There are plenty of proactive reasons why it pays to plan ahead for an unexpected windfall. You never know when pursuing just another one of the best casino bonus offers might pay off in a big way, although it helps to remember that windfalls can come in many different ways.
It protects your wealth. When you invest you often buy and sell assets over time in order to generate income and achieve your financial goals. Knowing that you can buy something cheap and sell it for a higher profit when the time comes, and that you can expect to have more money to invest over time, encourages you to be smarter with your money. The same principles apply when you are planning for a potential windfall, because they ensure you aren’t scared off by the higher risks and costs that can come with sudden wealth.
It encourages you to be smarter with your money. Knowing that you can buy something cheap and sell it for a higher profit when the time comes, and that you can expect to have more money to invest over time, encourages you to be smarter with your money. The same principles apply when you are planning for a potential windfall, because they ensure you aren’t scared off by the higher risks and costs that can come with sudden wealth. It could be beneficial to others. If you are planning to donate a large sum of money to charity or your family or a community in need, you will often get a tax benefit as well. You can also feel good about providing for those who need your support, whether it’s for retirement, buying a house or sending a child to college.
So, if you are planning to receive a tax benefit for donating a large sum of money to charity or to your family or to your community, it is often best to plan ahead and arrange the amount you’re donating in advance. The likelihood that you will get a tax benefit means you can pay off your debt and also protect your finances from an unexpected cash shortage. You can use the withdrawal rates and balance sheets from Vanguard to determine your potential windfall tax liability in advance.
How Much Money Should You Invest at Any Time?
Some investment pros say you should never invest when you are in a losing position. That’s wrong, however. The time when you’re in a losing position depends on your age and goals. The amount of money you’re willing to lose at any time can vary from a few dollars to several hundred dollars, depending on the type of investment you’re investing in. If you’re investing in a stock or stock index fund, it can actually be best to take advantage of short-term volatility to buy more of the same stock or index fund and increase your percentage of the money you’re investing. This is called “insisting on stability.”
If you are investing in a financial product, like a mutual fund, or short-term bond fund, the time you’re most likely to earn a higher return is when you are buying more stock or index funds or short-term bond funds that are trading in a declining market. You can get help in setting this up by researching online or talking with an expert.