Winning the lottery is a dream come true for many people, but what happens when you win 100k? Do you sit back and relax or do you have other plans in mind? Is it really as simple as just going out to dinner every night, buying a nice new house and a brand-new car?
Getting a lot of money at once is both exhilarating and nerve-racking. It’s easy to feel like you don’t know what to do with it or to be scared of blowing it on trivial things. There is, however, some advice on how to make the most out of your newfound fortune.
1. Do your research.
First things first – you should always do your research about your investment options. When you find a big chunk of money suddenly on your bank account, you might get the urge to go on a shopping spree, or just invest in whatever comes to mind. However, it’s always better to take a bit of time to really look into what experts have to say about the different types of investment options in order to find the right one for yourself. Whether you want to invest in stocks, real estate, peer-to-peer lending, or anything else, you should do some initial research and understand all the basic terms and jargon so that it’s easier to make an educated decision.
Every option out there has its own set of pros and cons, and something that might deter one person might not be as significant to another. The first thing you should decide on is whether you’d prefer to have a hands-on high-risk high-reward approach, or look at passive-income options, and go from there.
2. Pay off debts.
Taking a look at your current financial situation is always best when dealing with investments of any kind. If you owe some money – whether it’s for your credit card, your house mortgage, or student loans, making sure you pay off your debts is one of your primary goals.
Having debt makes it hard to make any kind of significant investments so the first thing you should do when winning the lottery is to pay off what you owe and start fresh financially. Not only will this free up more spending money every month. It will also improve your credit score significantly, making borrowing much easier and cheaper. Of course, you can be strategic about this as well. In case you have more than one outstanding debt, you can prioritize the one with the highest interest rate, and invest the money you have left over.
3. Set goals.
Before locking in on your investment, you need to consider what you want to achieve. Do you want to go on a vacation abroad? Do you have your eye on purchasing your dream vehicle or your perfect home? Do you intend to buy a business of some kind, or do you just want to put the money somewhere secure and sit back?
Decide what it is that you want, create a plan to put things in motion, and then see if there’s an investment that can match it. It’s important that you plan out exactly how much money you’ll need for each goal so that you can see whether or not you will need to take some action if your initial investment plan doesn’t pan out. This will help you ensure that every purchase is accounted for and that it isn’t all just floating away. When doing this, it’s important to think about your future as well. A luxury car is a great thing to have if it’s something you’ve always wanted, but it won’t do you much good when it comes to your retirement years. Making a plan that suits both your wants and your needs is always a good idea.
4. Get professional help.
When you win the lottery, it’s often a dramatic time that leaves you feeling vulnerable and unsure. Because of that, getting professional help is important to ensure that your hard-earned money doesn’t end up going down the drain as a result of one bad decision. After all, there are people out there who have been working in financial and investment realms for years, and who can give you the best tips on your current situation.
Of course, this isn’t something you should take lightly. It will cost a bit of money to get access to these people, so you should only do so if it’s really necessary. For example, if you want to invest in stocks and don’t know much about them – it would be a good idea to hire someone to help you. On the other hand, buying real-estate means you don’t have to get professional help if you put the time in to do your own research.
With the right investments, whether passive or active, you can see your wealth grow much faster than what you would get if you just left it in a savings account or did nothing at all. Of course, that doesn’t mean that you should go out and take any and every opportunity that presents itself to you. You need to keep in mind your current financial situation and capacity for risk so that you can plan out the best way to use your money.
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