Investment Tips for Lottery Winners

It’s pretty easy to waste money when you’ve got a lot of it. Ask most lottery winners about the amount of cash they part with following a huge windfall and you’ll probably be met with a wide-eyed response. In fact, some jackpot recipients take things too far and squander their prize money in no time at all, only to find themselves back on 9-5 street within a few years.

While there’s no harm in enjoying the high-life for a while, it’s a good idea to find useful places to invest those millions, so that you can protect your future and ensure financial stability. Here a few places to start.

Find the Right Bank

Finding the right bank in which to deposit your fortune is a good place to start. Operators like the Camelot Group run after-care programs which provide access to lawyers and financial advisers. These people have extensive experience working with high-net individuals and are able to offer pertinent, useful advice. As a general rule of thumb, for lottery wins of more than £500,000, private banks are usually recommended.

Pay off Debts

In fairness to even the most profligate of lottery winners, paying off debts is often the first thing that they take care of. Student loans, mortgages and credit card debts are a fact of life for most of us, so it makes sense to get rid of these burdens. That way, you’ll establish a sounder financial footing as well as peace of mind.

Buy Assets with Equity

Buying assets such as flashy cars, jewellery and clothing can be great fun if you’ve got cash on the hip. Unfortunately, investing in these kinds of luxuries isn’t terribly prudent because they depreciate in value like there’s no tomorrow: car models get updated constantly while jewellery and clothes go in and out of fashion.

What this means of course is that you’re going to get little or no value back in the short to medium-term. So it’s worth investing in items that are going to retain value and become a source of disposable income in the future. These include collectibles like artwork and antiques as well as high-end properties, which can have a significant resale value.

Investing in the Stock Market

Although the mere phrase is enough to fill some people with terror, the stock market offers plenty of opportunities for sound investment, as long as the risks are managed properly.

For one thing, spending money on stocks allows you to stay ahead of inflation – historically, stocks average an annual return of 10% which is significantly better than the 3.2% inflation rate. Many well-established companies also pay dividends to their investors which should improve your chance of a solid return in the long-run.

Future Generations

Securing the future of your loved ones is a no-brainer if you’ve got the money to do so. One of the best ways to go about this is to set up a discretionary trust, which you can then oversee as a trustee.

Whatever sum you put into such an account will be subject to tax at the rate of 6% every 10 years. However this becomes free from inheritance tax after you die, meaning that your children and grandchildren will be included as beneficiaries.