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What Should I Do If I Just Received a large financial windfall?

Receiving a substantial windfall like $1.5 million inheritance or business sale or even lottery winning is a life-changing event, and it's crucial to approach it with a well-thought-out financial plan. At Parkmount Financial Partners, we have extensive experience helping clients navigate these situations.

Here are some essential steps to consider:

Keep It Confidential

First and foremost, discretion is key. Broadcasting your newfound wealth can lead to strained relationships and unwanted attention. It's best to keep this information on a strictly need-to-know basis.

Adopt a Trustee Mindset

Think of yourself as a trustee of these funds. Your responsibility is to steward them effectively for your long-term benefit. This mindset helps you make prudent decisions that balance immediate needs with future goals.

Develop a Life Plan

Before making any financial moves, take time to reflect on your life goals. Consider aspects like your career, living situation, family plans, and leisure activities. Defining these goals will guide your financial decisions and ensure your money supports your aspirations in a way that is sustainable and more satisfying

Key Questions to Consider:

  • What would you do if you only had five years left to live?

  • What are your long-term career and family goals?

  • Where would you do with your time if money were no object?

Pay Off High-Interest Debt

One of the most straightforward steps is to pay off high-interest debt, such as credit card balances, student loans, or car loans. Reducing or eliminating these obligations can significantly improve your financial stability.

Optimize Your Tax Strategy

Evaluate your tax strategy to minimize liabilities. Consider contributing to tax-advantaged accounts like Roth IRAs or utilizing backdoor Roth conversions. Explore employer-sponsored retirement plans to maximize tax benefits.

Create a Spending Plan

It's tempting to increase your lifestyle with a windfall, but uncontrolled spending can lead to financial instability. Develop a spending plan that allows for enjoyment without jeopardizing your future. Determine a reasonable annual spending amount that aligns with your goals and financial position.

Build an Investment Portfolio

Define your investment philosophy before making any investment decisions. A well-considered investment strategy will help you stay the course during market fluctuations and achieve long-term growth. Avoid the pitfall of frequently changing strategies, which can undermine your returns.

Key Considerations for Your Portfolio:

  • What is your risk tolerance?

  • What are your long-term investment goals?

  • How will you diversify your investments?

Seek Professional Guidance

Navigating a significant financial windfall can be complex. At Parkmount Financial Partners, we specialize in helping clients create comprehensive financial plans tailored to their unique situations. If you have questions about financial planning, investing, or retirement, visit Parkmount Financial Partners and fill out our contact form. We have been in the Boston area as a financial advisor for a number of years and believe in the process and ethics put forth in the CERTIFIED FINANCIAL PLANNER™ Professional process to create impactful financial advice for our clients. Subscribe to our newsletter for more insights and updates.

For all you people that have inherited money, or won the lotto, or maybe sold a business and have a large liquidity event.

Here is our lates video on the topic!

“Parkmount Financial Partners LLC”  (herein “Parkmount Financial”) is a registered investment advisor offering advisory services in the State[s] of Massachusetts and in other jurisdictions where exempt. Registration does not imply a certain level of skill or training.

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