Whether you’ve sued your employer for a wrongful termination, you got injured in an auto collision that wasn’t your fault or you’ve slipped and fallen while you are out shopping, it is crucial to hold onto your settlement money for as long as you can. Your first impulse will be to spend all of it at once, but the wisest thing you can do is invest it. If you want to make the money last, possibly for a lifetime, you have to look at the funds not as a windfall, but as a nest egg that could secure your financial future.
Here are 5 tips for investing lawsuit settlement money:
Make sure that all your financial records are in tip-top shape. It is important to know how much you should invest and how much you should keep liquid for expenses, like paying off medical bills if you were injured or for bills if you were laid off. While it is smart to invest your settlement winnings, you typically don’t want to go all in, because you can end up not having enough for your immediate expenses. In this case it might be wise to consult with a financial advisor who can better estimate how much you should invest and how much you should hold on to.
It is also important to diversify. Most financial advisors will tell you to put a larger portion into a high yielding mutual fund and a small portion into a more risky account. Putting the lion’s share of the money into a higher interest yielding account is a great way to hedge your bets, while putting a smaller potion in a riskier account can possibly yield much higher returns. You could then move dividends from the riskier accounts into the safer accounts whenever you get paid out.
Find a brokerage firm with the lowest commission rates. Some of these firms will gouge less savvy investors, because they don’t typically know the market rate for commissions. The best way to find out is to ask and then compare to the current market rates. And before you sign documents make sure to look at the fine print so that you don’t end up having to pay a slew of hidden fees.
Next, be careful about taking a loan out against your future winnings. You might have immediate expenses that you need to pay for and it might be a while before you get your settlement check, but you want to be smart before you take out a loan. If you are looking for a lender, check out AnyLawsuits lawsuit loans, because you will get the money you need so that you can pay for all your most pressing expenses, like lawyer fees and more.
Lastly, make sure you thoroughly review an account before you invest in it. A brokerage firm will be able to provide you with a prospective of all available stocks. If you have a significant amount of money to invest, it is especially important to review, because you can end up losing more money that your settlement was worth in the first place, which can be quite devastating.
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