The luck finally landed in your favor, and you won the lottery. Whether this is from the federal government or a local government scratch-off, you’re going to get paid in one of two ways, either in a lump sum payout or an option to receive your money over time.
How do you invest lottery winnings after you receive them, though?
Here is how to invest lottery winnings effectively.
1. Build a Business
One of the smartest ways to invest your winnings is to start your own business. You’re investing in yourself and the roof for how much money you can earn is technically unlimited. While you’ll have to pay to get everything up and running, there is no roof on how much your returns can be.
Not all businesses will be successful, so if you’re concerned about what business to get into, contact a financial advisor or consult start-ups. You can become an investor in those businesses and earn profits from contributing money.
For those that need help with what to do with their lottery winnings and want to learn some options, be sure to check out RSL Funding.
2. Contribute to Your Retirement Account
You’ll need to make sure the future you are taken care of down the road. Make sure that you’re contributing to your retirement accounts, whether this is a Roth IRA or a simple brokerage account for retirement.
You can only contribute so much to a Roth IRA every year though since your money will be post-taxed for lottery winnings. Consider a mixture of short-term investments and long-term investments. Though this will be based on your own risk tolerance.
3. Invest in Companies You Believe In
Another strategy to consider when deciding where to invest your money after winning the lottery is to simply invest in companies you believe in. You can take a simple approach and find companies that other high-profile investors believe in, like Warren Buffet or Bill Gates.
Don’t just invest in any company that someone throws at you though, as they could be trying to scam you. Instead, do research into a company and figure out what the growth will look like for them.
If you wanted to be even safer, you could consider investing in an index fund. Rather than trying to pick companies, you instead invest into the stock market itself and the percentages that those companies make up of the stock market.
How To Invest Lottery Winnings: Key Takeaways
Learning how to invest lottery winnings before you receive them is an integral part of understanding how to keep your money growing. Winning the lottery can mean that you earn and win more money the rest of your life, as long as you know where to invest it. Just be sure to invest it wisely.
If you want to learn more about getting your finances in order, then be sure to delve deeper into our blog. If you know someone that recently won the lottery, then be sure to share this article with them.