It happens every day to people all around the world. They suddenly get an unexpected inheritance. They find themselves owners of valuable property; or
It happens every day to people all around the world. They suddenly get an unexpected inheritance. They find themselves owners of valuable property; or get a big bonus or lawsuit settlement. Maybe they will win the lottery. However it happens, people experience vast windfalls of cash, and their entire world changes in the blink of an eye.
Money is not a self-sustaining product. It has to be maintained and invested if it will replenish itself. An interesting article on Lottoland addresses the best ways to invest lottery winnings. The article has some wonderful advice. However, there are a lot of ways to address this issue. We want to share some of our ideas with you too. You will find there is much information on the internet to help you. So, you want to be careful to find information that fits your goals and lifestyle.
Win it – One it – Wait On It
Okay, maybe you are a person who lacks patience. You know you have to invest, plan, and let your money work for you, but you want to go shopping!
Rule #1 Win it and 1% it
Take 1% of your windfall and go crazy. Buy whatever you want. Let that be your prize for picking the winning number or for remembering to send Aunt Bertha a fruit cake every Christmas. But, take the 99% and put it somewhere that pays interest so that you will not be tempted to touch it for six months. It will not make you a lot of money, but it will help you get your 1% back, and it will give you time to think about how you want to spend or invest.
Rule #2 Get out of debt
When your cooling-off period is over, pay off all your bills. Get rid of those credit cards and loans you are paying interest on. Pay off your house and your car. Give yourself more room to live on your annual budget and improve your credit. You will be amazed at the power you have when you have cash and good credit. Do not start investing with all of your bills; still collecting monthly bills.
Rule#3 Create a cushion
Open a savings account that pays high interest and deposit a three to six-month expense fund. This is an emergency fund, and it is not to be touched unless it is an emergency.
Rule # 4 Hire an expert
You may be a builder, a doctor, an automobile mechanic, or a small business owner. Maybe you are a chef, a dancer, or an artist. Just as you would not hire a chef to work on your automobile or a dancer to fix a broken bone, you would not let a buddy advise you on how to invest your money. You need financial experts. While some of the experts on this may overlap, you need the following team:
- Attorney for the legal requirements (including taxes).
- Investors group skilled in investing in various avenues of investing
- A quality banking establishment
Please note; even though you have experts working with you, it is important that you understand what you are investing in. You need to understand the risks and the potential rewards. Be sure you understand completely before progressing with new ventures. Carefully check the references of the people you select to hire.
Rule #5 Plan for future events
Now is the time to decide what you want to do about the future. Do you want to prepare for your retirement years? Do you need to set up an education fund? Are you planning on relocating to another country? These kinds of plans should be worked into your financial planning with your financial advisor. You may also want to address your will and insurance with your attorney. As things change, you can update the details, but this will ensure your money is in order now.
Take it slow
Maybe you want to invest in bonds for long-term goals, but you also want immediate income generation with buying and leasing property. It is fine to have a diversified portfolio. It is wise not to invest everything you have in tons of different investments until you are sure of what you want to do. There is no problem with moving slower. Talk to your team and let them guide you with some investments to get the ball rolling. As you are more comfortable, you can get in deeper. If you want to invest in property, there are many ways to do that. You can build homes or buy homes that are already built to rent out or sell. There is a lot of money to be made in land development. The field is wide open. Let the people who know the industry lead you.
If you follow these simple tips and take your time, you will be able to live comfortably off of your windfall. You will find that your money will work hard for you. Just take your time and learn as you go. Enjoy your newfound wealth for years to come.