Important considerations to make when investing a lump sum


If you’re looking to invest a lump sum of money, the chances are you may have acquired the funds through an unusual life event, such as an inheritance following the death of a loved one, or something more positive, such as a lottery win or payout from a settlement case.

Regardless of how you appropriated your cash reserves, it is essential you invest your money wisely in order to get the most from it and make it last as long as possible.

There are a number of potential solutions, and the right one will differ from person to person. But below are a few pointers to help you make the right decisions. As always, please contact me, Alex Herbert, at Prestige Wealth Solutions in Dubai for assistance.

Separate business from emotions

However your money has been acquired, it is important to allow yourself time to think with a clear head when considering your options. Don’t rush into a decision, and make sure you’ve done your homework before making a decision. Employing the services of a reputable financial adviser will help in this regard.

Consider both long-term and short-term options

When investing a lump sum, many people think about the long-term impact of investing their money, but neglect their short-term needs. For example, you may wish to use some of the money in the short-term to reduce your mortgage or pay off any existing debt. If you’re not working, you may require some of the lump sum for living expenses.

Your first action when you receive the payment is to sit down and consider exactly what you would like to use it for – both in the short-term and the long-term.

Once you have done this, you can work with a financial adviser to determine the best way to invest the lump sum. Short-term funds can be placed in cash investments while the majority should be invested through funds with the ability to grow your investment above inflation over the medium to long term.

Get professional advice

For most people, the investment of a large amount of money can be confusing. Therefore, to get the most from your finances, consider using a professional lump sum investment service. There are a number of companies out there who can help, such as Prestige Wealth Solutions (PWS). With offices across the globe – in locations such as Dubai, Qatar, Monaco, and South Africa – PWS can ensure that you get the most from your investment.

Professional advisers will be able to consult with you regarding the best course of action; they will be able to tailor an investment plan according to your exact needs and ensure that you invest your money with maximum tax efficiency. Although this will involve a cost, in the long-term this is likely to pay dividends in terms of time saved and growth achieved.

When working with an adviser, be sure to ask lots of questions. A good advisor, such as those at PWS, will be able to advise you on time frames, investment risk, and potential return on investment.