What would you do with £1 million? Pay off the mortgage? Buy the car of your dreams or leave your job and live a life of leisure?

Becoming a millionaire usually takes hard work, dedication, and lots of time. But there could be another way: winning the seven-figure sum on ITV’s popular game show, Who Wants to Be a Millionaire?.

The game show, which has been running since 1998, has seen six people scoop the £1 million prize. The latest winner, Donald Fear, hit the jackpot after answering all the show’s 15 questions correctly in September 2020.

Nowadays, the show’s host is Jeremy Clarkson, who puts the multiple-choice questions to contestants, each with four possible answers the contestant chooses from. As the value attached to each question increases dramatically, so the questions become more challenging as the contestant gets closer to the prize.

If you are a fan of the show, you’ll also know contestants now have “lifelines”. While these changed during the Covid pandemic as audiences were not allowed into the studios for filming, they usually are:

• Phone a friend: the contestant calls a nominated person who helps answer the question
• Ask the audience: the audience says which of the four answers they feel is the correct one
• Fifty-fifty: two wrong answers are deducted from the four, leaving one correct and one wrong answer.

So, now we have looked at the show, let’s look at the four important lessons it can provide investors.

1. Don’t rely on friends when you need an answer

In April 2021, contestant Sarah Knapper lost £93,000 when her friend Barbara provided the wrong answer to a question that would have taken Sarah to £250,000. She used her “phone a friend” lifeline to call Barbara, who then chose the incorrect answer from the four given.

As a result, Sarah took home £32,000.

It’s not the first time a contestant’s friend provided an answer that cost them dear, and it highlights the risk of taking “advice” from a friend about your money and investments.

Financial planners must achieve and maintain rigorous qualifications and commit to strict continuous personal development to ensure they understand your investments and offer the right advice for you.

Unfortunately, well-intentioned friends can misunderstand the markets and your situation, which like Sarah, could cause significant losses for you.

2. Following popular opinion could result in you losing out

In 2019, a contestant called Oli also lost £93,000 when he asked the audience to provide the answer to a question. The audience got it wrong.

This highlights that listening to popular opinion can be as disastrous as asking a friend. This is important in a market downturn, when many investors panic and disinvest.

Following this trend means you “lock in” any reduction in value your investments have experienced, by depriving them of the opportunity to recover and grow again in the future.

As the graph below shows, in the wake of coronavirus the FTSE 100 investments fell dramatically in March 2020. If you had sold your investments at that point, you would have received a significantly reduced amount for them.

Yet by June 2021 the index had recovered and saw growth again. While future performance can never be guaranteed, it dovetails into the long-term growth potential that investments typically offer.

Source: London Stock Exchange

Working with a financial planner means you can talk to someone who understands the long-term implications of market movements, and what your best option is likely to be. This ensures you don’t follow the masses who make a knee-jerk decision they later regret.

3. Making a decision if you’re still not sure could be costly

In 2021 Eleanor Ayres lost £125,000 when she gambled on a £500,000 question. If she had not answered the question, she would have won £250,000 instead of half that amount. Eleanor’s story shows the potential of making a high-risk decision based on the hope of a making a quick, high return.

A financial planner helps you understand where you might grow your wealth, but also helps you understand the potential downsides of a decision you’re contemplating.

Sometimes doing nothing can be the best action to take, and a professional will help you understand when this is.

4. The closer you are to your goal, the harder the decision

The fact the questions become increasingly more difficult as the contestant gets closer and closer to the £1 million prize mirrors one aspect of investing.

This is that the closer you get to your goal, such as a retirement date, the more important it is to make the right decisions. Without the time to recover from a poor decision, your investments or pension could be significantly affected if you make a decision that you later regret.

Speaking with a financial planner ensures you understand your options and why a particular course of action is likely to be right for you. This takes the stress away from you having to decide for yourself.

Get in touch

If you’re a DIY investor, it’s easy to fall into any of the four traps outlined. That’s why having a financial planner can help increase your money’s growth potential, ensure it’s as tax efficient as possible and help reduce stress levels for you.

If you would like to discuss your investments, pensions or anything else about your wealth and finances, we’d be happy to talk. Simply email us on hello@ardentuk.com or call on 01904 655 330.

Please note

This article is for information only. Please do not act based on anything you might read in this article. Contents are based on our understanding of HMRC legislation, which is subject to change.

The value of your investments (and any income from them) can go down and up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and your financial circumstances.