Making the Most of an Inheritance: No Squandering Allowed
Forming a Good Game Plan for a Sudden Money Windfall
Elders have long held care-worn advice for their younger kin. One such gem - don't count your chickens before they've hatched. This cautionary tale often holds true when it comes to sudden fortunes, such as an unexpected inheritance. Deep diving into the nitty-gritty of money management is a must when it comes to keeping and growing your new found wealth. With the right steps, your golden egg of an inheritance doesn't have to be a nerve-racking prospect.
Investing your Inheritance Wisely for Long-Term Security
Once you have formed a clear picture of your financial goals, it's time to get into long-term investments. This is where you get to stretch that money into the lifestyle you've dreamed of. However, avoid over-complicating things. Keep it simple. Before you poke around in complicated financial ventures, consider options like stocks, bonds and real estate that are more familiar and reliable.
Avoiding the Allure of Instant Gratification
Your newfound wealth could create an overwhelming urge to instantly improve your standard of living. New car, spiffy gadgets, exotic vacations may seem appealing and you may be tempted to take the plunge. However, one must remember that instinctive splurging leads to unexpected debts. If you're not careful, you can easily slip into a debt cycle that's hard to claw out of.
The Curse of Short-term Improvements
Marshawn Lynch, the Seattle Seahawks running back, once offered a refreshing perspective that's as valid for the newly wealthy as it is for high-playing athletes. His trifecta advice is uncomplicated but weighty: protect your mind, your body, and your money. The objective? To eventually retire and do whatever you want. Chew on that, because that's the essence of smart money management.
The Tangled Issue of NFL Players and Bankruptcy
There's a startling statistic from Sports Illustrated: 78% of NFL players either go bankrupt or suffer financial stress within two years of retirement. The story gets darker in the National Basketball Association: 60% players are broke within five years of leaving the sport. This begs a critical question: why?
Figuring a Path through Myths of Massive Inheritances
Researchers suggest that those who received a sudden inheritance tend to decrease their saving efforts in the following ten years. One’s net worth tends to revert back to the path established before the windfall. Interestingly, about a third of the initial increase in net worth remains after nine years. Is there a hidden complexity that predisposes heirs to such a detrimental pattern?
Taking a Closer Look at Sustainable Purchases
The research indicates that a common pitfall for inheritors is that instead of making a saving and investing plan, they immediately plan to spend on high-cost items. When you make purchasing property that's within budget or investing in other financial assets such as bonds and stocks a priority, you can not only keep your sudden wealth, but also grow it.
Laying the Foundation of Long-Term Financial Stability
Sound financial advice doesn’t change over time. Irrespective of how the stock market behaves or which real estate bubbles pop, the fundamental principles remain the same. To secure your future, keep your 'chicken' protected. Try not to get carried away with impulsive decisions. Heed Marshawn Lynch's sage advice, and you too can enjoy a comfortable, secure financial future.
Originally Post From https://www.jpost.com/business-and-innovation/article-841060
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