Getting huge sums of money isn’t a daily occurrence for most people. But when the stars align, and millions fall right into your lap, you’ll have one problem at hand: the best investments to make.
You see, as illustrated in Lottoland’s guide on how to invest if you win the lottery, you’ll need to develop strategies to protect your newfound wealth. Since investing is the best way to ensure the money lasts, you’ll need to avoid financial pitfalls when doing so.
That said, below are some smart investments you can make after landing an unexpected windfall to ensure it lasts you a lifetime. Read on!
1. Buy Some Undeveloped Land
The fact is, windfalls won’t keep coming your way forever. Therefore, use this windfall to get a piece of land in a prime area you have always desired. A piece of land is a versatile investment option requiring little to no maintenance, unlike a developed property with huge tax obligations.
As you might expect, there are several benefits of owning land. For instance, you can reserve it for future investment, building a retirement, vacation, or family home. It can also be a site for rental houses, bringing additional cash in rent.
The best part is that the value of land appreciates with time. You can always sell it at a higher price and make some profit on the buying price.
2. Invest for Retirement
Most people want to retire early, and as you are aware, an unexpected windfall can see your retirement come sooner than you think. Preparing for retirement is one of the smartest ways of investing a windfall.
One way to do this is to invest in a workplace pension and the SIPP (self-invested personal pension). The employer usually arranges a workplace pension and offers you a tax-efficient way to save for your retirement. On the other hand, the SIPP gives you control and flexibility over your pension.
3. Invest in Education or a Skill
Education is a lifelong skill that no one can take from you. Higher education is usually out of reach to many, but not when you have a handsome lump sum in your bank account.
Enrol in a degree or diploma if you don’t have one. If you do, go for a second or a third one. You can also advance your career or venture into a new one altogether. Furthermore, you can apply for partial scholarships or grants to cover a portion of the tuition fees without spending millions on education.
If there’s a skill, workshop, seminar, or talk you have wanted to attend but didn’t due to lack of money, now it’s time to attend it and add value to your career skills. Better still, you have the ability now to hire coaches and mentors to help with your skills, skills which you can use to earn more.
4. Pay Off Debts to Improve Your Credit Score
In this case, depending on your financial situation, start by paying off your high-interest debts. This could be credit card debt or a car loan.
Paying off high-interest debts ensures you don’t pay huge sums of money in interest in the long run.
Furthermore, paying off your borrowed debt improves your credit score for future borrowing. You see, contrary to what most people believe, with a good credit score, you can use debt to create long-term wealth. However, you’d need to use this strategy responsibly or contact a professional to help you formulate a good plan.
5. Spend a Portion of the Windfall on Something You Love
Resisting the temptation to purchase significant things you have always wanted is usually an uphill task. You feel like immediately quitting that day job, buying a luxurious yacht, and travelling the world.
In this case, consider investing some of the money in something you are passionate about and enjoy doing. Do you have a hobby? Perfect! Look for ways to turn that hobby into an income-generating asset. This will give you a sense of fulfilment, ensuring you avoid lifestyle creep.
Conclusion
The first thought that should come to your mind after landing a financial windfall should be investment, not expenditure. You can decide to invest in your education, retirement, or buy real estate. The goal is to ensure the money lasts and, more importantly, brings you long-term happiness. Ensure you consult a professional before you begin investing to avoid pitfalls that come with receiving unexpected windfalls
One Response
Congratulations on receiving an unexpected windfall! Whether it’s an inheritance, a bonus, or a lottery win, handling this money wisely can set you up for financial security and growth. Instead of splurging on immediate gratification, consider making smart investments that can yield long-term benefits. Start by paying off any high-interest credit card debt. This can instantly boost your financial health by reducing interest payments.