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Wealth Advising: What to do With a Windfall

Don’t be Part of the 70 Percent Who Lose Their Wealth Within Seven Years


The recent record Powerball jackpot of $1.5 billion got many people talking about money. The National Weather Service says the odds of being struck by lightning in a given year are one in 1.19 million, which are actually better odds than winning a Powerball jackpot. However, when it comes to wealth advising, the recent jackpot opened the door for discussion about what to do with sudden wealth.

A more likely scenario for you is that your windfall will be much smaller, and likely arrive through an inheritance. Here are some tips to remember for investing wisely when you receive a windfall:

·         Take the time to consider where you are in life right now and how you’d like to be living in 20 or 30 years. Are you providing for extended family? Take that into account, as well as travel expenses that may be part of your retirement plan.

·         Set goals and stick to them. Now isn’t the time to spend randomly. Around 70 percent of people who become suddenly wealthy lose it within seven years, according to the National Endowment for Financial Education. Avoid this scenario by investing for your future instead of focusing on what you can purchase with your newfound wealth.

·         Ask for guidance from an investment expert whose style of wealth advising fits your situation. For example, choosing a commission-free advisor may make the most sense to you because it helps to ensure that the advice will be unbiased.

·         Be ready to pay taxes. Inherited IRAs and annuities have tax implications that you will probably need assistance handling. Consider seeking help from a tax professional.

·         If you’re going to share your wealth, know the implications related to the gift tax, which could substantially diminish your wealth.

·         Prepare an estate plan to protect your family after you’re gone. The most popular plans include a trust, will, medical power of attorney, and advance directive or living will.  

Remember, most things in moderation are okay, which means you can splurge some with your newfound wealth. Just make sure you’re not eating into the principal too much or too quickly, which is a mistake that has negative implications on your ability to see compound interest over time.

When you seek out wealth advice, look for a fee-only investment advisor. When you connect with a fee-only advisor, you’ll receive advice from a professional that doesn’t take a commission, which means what they’re advice is for your benefit first and foremost – not for their profit.

Family Investment Center is a trusted, fee-only advisor that can help you manage your financial windfall – as well as the wealth you’ve built up over decades of hard work. Contact us today and let’s discuss how to get started on planning the future you have in mind.

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