the lottery, what would you do with the money? In the UK, you're 45 times more likely to be struck by lightening than to win the lottery, so chances are you've never thought about that either.

Chances are, just like the magic lamp, you've never put much thought into what you'd actually do with a million pounds. After years of Tory austerity, and now a cost of living crisis, most people are playing defence with their finances - and understandably so. When you're living payday to payday, money worries are the forefront of your mind, not money fantasies. Questions like "How the fuck am I paying for my electricity bill this month" take priority over "What would I do if...".

But to quote Jimmy Carr's autobiography, "Money is like a magic lamp, you need to know what to do with it - otherwise all you've got is a fucking lamp." You can't very well say that it would change your life if you've never thought about it for more than a few moments. 

I've tried to spend a huge lottery jackpot on paper before and trust me, it is harder than it sounds! But the exercise came to mind again this morning. I'm renovating the bedroom this week and I've had Heart Radio blasting all morning. They're running a competition right now called "Heart, Make Me A Millionaire" where contestants listen out for an artist and send in a text when they hear one of their songs. Someone is then phoned up at random and can either take a cash amount or enter into a million pound final by saying the words "Heart, Make Me A Millionaire". Personally, the cash amount would need to be in excess of £5k, otherwise I'd be screaming those magic words. If, should that day ever come, I could afford to turn down a few grand, I would. I'd much rather have a 1-in-30 chance of becoming a millionaire. I've no idea what the odds are that they'd phone me, but once they did the odds of actually winning would surely outweigh the 1-in-300 million chance you have of winning the National Lottery. I entered, of course, but won sod-all!

I digress. But the competition got me to thinking about what I'd do if I won the £1m, a far more feasible figure than the £26m EuroMillions figure I worked with in the notes app on my phone one morning on the train to work. Especially considering, all going well, it's the pension pot I'll retire on - as will many people like me. If you've been paying into a decent pension pot from as early as you've been allowed to, you're on the right tracks already.

So, to these winnings. As I say I'd treat it almost exactly the way that many would treat their pension pots. I'd take a cash advance and then invest the rest and live off of the interest.

With the cash, right now I'd put £150k of it down as a deposit on a house and take out a mortgage on the rest (around £50k). Then I'd convert the flat to a rental and let it out. This primarily would be to give me a down-sizing option later in life. People think getting into property as a side hustle is a great idea, but honestly the income I'd make on the flat is hardly worth the effort. I'd need to have all the time in the world and zero need for the money to even bother! Oh, and with the remaining £50k cash I'd buy a new car. Something big-ish, like a BMW 4 Series, Audi A5 or a Volkswagen Arteon. Some kind of fast, four door, family saloon.

I'd then take the remaining £800k and invest it into a low-risk, diversified index fund. I'd then draw down 4% per year to live on. That's it. Simple and boring and very un-sexy. No drink, drugs or hookers for Aedan! £32k per year is a decent salary in the UK. I wouldn't be minted but I wouldn't be skint either. I could pay my bills, go on one or two holidays a year and enjoy a pint or five on a Friday night. In other words, my money life would be virtually unchanged. The big change would be that I wouldn't need to work to maintain that lifestyle. I could go contracting for 3 months in every 12, I could be a part-time barista like I've secretly always wanted to, or a taxi driver - or a full-time volunteer. Working would transcend beyond something I do out of pure necessity and become something I'd do for the benefit of others instead, which if we're honest is where humanity really shines.

With a self-sustaining passive income source I'd have all the time in the world, allowing me to pick and choose what I do with my days. A "mere" million can buy the ordinary person the life-changing  freedom of choice, to work or not to work, which really is the greatest kind of wealth of all. Plus it really puts into perspective the mountain of wealth that the politicians and CEOs of the world are sitting on. We could literally solve world hunger in a year. The issue is the millionaires who remain unsatisfied until their first billion - and then their second, and so on. 

So I challenge you, sit down and, as a paper exercise, try to spend a million pounds. You might find it harder than you thought, or you might burn through it quicker than you'd imagine. Either way, you'll have actually thought about it - possibly for the first time in your life.

~ Aedan.