Eight Ways to Spend Your Windfall

villa2If you’ve ever received a lump sum, then you know how difficult it can be to decide how to spend it. There are so many different options that you may find yourself agonizing over what to buy. Since you may not have enough money for everything you want, you’ll have to examine your priorities to see what you need and what you can do without. Try weighing some of these popular options to see which ones are right for you.

Paying Off Your Mortgage

Many people who receive lump sums use the money to pay off the mortgages on their homes. Paying off your mortgage can be a great way to save money because it allows you to avoid the interest you’d otherwise have to pay. Assuming your house appreciates at 5 percent per year, you can use the money you’d normally spend on house payments to invest in something with a higher rate of return. Of course, you might also choose to buy a new house.

Buying a New House

If your home is cramped or needs a lot of repairs, then using your lump sum for new lodging can be a great way to go. While your new house doesn’t have to be this year’s model, newer homes need fewer repairs and are usually more energy-efficient than homes that were built just a decade ago. Look for information on the benefits of having new windows. By doing a little research you can potentially reduce your energy costs and save yourself a lot of money.

Renovating Your Home

If you like your current home and it’s already paid for, then you might consider using your lump sum to renovate. In addition to increasing your home’s value, renovating will make your home more livable. If you use a contractor, then be sure to check their credentials before you allow them to start work. This will help you to avoid a lot of headaches and ensure that your renovation is completed in a timely manner.

Investing

One of the best things you can do with a lump sum is to invest it. Investing your lump sum will allow you to grow your nest egg rather than watch it dwindle. If you don’t make a lot of money, then saving your lump sum for your golden years might be just what you need to do. Contact a financial advisor to see which investments are right for you.

Starting a Business

A great way to invest a lump sum is to use it to start a business. Assuming your business is successful, it can provide you with extra income every month. On the other hand, if your business is not successful, you could lose your investment. Your best bet could be to buy an existing business in an industry that you’re familiar with.

Putting the Kids Through College

Of all the things you can buy with a lump sum, one of the most useful is an education. Putting yourself or your kids through college can provide you or them with an excellent income which will allow you to purchase the other things on your list. This is yet another way to make your money work for you.

Travelling

When you ask people what they’d like to do when they retire, they’ll often tell you that they’d like to travel. Spending a lump sum on a trip around the world is something that everyone can appreciate. Of course, you may want to invest the money first and then think about taking the occasional vacation. It’s up to you.

Giving it to Charity

If you’ve received a lump sum and you’re already financially independent, then you’ve probably thought about giving your money to charity. While there are many charities that would be happy to accept your donation, it’s important to keep in mind that not all charities are on the up and up. In addition to this, many charity directors pay themselves a significant portion of the money the charity takes in. The only way to ensure that your money is going where it’s supposed to is to do a lot of research and spend as wisely as you would on anything else.

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