Posted by Tiffany Gaskin

Smart Ways to Invest Your Lottery Winnings

Smart Ways to Invest Your Lottery Winnings

Winning the lottery is a two-way thing. While receiving a massive sum of money might solve your entire financial problems, you might be faced with new opportunities that could leave you worse off. 

Even though many people swear that they will spend their lottery winnings wisely, it is not always so. People who win the lottery should consider following best practices and recommendations from financial experts on the best way to invest their earnings. 


This article explores some ways:

  1. Reflect

Most lottery winnings are claimed over several months. There are two important reasons to take it slow: 

  • To reflect and

  • To avoid unnecessary media attention

The announcement of a winning lottery ticket is usually met with a media frenzy ready to create headlines around such a topic. As a result, there will be unsolicited advice, unwanted instructions and people asking for money. With such attention, getting your act together and deciding what is best for you might seem difficult.

When you wait a couple of months to claim your prize, you have enough time to establish a financial plan. With time, the media attention will die down, so you can avoid unnecessary attention in deciding what you want to do with the money. However, know the deadline to claim such money.


  1. Work with Financial and Legal Consultant 

Hiring a legal and financial professional is one of the best investments you can make at this time. With a financial planner, you can have an effective plan to use your winnings. Their advice will go a long way in guiding you for the tax situation and help you decide the best approach to pay such tax, 

Their advice is also invaluable in helping you structure a sustainable lifestyle while also investing. An attorney will also help you tackle anyone who files a suit or makes claims against you.

 

  1. Pay all Debt

Getting rid of all debt should be one of the best points of call before switching to a luxurious lifestyle. Debts left will keep accruing interest until you pay them off. Make high-interest debt a priority since it multiplies faster. All car loans, school loans and mortgages should be your priority.

Imagine the feeling when you have no debt hanging on your neck. Besides, make sure you do not create new debts.

 

  1. Create an Emergency Fund

The last thing on your mind when swimming in money might be to have an emergency fund. It is, however, one of the most crucial things to do. Don’t forget unforeseen circumstances like disaster sometimes creep in, which makes sense to be prepared. Your emergency fund gives you peace of mind knowing you are ready for whatever situation that arises.

Make sure your emergency fund can sustain you for six months. Consider using a high yield saving account as it grows your savings at a pretty faster rate compared to a traditional account and also allows you access should there be an emergency.

 

  1. Put Funds aside for Retirement 

Setting some funds for later years should be one of your priorities when you get the lottery. Ensure to have huge savings if you are still young. With this, plan to spend your lottery savings into the years rather than squandering it all on a luxurious lifestyle.

Your financial advisor can help you determine what you need precisely for retirement. This money is typically a factor in the lifestyle you prefer. Other things to consider are medical bills, family members you support, inflation and many more. They can guide you towards the best place to direct your savings, which may be a mutual fund, Individual Retirement Account or low-risk portfolio.


  1. Consider Low-Risk Investment

On putting off debt, establishing an emergency fund and setting funds apart for retirement, consider an investment. You might have some fun and live the dream life you constantly desired or go on vacation. Again, work with your financial advisor to guide you on setting a reasonable budget for this. 

When you sort all this out, ensure you consider low-risk investments. Making a wrong move with volatile stocks could cost you lots of money. Consider safe investments alongside portfolios that stand for a series of stocks and bonds. Real estate is also a good call that will stand well over time.


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Tiffany Gaskin
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