Smart ways to invest lottery winnings
Although they purchase lottery tickets hoping that one day the investment will pay off and they will win the jackpot, very few players are actually prepared for this fortunate event. When good luck strikes, many are overwhelmed by the fact that they are suddenly in possession of huge amounts and don’t have any plan on how to invest lottery winnings. This is why many winners end up losing everything and their stories serve as an example for their peers who might one day scoop a jackpot.
The reasons to invest lottery winnings in real estate
The second most obvious investment for lottery winners is their real estate, with the main one being a bank account where the money can be stored indefinitely. The advantage of keeping the money in the bank is that you receive a monthly interest, but the downside is that during times of inflation you are actually losing money. Very few small investments are going to pay off and represent a viable alternative, for big-time lottery winners because they spin millions of dollars.
The real estate is an intelligent way to invest lottery winnings, because if you choose the right property you can expect its worth to increase over the course of time. Naturally, the housing bubble brought many investors to their knees, and the danger of losing everything by acquiring expensive properties that are worth much less is all too real. This is why jackpot winners should consult a financial planning specialist if they want to invest lottery winnings in the real estate and never base their decisions on hunches.
The advantages of stocks and mutual funds
Another way to invest lottery winnings is by purchasing stocks, but this is a double-edged sword that has to be handled carefully. Very few of those who win the lottery jackpots have any financial background, and this means that for most of those who buy stocks the future is uncertain. Nowadays even experienced brokers can make poor decisions which translate into millions of dollars lost, and lottery players are every bit as vulnerable. Once again it is important to get in touch with a financial planner and consult several specialists before investing in either mutual funds or stocks.
On the good side, if you make the right decision, you can win a lot of money with minimal effort and you always have a safety net in place. The idea is to have a diversified portfolio, so even if one of the stocks that you chose to invest lottery winnings in crashes, you would only lose a small part of your savings. The bottom line is that there are several alternatives for those who have a lot of money and want to invest it in something safer, but they shouldn’t do it with without asking for a professional opinion.
Check out how to Be smart and invest your lottery winnings for future returns now.
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March 7, 2013 | by John Greener |