You find yourself in the unique situation of unexpected money. You win a settlement, gain an inheritance, or win the lottery. For most of us, this is a dream situation. However, it can also be challenging.
Many websites let you play the lottery or bet on sports. It is easy to find the latest Irish Lotto results or how many jackpots are in major international lotteries. Few sites tell you what to do after winning. How do you save money? Where do you invest money to ensure its continual growth?
Professionals
The first thing you will need to do is hire a private financial advisor. This is someone who is a specialist in helping you manage your money. They help you devise a plan to accomplish your personal financial goals and give you specific advice on how to achieve them. This is a critical step. Professionals in this field know the market. Their job is to know where to put money to get the desired results in a specific time frame. You will need to answer questions including:
- Do you need to save for retirement?
- Do you need to execute a plan for paying for education?
- Are you going to leave your employment?
- Will you open a business of your own?
- Will you retire early?
- Do you expect to do extensive travels?
Basic strategy
Before you begin to invest money or set up accounts to save money, there are some basic things every financial advisor usually recommends.
- Pay off all debt
Put yourself in the best financial standing possible. Pay off everything you owe. This includes mortgages, car payments, credit cards, and loans. You should be completely debt-free when you begin your financial journey. This is a tip most people of wealth follow. You will always get a better deal on your purchase when you pay for it upfront. This is true for anything from designer clothing to business establishments. Paying in full can get you a better price, and you will not have interest or fees tacked on.
- Have an emergency fund
Be prepared for something to go wrong. Determine the amount of money you need to live comfortably for six months to one year. Deposit that amount into an account that pays interest. This is an emergency fund, and the money should not be touched unless it is a true emergency. Discuss this account with your banking professionals to find the best paying account.
- Give yourself an allowance.
If you do not hold yourself (and your partner or spouse) to a specific amount of money each month, you may find yourself overspending. Set a reasonable amount of money to deposit into your personal account each month. Do not spend money outside of that account for personal reasons.
- Do not rush
It takes a while to get used to your new lifestyle when you make substantial changes in your life. People will show up from everywhere wanting you to loan them money, invest in their business, and contribute to their civic cause. A wise person does not make financial decisions without speaking to professionals, taking the time to ensure you want to be involved with a person or project, and giving it much thought.
Tax-free ISA accounts in the UK
The government of the United Kingdom helps people with their savings. Individual Savings Accounts (ISA) allow citizens to save money without paying taxes on the accounts. Each tax year in the Uk, from 6 April to 5 April, you are allowed to deposit up to £20,000 in a single account or split the deposit between various accounts. You do not have to close your account at the end of the tax year. The money can remain tax-free in your account as long as you wish. The various types of ISA accounts include:
- Cash ISAs
- Bank account savings
- Building society account savings
- National Savings (and Investment products)
- ISAs in stocks and shares
- Company shares purchases
- Unit trusts purchases
- Miscellaneous Investments
- Government bonds
- Corporate bonds
- Lifetime ISAs
- These are either cash or stock and shares
- Finance ISAs
- You provide loans to people or businesses that do not include a bank’s service.
- You are buying a debt owed from a company as an investment.
Other investments
The tips above are the basic building blocks that will help you begin. Of course, you will also need investments that will grow and replenish your money over time. There are almost endless options. There are high-risk and high-return investments or very low-risk investments that will pay gradually over time. Again, this is where you need the help of a professional. Most successful investors go for a diversified portfolio with a range of investments of various types.
Conclusion
Unexpected windfalls happen. When they happen to you, it is sometimes difficult to decide how you want to use your wealth. Those who plan well and advance carefully can usually count on their money becoming self-sustaining. Those who do not may enjoy their wealth for a short time, then find themselves back at point A in short order. The choices you make today will determine your tomorrow. With some expert advice and practice, you can put your money to work for you. You can live your best life. We count that as a win.
