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Date Published : Thursday, July 31, 2008
It could be a share in a lottery jackpot, an unexpected bequest or maybe the proceeds from the auction of that immaculately preserved collection of childhood toys in the attic, but windfalls do happen - and what should you do if cash falls into your lap?
The Sydney Morning Herald states the first impulse is to spend, spend, spend but with the right choices, a windfall of $50,000 can help to set somebody up for the long-term.
It asked a panel of experts to recommend what consumers can do to make the most of financial good fortune.
Alex Dunnin of Rainmaker Information Services said one option would be to take a chunk out of household debts.
"If you've got a car loan where you're paying 13 or 15 per cent, then use this windfall to get the hell out of those loans," he said.
Carolyn Bond of Melbourne's Consumer Action Law Centre added that if consumers put a windfall towards clearing debt, they must avoid making the same mistakes again.
"Pay off debt, particularly non-mortgage debt ... and keep it off," she said.
Those who want to invest should treat a $50,000 inheritance as a "trigger" to review their financial planning, Hugh Elvy of the Institute of Chartered Accountants commented.
He recommended doing a budget, then identifying financial goals, putting a dollar value on them and deciding how long it will take to reach that amount. This will help consumers to decide on the best investments for their circumstances.
Alternatively, finance and property expert Peter Cerexhe said, consumers could take advantage of Australia's 7.25 per cent base interest rate by opening an online savings account, which will give them an annual return of up to eight per cent.
But, Mr Dunnin said, it's doesn't all have to be sensible.
"If you want to spend a couple of grand on a bit of a toy, why not?" he said - but make sure you "do something intelligent" with the rest.
Compare savings accounts.
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