Posted on: 14 April 2015
Once you cash in your structured settlement buyout for a lump sum payout, you may feel overwhelmed with your newfound wealth. Although new cars, homes and luxury goods will surely catch your eye, these purchases do not often pan out as a solid long-term investment. Instead, you can protect your finances by selecting investments that project positive growth. As soon as you put your money to work for you, it's possible to have all of those tempting goods while maintaining financial stability. Here are four ways to increase the value of your payout over the years.
Pick Up Stocks
After receiving your payout, it's incredibly wise to max out your retirement fund and put aside a generous amount for emergencies in an easily accessible savings account. After that, you can continue socking the money away in interest bearing accounts to help it slowly grow without worry.
Mutual funds allow you to support groups of stocks you believe will increase in value throughout the years. Since the mutual funds back a diverse mix of company types, you do not face the risk of losing it all if one entity fails to thrive. On the other hand, the funds grow slowly despite the immense success of a single entity backed by your contribution.
Become An Angel Investor
If you want to up the stakes and increase the chance of hitting it big, you can become an angel investor for startups in a variety of industries. When you act as an angel investor, you grab a big chunk of the resulting profits if the company hits it big.
For your most successful investments, you can expect to net at least 2.5 times the total of your initial investment. Since most investor options include a solid exit strategy, you can pull your support after five years and move onto another budding business to try your hand at turning a profit once again.
Start Your Own Company
If you always wanted to create a product or provide a service, your settlement payment will now give you a chance to strut your stuff. When investing in yourself, however, resist the urge to jump in with both feet. Instead, plan to take the business creation process one slow step at a time to help the company grow organically.
As you gain a good customer base, you can increase your investment in tools, materials, staff members, facilities and other associated costs of running your business. You always want you end of the year profits to exceed the total funds put into the development of your company to stay above water financially.
Secure High Yield Properties
Unless you are incredibly lucky, purchasing a family home doesn't often lead to big real estate payouts. Instead, you will want to purchase high yield properties sure to immediately turn a profit or rise in price within just a few years.
For example, purchasing an office building or multi-family dwelling allows you to collect rent from several parties each month to quickly exceed your initial investment. Once you recoup your initial costs, your profits will continue to grow as you collect rent each month. If you prefer to stay out of the rental game, you can buy dilapidated low cost properties that will drastically increase in price after completing the needed repairs.
Finding Your Niche
Of course, you will need to spend some time reflecting on your strengths and passions before selecting an investment opportunity for your cash. If you prefer a hands off approach, you will likely enjoy plunking your money into interest bearing accounts or using it to back promising startups. On the other hand, investing in your own company or real estate allows you to roll up your sleeves and jump into the process personally.
You do not need to commit to just one method either. Depending on your settlement payout amount, you may be able to try all four of the above investment options. Just make sure you leave enough funds available for emergencies and living expenses, if needed.
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