How to Invest a Windfall of $100 000: 5 Practical Tips
Congratulations on your newfound wealth!
It’s only sometimes that we come across large sums of money. But, expected or not, you shouldn’t be too quick to pay off your student loan or, worse, have a shopping spree at your favorite luxurious store.
Windfall money is known to have some emotional effect, which can quickly blow you off course. This is especially true if it follows painful experiences like losing a loved one, divorce, or injury settlements.
However, it’s vital that you consider windfall wealth planning if you want to be different from the huge number of people that wake to immense monetary wealth and then file for bankruptcy a couple of years later.
This article sheds light on what to do with a windfall and the five investment ideas to grow your money and minimize wastage.
But first…
Why is Financial Windfall Planning Important?
Windfall and retirement financial planning are essential because:
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They allow you to invest and save for life as a senior
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You partner with financial planners that offer invaluable investment advice
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Allow you to plan for future expenses
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Allow you to achieve your financial goals
What Should You Do with the Unexpected Money?
So, I have $100 000 what should I do with it?
The smart thing to do when you have a large amount of money is to make sure you put it somewhere where it compounds interest. However, this will depend on your current financial situation.
If you are drowning in debt, sorting out loans with exorbitant fees would be an excellent idea. You might also consider setting up money savings or stashing away a cash reserve for when emergency strikes.
Additionally, you can use the unexpected money to pay your mortgage or fund life events such as a wedding, starting college, etc.
Questions to Ask Yourself Before Investing a Windfall of Money
Whether you are just getting your feet wet or are the George Soros of forex trading, there are a couple of considerations that should be top of mind before you invest big money.
A few basic questions to ask include:
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What do you know about the investment?
The first step to knowing how to make money from $100.000 is never to invest in what you don’t understand.
If you are wondering how everything works or how you will make a killing, speak to your financial planner for clarification. If you have read the disclosure statement, spoke with an expert, and are still clueless, consider other investments.
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What’s your risk tolerance?
Are you able to tolerate the investment’s given risk? If not, consider investments with a lower risk.
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Where can you seek help?
Windfall investing needs unbiased advice. So, make sure you have someone you can contact if you have any questions or concerns.
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How long do you plan to invest?
Will you go for short or long-term investments? Short-term means going for investments with lower risks.
Best Ways to Invest $100K: 5 Tips to Follow
So, what is the best way to invest $100.000?
Venture into business
Businesses are valuable assets that can guarantee a regular income stream for years. Starting a business is one of the best investments to give thought to when you have 100k in bank accounts as they can be part of your legacy.
However, it’s essential that you research beforehand to find a business idea that assures you of longevity.
Diversify your portfolio
We are often warned about putting our eggs in one basket. So, to minimize the chances of losing a hundred grand, spread your windfall investments. Some investments to contemplate include stocks, ETFs, and REITs.
However, don’t be carried away; only have a portfolio you can manage.
Peer-to-peer lending
If you are looking to invest windfall and grow your money fast, peer-to-peer lending is something you might consider. Some of its advantages include high-interest rates and P2P platforms that are relatively easy to use.
However, this is a high-risk investment, and you should only venture into it if you understand the business in-depth.
Real estate
According to Grand View Research, the real estate market is expected to grow at an annual CAGR of 5.2.% from 2022 to 2030, a reason why it is an excellent investment if you are wondering what to do with 100 000. Not only does it offer a steady cash flow, but real estates appreciate with time.
Invest in yourself
People with windfall cash will invest in various assets but rarely in themselves. As you diversify your investment portfolio, you can also consider feeding your passions and elevating your skillset through learning. Return to school or take an online course to increase your value.
Wrapping Up
You will likely experience strings of emotions as you ponder what to do with unexpected money. But resist the urge to purchase your vacation home or a yacht, at least not until you talk to a financial expert.
Seeking professional windfall and legacy financial services is a great way to make the most of the cash and hasten your journey to financial freedom.
Also checkout: Why DIY Property Selling Isn’t a Good Idea
