If you have come into some money through an inheritance, lottery winnings, or a severance package, it’s quite easy to feel overwhelmed. Depending on the size of the money you have received, it is a good idea to go to a professional to help you decide how to invest that money. If you can do some thinking about how you might want to invest beforehand, then that will help you navigate such an appointment.
First, think about your goals. Are you aiming to build long term savings? If you have a severance package and you don’t have a new job, short term financial security will be an issue. You may have other goes that go beyond financial security as well. Perhaps this is an opportunity to realize your goal of taking a leave to write a novel or work on your art. You might want to take a trip or build a home. These goals are important, as is your financial security.
If you plan to invest the money, you need to look at your goals for the investment. You may want to pay down your mortgage, invest in a retirement fund, or invest in mutual funds. Secure investments are good if you’re moving towards retirement. If you own a home and your mortgage renewal anniversary date is coming up, think about the repayment of your home loan as an investment. If you have a mortgage at five percent interest, you’ll be “earning” a secure five percent on your investment in your home, since otherwise you would be paying that in interest. If it’s time to renegotiate the mortgage, you can pay down part of the total and either choose a much shorter mortgage term or smaller monthly payments, freeing up some of your money for other life goals.
What would you choose if you received a sum of money?