What to do with a big windfall
We all dream about receiving a large amount of money out of the blue, but what are the practicalities of instant riches?
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Winning Lotto, receiving an unexpected inheritance or insurance payout, or some other windfall could be a life-changing event, allowing you to entrench your financial security and achieve long-term goals.
However, it’s crucial to approach newfound wealth with careful planning and consideration.
Here’s a guide on how to navigate the exciting yet challenging journey of managing a big windfall.
Inheritance: Receiving an inheritance can be both emotionally and financially impactful. It’s important to respect the legacy of the person who left you the funds by using them wisely.
Capital gain: Selling a property, especially in a booming market, can result in a substantial capital gain. This influx of cash requires thoughtful management to maximise its benefits.
Insurance payouts: These can come from various types of insurance, including life, health, or property. They are often intended to help you recover from a significant loss, so prudent use is essential.
Lotto wins: First up, the odds are stacked against you in games of chance, such as Lotto, Keno, and pokies. Always gamble responsibly. In the unlikely event that you do have a big win, it may provide an enormous financial boost. However, this sudden wealth can be overwhelming without proper planning.
National Seniors Term Deposit
With no fees and flexible terms, the National Seniors Term Deposit allows you to lock in a competitive interest rate that’s protected for your fixed term.
You can earn competitive interest rates up to 5.00% per annum.
National Seniors members can earn a special rate of 4.95% for 4 months, 5.00% for 8 months, or 4.95% for 12 months on maturity for term deposits over $5,000.
A term deposit is a fixed-term investment where your money is locked away for a set period, typically ranging from a few months to several years. Here’s why it can be advantageous:
Safety and security: Term deposits with a reputable bank are considered low-risk investments since they offer a guaranteed return.
Fixed interest rate: You’ll know exactly how much interest you’ll earn, providing financial certainty.
Encourages discipline: By locking your money away, you avoid the temptation to spend it impulsively.
Short-term solution: It buys you time to consult with financial advisors and plan your long-term strategy.
Take a comprehensive look at your financial situation before making significant decisions. Consider the following:
Debts and loans: Paying off high-interest debts, such as credit cards or personal loans, can provide immediate financial relief and improve your overall financial health.
Mortgages: Reducing or paying off your mortgage can significantly decrease your monthly expenses and increase your financial security.
Retirement plans: Contributing to your superannuation can enhance your retirement savings, providing long-term benefits.
If you’re receiving a pension, a large windfall can affect your eligibility and the amount you receive. Australia’s pension system includes means testing, which considers your income and assets.
Consult with a financial advisor or Centrelink to understand how your windfall might affect your pension and explore strategies to minimise any negative impact.
By taking a measured approach, using safe investment options like term deposits, seeking professional advice, and considering your overall financial situation, you can make the most of this fortunate event.
Proper planning will ensure that your windfall enhances your financial wellbeing and helps you achieve your long-term goals.
National Seniors Australia Ltd ABN 89 050 523 003 arranges deposits as an authorised representative (AR 282736) of Auswide Bank Ltd, ABN 40 087 652 060 Australian Financial Services Licence 239686. We do not provide any advice based on any consideration of your objectives, financial situation or needs. A target market determination can be obtained at auswidebank.com.au/tmd. Before making a decision to invest, please consider the Terms and Conditions. If you make a deposit, we will receive a commission from Auswide Bank. For more information about our relationship with Auswide Bank please read the Financial Services Guide contained in the Terms and Conditions.*This account is protected by the Australian Government deposit guarantee. Up to $250,000 of deposits in ‘protected accounts’ held by an entity with Auswide Bank are covered under the Financial Claims Scheme. Information on the Financial Claims Scheme is available at www.fcs.gov.au