With the new Lotto Max, more people have started asking themselves what they would do if they won. While this is a fun dream, a few wrong decisions can turn the dream into a nightmare. Whether you come into a large sum of money by winning the lottery, receiving a large inheritance or perhaps from the sale of your home, you should meet with a financial advisor just like any other change to your financial plan.

 

The first thing most people say they want to do is pay off their mortgage. While this is a worthwhile goal, depending on the terms of your mortgage it may not be the best strategy to do so in a lump sum. Depending on penalties and interest rates you may be better to invest the money and draw a monthly amount equal to your mortgage payment, allowing the money to grow while still paying your mortgage off.

 

Charitable giving is another very popular goal when a person receives an unexpected lump sum. While this is commendable there are limits to the tax advantages associated with charitable donations in a single year. It may be in your best interests to spread your donation over several years as opposed to all at once. You also need to decide if you want to donate to an existing charity or start a foundation of your own that will continue to make donations long after you are gone. A financial advisor can help you minimize the administrative and tax costs of your donation so you can maximize the impact.

 

Often time coming into a sudden windfall provides the opportunity to retire. If that is your goal you need to decide what income you require, and choose the correct investments to provide that income while allowing for inflation. Finding the right balance between growth and guaranteed income is not always easy but a professional financial advisor can help you meet those challenges.

 

There is also the tax issue to consider, while the initial lump sum may or may not be tax free depending on the source, that money will be generating taxable income each year. There are many strategies to help reduce those taxes that a financial advisor can help you with.

 

If you are fortunate enough to come into a lump sum of money don’t risk making an expensive mistake that may be easily avoided. Money can’t buy happiness, but poor money strategies can cause misery. The professionals at Langlois Financial Services would be happy to help you regardless of what financial questions you currently have.

It is generally accepted that if you have a mortgage it should be protected with some form of life insurance. More and more people are realizing the benefits of having an individual life insurance policy versus the group creditor insurance offered by a lender. What most people don’t realize is that life insurance can do more than protect loved ones when you pass away unexpectedly, it can even help pay off your mortgage early when you stay healthy.

 

If a 30 year old couple were to buy a home and took a $250,000 mortgage over 20 years, their payments would be $1,282 a month based on current mortgage rates. The most obvious insurance option is 20 year term which would cost approximately $38.18 a month. What most people don’t even consider is whole life insurance.

 

Whole life insurance is more expensive than term, but it has a cash surrender value based on dividends and interest. The cash surrender value increases as your mortgage decreases. At some point they will overlap, at that point the policy can be cancelled and then used to pay off the balance of the mortgage. 

 

In our example from above, the couple could pay $208.32 a month for whole life instead of paying for term insurance, and then use the cash surrender value to pay off their mortgage in 16 years. The same increase to their payments applied directly to the mortgage principle would have it paid off in 18 years. That’s a savings of $35,767.68 just by changing which life insurance they use to protect their mortgage.

 

Most people recognize the importance of life insurance. However many of us over look the many additional advantages life ins offers. Speaking to a professional financial advisor can help you get the most from your financial plan. An informed decision is always the best decision.