How to invest One Million Pounds by Simon Zutshi

“What would you do if you had £1 Million to invest?” Wouldn’t this be a nice problem to have!

I am frequently asked this question by people who want advice on how best to invest their money, although it is not usually for quite as much. My answer is always the same. It depends what you want to achieve: cash flow, or equity growth as this will affect the type of property you invest in!

People respond by saying “No Simon, I want to know what YOU would do if you had £1 million to invest?” Well that’s a bit different. I already have a great cash flow from my portfolio and I have enough property for my long-term pension plan, so my situation may be slightly different. However, in this article I will explain how I would personally use the money.

Borrowed Money?

First of all; we need to determine if the £1 Million is free and clear cash or is it borrowed money, on which interest is payable. Let’s assume it is borrowed, as this is probably the circumstance for most people reading this article. Let’s say the cash is released equity from property and assume the cost of borrowing of is 6% per year. At this rate of interest, the monthly interest payment would be £5000 on borrowings of £1M. My first objective would be to use half of the funds (in this case £500,000) and invest it in such a way to generate at least £5000 a month. This would enable me to cover the borrowing on the entire £1M thus leaving me rest of the funds (£500,000) to play with at no cost.

To generate £5000 per month I would need to work the first £500,000 to achieve an income of 1% per month (12% per annum). It is very possible to achieve this by working with other investors who have found great investment opportunities, but are unable to funds all of the deals they are finding.  This is the case with many of the investors on my Property Mastermind Programme, who just have too many deals to do on their own.

Money to Invest?

If you have money to invest you are in a great position to get other people to do the running around and bring great deals to you. It is critical that you educate yourself so that you can differentiate between the good and not so good deals. With plenty of cash you can afford to be fussy and cherry pick the very best deals. You can either find projects when you get a guaranteed return of 1% a month or you may become a joint-venture partner with potentially higher returns of maybe 20% per year will of course there is always a bit more risk.

Personally, I would find deals that require some initial funding, where we can add value, and then refinance after 6 to 12 months to take all of the money out and be left with a property with equity but none of my funds invested. This is a great way to rapidly build your portfolio.

Having covered the cost of borrowing the entire £1M utilising the first half as described above, that leaves £500,000 for me to invest without necessarily needing to gain a return on that money.

Refinancing Investments

Refinancing investments is my preferred option, although sometimes I find deals with fantastic cash flow, which require cash deposits to be left in them for the long-term. I am happy to do this as long as there is a great return on the invested funds of at least 20%. There are many HMO and multi-let properties that fall into this category. Assuming a 75% loan to value borrowing on these HMO properties, with £200,000 for deposits, I would be able afford between four and six HMO properties, depending on location. Purchasing this type of property (which should generate £500-£700 net profits per month property) could give me an extra cash flow of £2,500 to £4000 profit per month.  I don’t really need that extra cash flow so I would use this extra income to build up a bigger cash reserve for the future.

Taking about cash reserves, I would want to keep £150,000 in reserve for those occasional fantastic opportunities that come up which require a very quick cash purchase. If you are looking for them, the “deal of a decade” comes up about once a month.

I would keep £50,000 to use for options deals as there are some fantastic options that do require a few thousand pound’s investment.


The final £100,000 I would use as a long-term hedge against future potential high interest rates. My personal preference is to invest this money into physical silver and gold. Both of these precious metal commodities have dramatically increased in value over the last few years and some people believe they have reached the top of the market. However, I have consulted with some of the best commodity experts in the world who really know what they are talking about, and I now believe that these commodities could significantly increase in value over the next 10 years.

To summarise: 50% of this money invested to generate sufficient cash flow to cover borrowing of the total £1M. 20% invest into long-term projects to generate cash flow. 15% I would keep ready to use for rapid cash purchases. 5% to buy options. The remaining 10% to diversify into commodities as a long term hedge.

A great article by Simon Zutshi

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