Whether you won a $10,000 scratcher or the million-dollar jackpot, how you spend that money will have an impact on your life. It’s not often that you’ll bank that much money in one fell swoop, and you don’t want to squander your winnings.
Instead of going on a shopping spree and purchasing trivial items that won’t bring lifelong satisfaction, consider more noble and useful purchases. Here are a few things you won’t regret buying with your lottery winnings.
1. Real Estate
Real estate can be a highly profitable market for amateur investors. The barrier for entry is low, and you have a dozen ways to diversify your investment. You can use your money to take a hands-on approach with fix-and-flips or rental properties, or invest behind the scenes in REITs and crowdfunded real estate investments.
Best of all, you don’t have to have all of the money at once. A $20,000 lottery winning is an adequate starter because you can leverage funding to pay for the rest of the investment and use your investment earnings to pay it back.
2. Stock Investments
Speak with a financial advisor about investing in stocks (don’t try to invest without their help). There will be many options depending on the amount of money you’re putting up and the current stock market.
Your financial advisor will likely recommend taking a diversified approach, separating your money into several different types of investments to help you avoid losses and improve your chances of maximizing the markets.
3. Retirement Starter
Did you know that 15 percent of Americans don’t have anything in retirement? Among those under the age of 29, 42 percent have nothing in savings, which means they’ll have a hard time accruing adequate retirement savings by the time they’ve reached retirement age.
This is the perfect time to start your retirement or add to what you already have. Determine how much you’ll need at that time to live comfortably, and use a retirement calculator to determine what you need to save yearly. You might consider speaking with a financial advisor to determine the best type of retirement account to use and the proper way to add to it.
4. Debt Payoff
Americans pay exorbitant interest fees for their existing debt. On average, those with credit card debt will pay between $1100 and $1400 per year in interest alone. Those with 10-year student loans will pay an average of $650 yearly in interest, and those with a 30-year fixed-rate loan will pay anywhere between $3,000 and $15,000 per year for interest.
If you have a windfall, throwing it towards debt is a great way to reduce what you pay in interest significantly. Paying down debt gives you more financial freedom to use your regular paychecks more wisely.
5. Business Startup
Whether you’re an entrepreneur looking for your big break, or you know of a great startup that needs funding, investing in a business venture is a great way to let your money work for you. Depending on the business, the payoff might be small or nonexistent at first, but in a few years, it may have huge yields that provide money for the rest of your life.
6. College Funds
If you have children, use a portion of the money to start a college fund. If you put the money into high-interest savings accounts, it can compound annually and quadruple your investment over the next 10 years or so.
Remember that you don’t have to pay for your child’s entire education, but the money you save will give them a great head start.
7. Charitable Giving
With extra money burning a hole in your pocket, don’t forget about others who could benefit from it. If there’s a cause or organization you believe in, consider making a donation. Not only is this money tax-deductible, potentially offering huge savings, but it leaves you satisfied knowing you selflessly helped others.
8. Budgeted Purchases
Most importantly, only purchase things that your budget allows. Setting a budget should be your first move, and you may need to constantly remind yourself not to overspend.
Lining out how you’ll spend your money will make your money last much longer. It will also give you the freedom to purchase things you want and also practical investments that can be for your long term benefit.
Photo Credit
Image by Hermann Traub from Pixabay
Guest Author Bio
Jamie Lansley
Jamie is a freelance writer who covers trends in business, technology, and health. She loves to go skiing, camping, and rock climbing with her family.
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