As the dust settles and your pulse returns to normal, one of the questions you will probably ask yourself quite quickly (or, if not, the organisers of the lottery will) is where you will have the proceeds paid. Contrary to popular belief, it is not possible to opt to receive the win in 'actual' cash; the organisers insist on paying it to your account by bank transfer.
There is a myth that Coutts automatically has the right to handle jackpot winners' funds, though this is just that. While historically their reputation (reportedly as bankers to HM Queen Elizabeth II) may have made them the natural choice for lottery winners, recent events (including a take over by Royal Bank of Scotland and various de-banking scandals) make them seem altogether less appropriate as potential custodians of your winnings.
Yes, the money is yours. Following verification of your ticket and a meeting with the lottery organisers, they will ask you for your bank details so that they can transfer you your winnings.
We consider our zero-risk, high-interest private client cash deposit account to be the only sensible place to send your funds. Safeguarded securely at the Bank of England, winners' money is held entirely risk-free at a very high rate of interest which can either be paid out to the winner each month or held over and compounded.
The amount of income you can generate from a jackpot depends on three things: (1) the amount you win; (2) the amount you spend on an ongoing basis; and (3) the rate of return you get on your investments/savings. There's not much you can do about the amount you win, but understanding your needs as early as possible will help you to get a good handle on whether you have won enough to retire.
To illustrate, however, we've set out a few scenarios...
As you'll see from our high-interest savings calculator, over a 5-year period with a Bank of England base rate of 5.00%, you could receive £1,052 a day (£384,227/year and over £30,000/month) for as long as the interest rate remains that high. Given that this is more than 8 times the average London salary at the time of writing (the ONS says it's £44,370), it is more than likely that you could live off a £10m win without needing to spend down any capital at all.
While a million pounds used to be considered a huge amount of money, people tend to think that these days it wouldn't go so far as a lottery win. Again, our compound interest savings calculator shows that after 5 years of compound interest, that could be worth £1,185,395, a return of over 18%. If you were to win £1 million and keep working, this would represent a very generous slush fund for you to be able to use for holidays, cars and treats as the mood takes you.
The internet is littered with lists of things to do if you win the National Lottery or EuroMillions. Most of them involve buying super-homes, supercars or travelling on exotic holidays. Much more important, as Allwyn, the operators of the National Lottery will no-doubt tell you, is looking after yourself and your family from the moment you receive the funds.
Sudden wealth syndrome (SWS) happens when coming into a large amount of money, like a lottery win, leads to unexpected stress, feelings of guilt, or worries about losing the money. This can make people feel isolated or cause tension in relationships, sometimes leading to impulsive spending or poor decisions. Often, people will decide not to tell their nearest and dearest about a lottery win for exactly this reason.
Here are three things to keep in mind to avoid SWS:
By staying grounded, you’ll be more prepared to enjoy your newfound wealth without letting it cause stress or strain on your well-being.
We can help with the 'taking time' element. Our zero-risk, high-interest savings accounts offer the perfect safe haven for your winnings, safeguarded and protected for you at the Bank of England, ready for whenever you need them. This affords you some peace of mind, but also sufficient time to start to plan and decide on some of the other big decisions you will have to take, like who else (if anyone) you would like to provide for and to what level.
This is a question best tackled between you, your advisors and trusted members of your family. Often, those who have experienced a significant windfall from a lottery win will engage the services of a financial advisor to work alongside their accountant and build them a wealth management plan which will include a wide range of considerations including your approach to risk; how 'liquid' you require your wealth to be; your financial planning/will intentions; your taxation; your charitable giving aims and much more.
Part of this financial planning will almost certainly include an element of holding funds in readily-accessible cash. For this, our 1-month Notice Account is absolutely perfect, as you can have as much as your wealth paid out as you wish by simply giving 30 days' notice, but while we have it you will be earning significant rates of interest.
There are plenty of private banks in the UK, which are renowned for their ability to anticipate your needs, and generally come with useful perks as well. They often carry large ongoing fees, however, and some of them (including Coutts) have very strict requirements and criteria about who they will open an account for. Their savings accounts are not known for paying high rates of interest, but they can offer creative lending and finance and wealth management services.
Our top savings recommendations for lottery winners are National Savings and Investments (NS&I) and, of course, ourselves.
Backed by HM Treasury, ns&i provides 100% security on all deposits. They offer premium bonds and direct saver accounts for amounts of up to £2 million. For lower sums, this is the recommended place for clients to safeguard their funds.
For larger sums, from £1 million upwards, DOS & Co., a Certified B Corporation in London specialising in the establishment and operation of UK single family offices, offers the perfect solution. These accounts pay as much as 85% of the Bank of England Base Rate, varying with that rate, and DOS & Co. will work with you to build a blend of instant-access, notice and fixed-term accounts (all held in the same way) to maximise the total return for you while maintaining flexibility for your plans.
In our view, these are the only accounts that winners should use for their lottery winnings. You can find out more about those here.
