How To Manage Sudden Wealth
At any given time in your life you may find yourself with a sudden windfall. Perhaps you've inherited money or a stock portfolio after a relative passed away. Or maybe you have built a successful business over the years that you were able to sell. So what to do with all that money? And more importantly, how to make sure it can help you achieve your financial goals? Read on to find out more.
Think Long Term
It's probably a good idea to hold off on major purchases because you may be liable for income or capital gains taxes. You don't want to end up splurging on that beautiful yacht or year-long sabbatical and then not be able to pay your tax bill.
Additionally, it's wise to pay off any credit card debt first because it is expensive. According to creditcards.com the average credit card interest rate as of August 14th, 2018, is 17.10% across all categories of cards with highest the percentage at 24.18%).
Instead, try to focus on your long-term financial goals and how your new money can be put to work to achieve them. For example, perhaps you want to use some of the proceeds of the sale of your business towards a new business initiative. Or maybe you are nearing a point in your life where you feel you might want to work less.
Share The News Only With People You Trust
Sadly, sometimes estranged family members or old friends come out of the woodwork when they learn that you are doing well. It may be wise to share the news only with close family and friends, in other words, people you trust.
Scammers prey on people who are newly wealthy. If anyone approaches you via phone, email or in person to offer you an investment opportunity that seems too good to be true, it probably is too good to be true. Check this six-step list from FINRA on how to spot an investment scam.
Consider Getting A Team Of Advisors
It's worth thinking about getting some help with managing your new-found wealth. For example, you may want to have a will drafted, which a Trust & Estate attorney can help you with. A CPA can help you determine your tax liability and file your taxes. An NYC wealth advisor or NYC financial planner can help you develop a financial plan to help you achieve your financial goals.
Ask friends and family members for a referral to a professional they trust. Make sure to check the credentials of your advisor with the appropriate regulatory body and get a clear understanding of how they charge.