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March 10th, 2016

UTC lump sum blog 2016


What about that lump sum?
What happens if you suddenly find yourself in receipt of a large sum of money? Receiving a lump sumcan be very exciting because it’s rare to have the opportunity to spend or invest a large amount of money at one time. But figuring out what to do with a lump sum pay-out can also be very stressful, especially if you aren’t comfortable making sound financial decisions.

First steps to managing a lump sum 
Many experts recommend that you take several months or even a year to decide how you’ll use the money, especially if the pay-out is tied to an emotional event, such as the death of a family member or losing your job.When you’re ready, the first step is to take an honest look at your current financial situationand develop a financial planbased on your goals.

What you need now is the temperament to control the urges that leads to negligent spending or investing in an ad hoc manner. Remember, by making a prudent assessment of your financial condition and allocating assets in line with the level of risk you are willing to take, you can take away some of the fear associated with investing a lump sum.As a general rule, it’s never a good idea to put all your assets and all your risk in a single asset class or investment.

Pay off debt
This should be a priority for anyone that gains a large lump sum of money. Try and clean up your consumer debt such as car loans, mortgage debt, credit cards or even student loans.Not only does paying off your debt free up yourmoneybut itcouldboost your retirement strategy. Consider investing in our retirement instruments, such as the UTC’s Universal Retirement Fund (URF) or the Individual Retirement Unit Account (IRUA), ideal vehicles to consider as part of your retirement planning. They can provide the keys to dealing effectively with the prospect of retirement and old age by allowing an investor to maintain an investment portfolio that provides financial options in the golden years.

Whether you put all your cash to work immediately or periodically invest portions, you need to make your decision completely upon your investment objective and risk tolerance – and not based on emotion.No matter your status, what is required is a judicious mixture of mutual funds, equity and fixed income investments that will enable anyone to build a strong investment portfolio.

For example, if your time horizon is 20 years, you can invest into a long term investment, such as the UTC’s Growth and Income Fund, an investment vehicle specifically designed to provide the investor with the potential to earn capital growth and dividend income. It comes with a price guarantee feature which affords investors protection of capital once the funds remain invested for a minimum of three years. It is designed to provide diversification to an investor’s portfolio and offer potential for long term investment growth.

Make a charitable donation
Not everyone will agree but you could give some of the money to your favourite charity or someone that needs urgent medical attention. Be sure to be discreet – you don’t want people knocking on your door demanding your support for a charitable cause.

Wealth Management
Whichever route you are considering, our Advisory Services team, with a focus on wealth management, can help enhance the performance of an investment portfolio and identify ways for you to continue to save and invest effectively and generate wealth.

Lump sumtips:

  • Resist the urge to splurge
  • Be responsible and take care of your financial priorities first
  • Whether it’s an inheritance, bonus or redundancy pay-out you should put it to work bymaking wise investmentsto secure your financial future.
  • Diversify so you don’t put all your eggs in one basket.