You get a lump sum payment. Now what? You can suddenly spend or invest a substantial amount of money at one time. However, this rare experience can cause a lot of stress if you’re unsure what to do with your newfound wealth.
The next step after receiving a lump sum payout includes making a wise financial decision. This means weighing all of your options to know which one is right for you. Understand all the details of your potential options and don’t make a rushed decision.
We can’t tell you what to do with your money, but we can give you the information to help you make the most informed decision. While you’re considering the best options, review these questions to see if they make the process any clearer.
1. Am I At Risk of Being Scammed?
Receiving a lump sum payout might be a newsworthy event, but it can also attract scams or the potential for fraud. This is especially true if your payout is broadcast online or on the news. You should be careful when people approach you with questions about what you plan to do with the money. Legitimate financial institutions will never reach out to you in this manner.
One of the best ways to avoid fraud is to ask financial professionals questions or by doing your research online. Be aware of and stay away from institutions that promise quick profits or guaranteed returns or attempt to pressure you into making a decision. These alleged opportunities are a scam.
2. What Does My Current Financial Situation Look Like?
If you’ve never had a set financial plan, now is the time to start one. It’s a good idea to realistically assess your financial situation. This will help you make the best financial decisions before you start spending your money. Having a lump sum of money opens up all kinds of opportunities that may not have been available to you before.
For example, you may be able to afford your dream home, save for your child’s future, or get a headstart on your retirement plan, so you can live out your years as a senior comfortably. One of the best ways to make this assessment is to make a list. Write down all your financial goals and decide which ones are the most important to you. Maybe now is the time to splurge on that new car.
There are also tools online that can help you do this, such as the Ballpark Estimate. This is a resource created by the American Savings Education Council that helps you calculate the amount of money required each year to meet your retirement fund goal.
3. Is My Credit Card Debt Paid Off?
If you have high-interest credit card debt, now might be the time to pay that off. This is a low-risk financial decision that can help you accomplish a goal and alleviate some of the stress that you’ve been carrying around as the interest grew. If you owe money on any credit cards that you have, one of the best things to do is pay it off as soon as possible. Start this chapter of your life debt free.
4. Should I Get Advice From a Financial Advisor?
You may not necessarily need the help of a financial advisor if you’ve accomplished most of the items on this list. However, most people are too busy with work, school, and family life to spend hours researching all of their potential options themselves. In this case, connecting with a reputable financial advisor will benefit you. These professionals provide a variety of services at different rates.
If you decide to get help, make sure you’re getting advice from someone you trust. Make the time to research the individual you want to help you handle your finances to ensure they’re qualified and have a good reputation. You don’t want to put your money in the wrong hands and have them violate your trust.
5. Have I Asked All the Right Questions?
There’s no such thing as asking too many questions when it comes to investing. Whether you’re a new investor or have been investing for years, it’s always a good idea to ask yourself questions or even write a checklist to make sure this investment is right for you. Don’t hesitate to get clarification from a professional financial advisor or by doing your research before making a decision.
Get In Touch With Annuity Associates To Learn More
Annuity Associates is here to help you find the resources you need to purchase annuities from top-rated insurance carriers. If your next move is to use some of your lump sum payment to invest in annuities, we can help you find exactly what you’re looking for. We specialize in helping individuals prepare for retirement, but we also offer additional educational financial resources.
Get in touch with us to learn more.