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Millennials today prefer on living their life king size, even if that means living pay cheque to pay cheque. Are you one of those individuals? What do you do when there is an unexpected windfall of surplus funds? This windfall of money could be a result of court settlements, lottery, sale of investments, tax refunds, inheritance, bonuses, sale of assets, etc. Do you spend your entire acquired amount? Though it is an amazing feeling to spend this entire money by spoiling ourselves, going on luxurious trips, or getting hands on expensive gadgets, you might want to reconsider your approach.
Are you clueless on how to use a lumpsum investment? Don’t fret. You are not alone. This article aims to act as a lumpsum investment guide and helps you wisely spend your lumpsum amount. Following are some of the ways how you can use a lumpsum amount:
- Pay off your debt – One of the best ways to use your windfall of money is putting them to good use and becoming debt free. This should be the primary goal for any individual. This is especially true for personal loans and credit card debts that account for at least 10 to 15% interest p.a. – which frankly adds up to a huge amount. Even if you don’t have enough money to pay off your entire debt, clear up as much as you can. You might want to start with high interest-bearing loans.
- Have an emergency fund in place – Having an emergency fund in place is very important. This emergency fund acts as a financial cushion for various expected events such as demise of a family member, home repairs, job loss, medical emergencies, unexpected tax or utility bills etc. An emergency corpus ensures that you are ready to face any disaster or downfall life has to offer. Ideally, one is expected to invest at least three to six months of their living expenses. You can invest this sum of money in liquid instruments such as liquid funds, money market accounts, high-yielding savings schemes, etc.
- Be financially independent – Everyone should be financially independent – it gives a sense of confidence to handle things. One of the key aspects that determine financial independence is the ability of an individual to save and invest their money in high-yielding securities. This would grow their wealth and help them to achieve their financial goals. Investing in mutual funds is a good place to start if you are clueless about where to invest money.
- Pamper yourself – It’s important to save a small part of your lumpsum amount and spend it on things that make you happy. You can use it to buy a new piece of furniture, or new dress, or a well-deserved vacation, or literally anything. Splurging and spoiling yourself will give you an instant emotional boost and happiness. And let’s face it we save and invest money with the ultimate goal to be happy.
Now that you have known how to use your lumpsum amount, what are you waiting for? Become financially independent and invest your money. Do not forget to spoil yourself along the way. Happy investing!
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