Winning the lottery is a curse in disguise. Many lottery winners go into a spending frenzy, leading them on the path to bankruptcy. Whether you win the lottery, strike business fortune or receive an inheritance, large influxes of cash can build your wealth and then destroy it. Protect your finances and prevent squandering all your assets with the following tips that will help you grow your fortune.
Prior to an investment, stabilize your finances and eliminate debts. Stop ignoring outstanding debts, pay down debts with high interest rates and make sure you have a savings fund to cover you in an emergency. Keep in mind that some investments can’t be quickly retrieved, at least not without a big financial hit. Once you put funds in, you shouldn’t touch them until the investment period is up.
Different investments are ideal for different lengths of time. For example, if you plan to invest your funds for retirement, your approach will be different than for a five-year plan.
Investment periods are broken down into short, medium and long-term approaches. Long-term investing focuses on your retirement years. In this case, you’d consider investing in a Roth IRA, an annuity or another fund that delivers returns during retirement. Medium-term plans include a 10-to-15-year window. A college fund for children or a fund to pay off your mortgage are typical medium-term plans. Short-term is typically five years or less and grow funds for a home down payment, car purchase or major upcoming expenses. Determine the goals of your investment, and then you can identify funds that best serve your financial needs.
Keep in mind you don’t have to commit to a single type of investment. A large sum of money could include a combination of stocks, bonds, IRAs, annuities, and other investment assets. Don’t feel limited to narrowing your options down to specific accounts at this point. Focus on learning about your options and weigh the pros and cons of each.
Although you may want to handle your investments on your own, risk is great while managing a large sum of money. Even if you’re determined to make your own investment moves, CNN Money suggests it’s worth your time to sit down with an adviser or asset manager to discuss your situation and vision. As a precaution, CNN mentions “stay away from advisers who are looking to steer you into investment products that pay them high commissions (and hit you up for big fees).” Based on your experience and the feedback you’ve received, decide whether you want to continue with your current plan or enlist the help of an experienced professional.
Leah is a business reporter who watches the financial markets.
Originally posted 2015-03-04 16:57:08.