M
Mike_25
Guest
Lottery winners often make poor investment decisions, so here are some of the safest options:
•Annuities: Taking annual payments over time is genius. It ensures you get money each year without outliving it or overspending. Even if taxes reduce each payment, at least you have a guaranteed income stream lined up.
•Bonds: High-quality bonds provide stable interest payments with minimal risk of default. U.S. Treasury bonds in particular are essentially risk-free. Ladder different maturity bonds for income over time.
•Blue-chip stocks: Established companies with a history of solid growth and dividends. While stocks is riskier than bonds, reputable companies are less volatile. Their earnings stand the test of time.
•Index funds: A simple portfolio of index funds provides automatic diversification and returns that match the overall market. Low fees mean more money working for you. Market growth over time means steady increases every year.
•Certificates of deposit or CDs: Consider CDs if you want zero risk of loss. Higher than a savings account, CD rates provide guaranteed interest payments for a set term. Easy to cash out if needed with little penalty.
•Dividend-paying ETFs: ETFs that track dividend-paying companies or sectors, like financials, industrials or consumer staples. Generous dividends and the potential for dividend growth and price appreciation over time.
•Real estate: Rental property can generate income and appreciation, but management and repairs require significant work. I only recommend real estate for those interested in becoming landlords.
The key is allocating between low-risk, income-generating investments and higher potential return assets that can beat inflation over the long run. But go slowly—there's no need to put it all to work at once!
•Annuities: Taking annual payments over time is genius. It ensures you get money each year without outliving it or overspending. Even if taxes reduce each payment, at least you have a guaranteed income stream lined up.
•Bonds: High-quality bonds provide stable interest payments with minimal risk of default. U.S. Treasury bonds in particular are essentially risk-free. Ladder different maturity bonds for income over time.
•Blue-chip stocks: Established companies with a history of solid growth and dividends. While stocks is riskier than bonds, reputable companies are less volatile. Their earnings stand the test of time.
•Index funds: A simple portfolio of index funds provides automatic diversification and returns that match the overall market. Low fees mean more money working for you. Market growth over time means steady increases every year.
•Certificates of deposit or CDs: Consider CDs if you want zero risk of loss. Higher than a savings account, CD rates provide guaranteed interest payments for a set term. Easy to cash out if needed with little penalty.
•Dividend-paying ETFs: ETFs that track dividend-paying companies or sectors, like financials, industrials or consumer staples. Generous dividends and the potential for dividend growth and price appreciation over time.
•Real estate: Rental property can generate income and appreciation, but management and repairs require significant work. I only recommend real estate for those interested in becoming landlords.
The key is allocating between low-risk, income-generating investments and higher potential return assets that can beat inflation over the long run. But go slowly—there's no need to put it all to work at once!
