What a Lottery Winner Can Do with His Winnings: 10 Ideas on How to Spend Your Newfound Money – Winning the lottery can change your life forever, but only if you play your cards right.
While the purchase of fast cars, big houses, luxury watches and clothes, and other goods might have appeal in the initial afterglow of winning, they are not the path to changing your life fundamentally and permanently.
Winning any sum of money has the potential to change your life.
You don’t have to win hundreds of millions of dollars for the lottery to completely change the course of where you are today.
Yet you do need to spend your money wisely, and that often involves saving and investing, among other things.
We’ve compiled a list of the top 10 best ways lottery winners can parlay their new fortunes into long-term happiness and wealth. These range from commonsensical to the more outlandish. Basically, you can decide what you are comfortable with and go from there. As you review these suggestions, keep in mind that your lottery earnings have potential for the future, not just the past and that you need to look ahead as much as you are in the here-and-now.
1. Pay Off Debts
If you have any lingering debts, you should use your lottery winnings to pay them off immediately. Why? Interest rates eat away at your fortune so paying off debt now is like ripping the band-aid off of a wound. It will have to happen eventually and you don’t want to be caught holding the bag when your lottery earnings have been spent elsewhere. It’s not only about being responsible, it’s about preserving the value of your paycheck (if you continue to get one) as well as your new fortune.
2. Purchase an Affordable Home
If you are currently renting and your lottery winnings allow you to do so, then you should buy a moderately priced home to help you save that money every month and build equity in a real estate investment. Why we like this suggestion is that it not only provides you with a necessary utility – a place to live – but also with an asset that can grow in value over the years.
3. Invest in Your Retirement
We all grow old and one day we will no longer be able to work. Whether you are ahead, behind, or haven’t even started on your retirement savings, now is the time to do that. Use your lottery earnings to secure your future and make sure you don’t have to scramble for a job in your old age.
A life insurance policy provides funds for your family in the event of your death. Since this is an inevitability, this is a way to make sure your loved ones are cared for after your passing. Not only that, but life insurance policies tend to be incredibly affordable. If you don’t have one yet, consider securing your family’s future with a life insurance policy using some of your lottery earnings. In a way, you could look at this as an investment in the future and as a way to defray expenses when you pass.
5. Invest in the Stock Market
Naturally, one of the most popular places to stash your cash is the stock market. We would advise a moderate fund with a healthy dividend that pays out to you on a regular basis. Avoid investing in single stocks or highly speculative securities. You want reliability here. Plus, the added quarterly bonus of hefty dividend incomes means that you make money while letting your money sit around. This is why they call it putting your money to work: It works while you don’t.
6. Purchase a Rental Property
Another way to generate income from your lottery winnings is to purchase a rental property. If you already own your home, but you want some extra income every month plus the potential for equity down the line, then a rental property makes perfect sense for you.
7. Savings and Certificates of Deposit
While not the most exciting suggestion on this list, savings accounts and certificates of deposit often give consumers reliable, government-backed returns and security knowing their funds are safe and unlikely to be lost in speculation on the stock market or through a downturn in the housing market.
One of the more exotic investments on this list, and one of the riskiest, cryptocurrency is seen by many people as the way of the future. Beyond that, however, it is also seen as an investment hedge against inflationary tendencies in fiat currencies. The only concern we have here is that there is no regulatory market whatsoever and consumers are often left at the mercy of their exchange. Even so, there are more than a couple of bitcoin millionaires out there and for good reason. They took a risk on something new while the rest of us took a wait-and-see approach. We wouldn’t put it all into crypto, but we would have a hedge for sure.
9. Start a Business
Maybe you’ve always dreamed of owning a business. Now you can with your lottery winnings as the financing element that kickstarts that dream. We would warn you, however, that starting a business is not without hefty risks. If you are risk-averse, poor at financial management, or think everything tends to be an overnight success, we would stay away from this option. Let other people work hard for you using your money. But if you have the guts and the brains to make it happen, as well as the grit and tenacity to see it through, then starting your own business is for you.
10. Build a Living Trust
Turn your lottery winnings into a living trust that provides you with income in perpetuity. Obviously, you will need somewhat substantial winnings to achieve this, but this preserves your capital and takes care of you for the duration.