It can be easy to assume that a large amount of money looks after itself – but the reality couldn’t be more different. There is a tendency, especially when one is dealing with a sum larger than one can easily relate to, to think you’re working with a near-infinite pot.
But one need only look at the many stories of lottery winners, jackpot recipients and successive stock-market traders who lost their wealth as quickly as they gained it to realize it’s not that simple.
Fortunately, there are some basic wealth management maxims that help ensure you won’t share a similar fate, should you find yourself in this position.
Take the Long View
There’s a perennial piece of advice you’ll hear time and again, and that’s that you should make your money, make money. This typically means re-investing it, but one should be mindful of how one approaches this.
Ideally, you want to prioritize long term investments that lead to ongoing, incremental and stable returns on your investment. While it may be tempting to utilize your capital in riskier short term trades, doing this exposes you to unnecessary risks and limits your ability to implement long term plans on how to use your wealth.
This distinction in attitude is partly at the root of the many stereotypes contrasting ‘old money’ with the nouveau riche. In effect, generational wealth only comes about by careful and shrewd long term investment. Those who get rich quickly are always going to be at risk of losing it quickly if they don’t adjust their approach towards one of steady conservation.
Hire an Advisor
Of course, it’s not just the business world that holds out the prospect of potential windfalls and their accompanying risks. The world of casinos, both in their brick-and-mortar and online formats, is more than accustomed to advising successful patrons on best practice methods for their winnings. Of the tips commonly outlined by this sector, one jumps out as the most prescient – that of seeking out professional help.
While it’s easy to assume you know what best to do with your own money, sometimes the lack of objectivity that comes about through proximity can cause problems. It is also, for this reason, a good idea that you hire someone from the outside to help you consider your options, as friends and family may just as easily be compelling to provide you with ill-suited advice.
A wealth management professional will be able to fact-check your ambitions, suggest means of re-inventing part or all of your funds in a way that guarantees sustainable and ongoing prosperity, and will also be able to assist you in navigating the various taxes and legislative hurdles that come with large sums of money.
Pay off Debts
Unquestionably, if there is one single ‘best move’ one could make should they come into a large sum of money, it’s to pay off all your debts. That way, even if one should – for whatever reason – lose the majority of your wealth in the future, you would at least be free from the obligations of debt.
This can range from paying off credit cards, to clearing educational debt incurred by student loans. Another great move is to pay off the mortgage on your house. Few things represent better locked-in capital than property, and being able to own your home outright places you in a position of fundamental security – after all, you own the roof over your head.
It’s important to keep perspective when you come into money, and freeing yourself from debt should always come before buying yourself a luxury car or property.
