What to do with cash surprises
So you've come into a sudden windfall—perhaps you had the winning lottery ticket or received a large income tax refund. While it's tempting to spend it, there are a number of more profitable strategies.
Before you make any spending or investing decisions, consider your financial priorities. Are you saving towards (or dreaming about) any specific goals? When do you hope to achieve those goals? Here are a few tips for making the best use of your windfall—both long-term and short-term.
Attack your debt
Be sure to pay down any high-interest debt first—such a credit cards, loans and lines of credit.
If you want to take a chunk out of your mortgage, look into the prepayment options offered by your lender. Most lenders will allow you to prepay, without penalty, a certain percentage of the outstanding principal once a year. At Investors Group, for example, you can pay down up to 15 per cent without penalty.
Invest it
Once you've taken care of your short-term needs with your newfound cash, you can pay attention to your long-term plan—and invest the rest. You can use your windfall to build or start a portfolio of investments. Through asset allocation, you can increase your potential to maximize returns while maintaining a comfortable level of risk. And you can take advantage of a wider range of investments, while limiting the potential negative impact of putting all your eggs in one basket.
Professional advice is especially beneficial at this point. Your Investors Group Consultant can help you come up with an investment strategy to meet your immediate income needs while allowing you to build towards your long-term objectives.
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This article, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.
© Copyright 2007, Investors Group. All rights reserved. Do not reproduce without the express written consent of Investors Group.
