Who doesn’t like a pleasant turn of fate – especially when you are least expecting it! Receiving a sudden windfall is one such news that can send you on cloud nine. Whether it comes from a relative’s will, your parents’ old FD in your name or a lottery – extra money is always welcome.
If you get your hands on an unexpectedly large sum of money, you may start making plans about spending it on a new smartphone or the luxury watch you have been eyeing for so long. But, before you make that final purchase, just step back and pause.
Although it may sound unappealing at the moment, your future self will be grateful if you choose to invest the windfall. This one smart decision today can give you a financially independent and stable tomorrow.
By investing the money, you can look at achieving greater goals in life. Here are few pointers you can begin with:
Prepare a Financial Plan
Drafting your financial plan is a good place to start if you want to make the best out of your windfall. Note down your short-term and long-term financial goals to identify the amount you will need to accomplish them. For instance, buying a house or saving for retirement could be your long-term plan, while getting a car or going on vacation could be your short-term goal.
Your windfall will give you the best returns if you put it into your long-term goals bucket. The real power of money is in compounding, and the interest earned will help you achieve your goals faster.
Do Your Homework
If you are a newbie in the world of finance, you may not know the best investment tools and resources available in the market. Before you commit to an investment plan, it’s best to do your own market study to understand the options available to you. Assess your personality, income and financial goals to decide the investment instrument most suitable for your needs.
Establish an Emergency Fund
Emergencies can strike at any time. When you have the financial means to manage such difficult times, sailing through them will become easier. Financial experts recommend saving at least three months of your monthly income in an emergency fund. If you haven’t created a rainy day fund already, consider putting some of your windfall into it.
Protection+ wealth creation
In case you are looking for a holistic product that offers you coverage and creates wealth as well, you can look at HDFC Life’s offering. The HDFC Life Click 2 Wealth is a life insurance plan that can grow your money with less risk. The plan offers three options to match your financial goals.
The Invest Plus Policy offers life cover and returns the fund value, on survival at maturity.
Protection for Your Family
The plan takes care of your dependents in your absence. With the Premium Waiver Option, the policy covers the premium until maturity in case of the unexpected death of the policyholder.
The Golden Years Benefit Option offers life cover till 99 years and repays the fund cover and mortality charges as lumpsum.
The news of receiving windfall can be like music to anyone’s ears. However, the way you choose to spend it will determine its real value in your life. Spending all of it today may leave you in a difficult situation tomorrow. However, investing it in a well-thought-out plan like HDFC Life Click 2 Wealth will ensure that it contributes to your overall wealth.
This is a partnered post.