photo by shirakiphoto.com
If you won €88.5 million on the EuroMillions what would you do? Spend it? Save it? Invest it?
The EuroMillions is really hard to win. The odds of scooping the top prize are 140 million to one. That's as long as a phone number - with area code attached. It’s why the prizes are so huge, with the biggest haul ever clocking €190 million which was picked up by an anonymous winner in Portugal in 2014.
Irish people have been pretty lucky though – the jackpot has been won in Ireland 10 times so far, and maybe you’re the 11th?
So let’s say you’ve just defied those incredible odds and are about to pick up a cheque for €88.5 million, what would you do?
Obviously, there’ll be family to sort out, houses to buy (yes houses - that plural is there on purpose!), cars to buy and holidays to take.
Buying the dream house
Rumour has it that the winner is from Cork, and if that’s true, and that's you, I’m sure you’ll be wanting a decent pad close to home. Perhaps an old nice country house? Well, you're in luck. Liss Ard Estate out by Skibb looks quite nice and it’s for sale at a mere €7.5 million. It’s a decent size too and has lots of bedrooms, so you should be able to do plenty of entertaining.
And the dream car
And with the gaff sorted, a nice comfortable ride will be needed to navigate those tricky West Cork roads. Of course, there are Land Rovers and Land Cruisers and whatnot, but our winner will probably want to go with something a little more unique. Say an Italian SUV?
Famous tractor manufacturer Lamborghini also makes a nice little 4X4 called the Urus which will help you stand out from the crowd. It’s quite quick apparently, and it takes corners rather well. Now, it’ll be fairly exotic in West Cork, but sure, why not… they’re only a few hundred grand after all.
Then once you’ve got all the necessities of life sorted, you’re likely to have quite a bit of cash left over. So what should you do?
What could you do with the cash?
Would you just pop it into the bank and live off the interest? Sounds like a nice easy, hassle-free way to keep yourself going and make sure you have plenty of time to enjoy the good life – and it would have worked just fine a few years ago.
Sadly though, interest rates are at historic lows right now, which means your ability to live off the interest – even on €80 million – will be quite challenging. You might have trouble finding a bank to take that amount of money.
You’ll want to be able to access your cash whenever you want, just in case of those little emergencies that do come up from time to time. So a Demand account will be right for you.
The problem is that the ones that pay half-way decent interest have limits. For example Nationwide UK Ireland’s Demand Deposit account pays 0.51%, but they’ll only take €2 million, so you’ll be stuck for somewhere to put the rest.
Now the big banks, which include AIB, Bank of Ireland and Permanent TSB, will all be delighted to take your €80 million. No bother at all. But they are not going to give you much in return. Their standard Demand Deposit Accounts all pay just 0.01% - that’s one one-hundredth of one per cent - which will yield you just €8,000 a year (no, I didn't forget a zero there). But after DIRT, you’ll pick up just €4,880! Or less than a hundred quid a week… which won’t even be enough to keep that Lamborghini in petrol.
To make matters worse, Bank of Ireland is planning to cut their Demand Deposit rate down to 0.0% from 20 March, and the other banks may well follow them, so you could actually find yourself earning nothing whatsoever in interest!
In fairness, EBS has a Demand Deposit Account that’s 0.40%, which is about as good as you're going to get with an instant access account right now. It will pay you €354,000 per year, but with DIRT now at 39%, the government will take a whopping chunk out of that and you’ll be left with just €216,000 to pay the bills on your 10,000 square foot Victorian mansion.
So, really, you will want to be making more than that if you want to keep that principal intact…
Well, personal finance journalist Jill Kerby was on RTE Radio 1’s Morning Ireland this morning and she had some good advice which is:
- Get good advice!
- Speak to a financial adviser
- Make sure s/he is someone you trust
- Make sure they charge a fee rather than a percentage
- Don’t go public
- And, seriously, whatever you do, don’t go public!