After spending your whole life trying to build your wealth, you’ve had a bit of a windfall—lucky you! With money, however, comes responsibility. Whether it was a sudden inheritance, the sale of a house, a legal settlement, or you’ve won the lottery (again, lucky you!), you need to think and act fast on where to put this money. Unless your windfall makes you a millionaire—and sometimes even then—it’s easier than you think to squander that money on everyday activities. This is particularly true if you’ve already had trouble saving money. As this Forbes article notes, “A Sports Illustrated investigation found that 78% of NFL players file for bankruptcy or experience financial difficulties within two years of retirement.” What’s even more shocking is lottery winners have been shown to file for bankruptcy at double the rate of the general population.
The key is to put this money somewhere safe but also preferably where it’s earning money and, most importantly, where you don’t have access to it whenever you want. Read on for five ways to invest when you come into money. Don’t become a statistic!
Invest With the Help of a Financial Planner
We’ve all seen the look of someone who’s winning big at a blackjack table in Vegas. It’s like they’re in their own little world, and they think they’re invincible … until three hours later they’ve broken even or far worse. It’s too easy to get caught up in emotions when investing on your own, especially in the stock market. It’s okay to have passion and interests as far as what to invest in, but bounce these ideas off someone who knows the pros and cons of each investment. Find a planner (or a team) that lets you express your opinions but is willing to shoot you straight when it comes to companies or funds that are just plain too risky.
Get the Necessities Out of the Way
Have you seen or heard how much college tuition costs these days? If you have and didn’t have a heart attack, we commend you, as it’s astounding how high it’s gotten. Even if your children are only babies or toddlers at the time of your windfall, begin to invest in their college education. Unless your windfall has made it so you can pay for it outright, you might consider investing in something like a 529 Savings Plan. It offers tax benefits and the only way you’ll incur a penalty is if you withdraw the money to use it for anything other than paying for college.
Invest With a Group
If you’re intimidated by investing on your own, consider joining an investment club. You could do this a bit more informally and go in with friends or peers on things like restaurants. However, the safer bet is to join a club that is actually bound by a legal agreement and has a brokerage account established in the club’s name. These groups typically meet fairly regularly and talk about what the hot investments are and ultimately vote on what is the best route. Not only does it have more of a feeling of a safety net but it can also be fun to meet with like-minded individuals.
Think About Real Estate
Sure, the real estate market has its ups and downs. Nothing taught us that more than the past five years. However, most financial experts still consider real estate to be a solid investment. One way to invest in houses is to flip them, especially if you are handy, motivated, and have a knack for what it takes to make a house sell-worthy. No one knows this more than Nick Evans of Frontier Properties, who says he’s “been buying houses since 2005.” If your background has anything to do with design and/or home remodeling, you might even find this fun. If you’re not having luck, a company like Frontier Properties can come in and buy the home for you without a realtor—no fuss necessary.
Pay Off Your Mortgage
Okay, so this isn’t exactly an investment, per se, but rather a way to avoid losing money hand over fist. Let’s face it—the 30-year-mortgage is a nightmare, as you are hemorrhaging money in interest. So instead of investing in something that could make you money, pay off your mortgage and avoid financial waste. You won’t believe how amazing you’ll feel in doing so.
Don’t let your windfall slip through your fingers. Follow any or all of these investment tips and expand your investment exponentially. You’re welcome.