It is only natural that at one point we have all imagined what life would be if we hit a windfall. Most people believe all their problems right now could all vanish if they would get a lot of money. And where else can you get so much money without working so hard than in the lottery? That is why most people fantasize about what life would become if they win a lottery.
After thinking about it for a long time, you won’t waste it, right? Wrong. Cases of those wasting away their gambling gains from the lottery are not strange. These people tend to win big and without any plan spend their money and lose it all within a few years or months. They end up even worse than before the lottery win. That’s why it’s crucial that you understand how to invest if you win the lottery to avoid following the same path.
Here are the steps to go about investing when you win the lottery.
1. Understand if you want to go public
The first step after winning the lottery is to know if you want to let everyone else in on the good news. While it might be okay to share the good news with friends and family, it can also be your destruction. With people around you, you will end up starting to give some money to friends and family. This is the point where even the former colleagues and classmates would be surfacing to be part of your millions. There have also been cases of lottery winners befriended then killed by people they came to trust.
While some lotteries require you to go public, others allow you to stay private. Staying silent is your best way out. Consider even changing your contact details, mailing addresses and deleting your social media handles.
2. Do not rush into taking the money
After winning the lottery, there can always be that feeling that you just want to have the money to confirm that you are the new millionaire. However, you are better off taking your time. Most lotteries allow for up to six months for you to pick your payment plan. You can choose to get either the lump-sum payment or in instalments. Either option depends on what you wish to do with the money and other factors like how income and investments are taxed.
By taking your time, you will have an idea of what you wish to do with the money. You would have had to decide where to stay and even the kind of lifestyle you wish to lead.
3. Plan for the money
Human wants are limitless. Even though the lottery money can also appear limitless, it will be over when you don’t plan properly. For example, while you might want to purchase that beachside apartment and travel the world, you might also be weighing up your kid’s school fees and even saving for early retirement.
Planning for all things can get overwhelming. However, it is in your interest to understand exactly what you need then sort them in line with importance. Do not go for the luxuries before you provide for the basic needs.
4. Get professional advice
Investing the lottery money requires money knowledge. If you are no financial expert then you don’t understand much about the investment options. That is where you will call an expert.
The expert will help you align your money into various investment options. For example, they will advise on both the short term and long term investment portfolios.
The expert will also help keep your books in order. As a new millionaire, your life will never be the same again. Maybe you are in a new country sipping away some top-end wine, however, the business books must keep running. It is the expert to sort the entries, taxes and other business requirements.
Remember to only work with reputable experts with a wide range of portfolios they are already managing.
5. Look to the future
When you win the lottery, you can always think of the good but unnecessary things for the moment like luxury cars and cruise ships. By then you might not have factored in the maintenance costs of such items. They might end up eating up your money, rendering you poor again. Always look for long term growth more than simple needs.
At the same time, consider having your estate planning in order as soon as possible. Winning the lottery allows you a better allowance to give your kids and others you wish to have part of your estate. Consider planning for this as early as possible.
Bottom Line
Financial discipline is what you need the most if you win the lottery. However, you can achieve it when you take your time to plan and then stick to it. You should also talk to an expert about the best investment options and strategies.
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