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Stuart Ritchie

By: Stuart Ritchie

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August 13th, 2019

Updated for 2019: How we helped lottery winners stay rich (3-point plan)

Financial Planning

Just imagine winning the lottery. 

You could do pretty much anything.

Give up work.

Take luxury holidays.

Huge houses....Beautiful cars.

No worries for the rest of your days.


Colin and Chris Weir from Scotland were Europe's biggest lottery winners in July 2011.

The husband and wife were catapulted into the Sunday Times Rich List above Beatle Ringo Starr and Sir Tom Jones with their £161 million win.

Their dreams had come true. 

But for many, money doesn't always equal a care-free life. 

Many famous faces have already taught us this.

Jonny Depp

And for lottery winners, statistics show 70% end up broke.

A third go on to declare bankruptcy. 

Without a plan, millions can become thousands in no time. 

For so many, the tale of rags to riches often ends up in rags again. 

But why? 

A lottery winning couple came to us for help.

They'd originally won £13 million.

They were aged 52 and 57 at the time of their win.

A labourer and bank cashier, living in a modest three-bedroom terraced house...

Their joint income was £45,000.

By the time they sought financial advice, they had just £8 million left.

£5 million spent...

On a dream country home complete with electric gates and a long driveway for their two new top of the range BMW’s.

Plus six more properties for family and friends.


Nothing lasts forever

Since The National Lottery started in 1994, over 3,000 people have become millionaires. 

But how long do they remain so?

Several winners who have scooped millions of pounds have ended up spending it all with little or nothing to show for it.

When Pete Kyle won a £5.1 million jackpot in 2005, he said it was "like a dream".

Stunned, the retired Royal Artillery gunner vowed the money was "going to change" his family's life.

And for a while, it did.

He took his relatives on lavish holidays, bought cars and boats and swapped his home for a luxury five-bedroom mansion boasting a steam room, bar and pool.


But just three years later, Pete was reportedly broke and on benefits.

He had squandered an eye-watering £4,600 a day.

And was now in his retirement years. 

While Pete was spending, the costs of goods and services was rising. 

He didn't have a plan to last his lifetime. 

No savings or investments. 

What if I told you, that for people with 40 years until retirement, £10 million is the amount they should be aiming to save?

That’s a lot of money, by anyone’s standards.

But inflation means £10 million may just about cover a comfortable retirement.

£1 million will have the same spending power as £306,000 today.

£10 million will equal £3,060,000.

Over the course of that retirement – it will shrink again. 

Our lottery winners now had £8 million left.

They were heading for financial disaster in their early 70s because they had started to spend their winnings at an unsustainable rate.

Their general spending had spiralled out of control at £280,000 (after tax) per year, as well as one off expensive gifts.

The result if they carried on like this?

They would have to start selling the houses they had bought for family and friends.

And if they kept up their spending and tried to match inflation for 30 years, then their main home would need to be sold too.


Even lottery winners need a financial plan

By carrying out lifetime cash flow modelling, we were able to illustrate the point at which they would actually run out of money.

A cash flow plan looks like this:


This sobering realisation led to them to follow this three-point plan:


1. Get professional advice

Our clients' lives had changed forever.

The drudgery of things like bank accounts and wills needed to be sorted.

Not to mention estate planning and tax planning.

It was time to do the maths.

Put their life into numbers. 

To partner with a fiduciary who was ethically bound to have their best interests at heart. 

One who would take the strain and leave them feeling confident that they can relax and enjoy their life. 


2. Plan now, spend later

Most wealthy people talk about their investments, not their spending. 

Our lottery winners agreed to stop spending large lump sums and focus on the long term. 

It was time to start thinking about the future.

(Theirs and their loved ones, who they wanted to continue helping). 

To get back control. 

They needed to put their retirement plans into action, while there was still time. 


3. Invest systematically 

The couple needed a globally diversified portfolio of low cost investments, within their low risk tolerance.

A clear and simple way to preserve and grow their wealth over the years to come. 

Choosing a globally diversified portfolio meant they would benefit from the growth of the entire market...

Avoiding trades that attempted to predict what’s ‘hot’.

(Needles in haystacks).

Once set up, it would be left alone. 

Letting the markets work for them. 



A lesson you can take from this case study

Investing for the future always makes more sense than spending in the now.

Build your wealth on the right foundations. 

Spend less than you earn and invest wisely. 

Take financial advice while you're in the strongest position to do so.

Don't put it off, like our lottery winners did, because they risked frittering away their opportunity.

There's never a better time to sort your financial position out than right now...

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Editor's note: First published in May 2017. Updated in August 2019.

About Stuart Ritchie

Stuart Ritchie is a Chartered Financial Planner, APFS, Chartered Wealth Manager, Chartered FCSI

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