Lately, I've been exploring all the great pfbloggers (personal finance bloggers) that are out there on the Internet. When I come across one I like, I add it immediately to my Bloglines subscription list. I have 40 pfblog sites in my list, and it's hard to keep up with all of them on a regular basis.
But since I make the attempt to read them all regularly anyway, I thought I'd spend a few days linking to a variety of articles by other pfbloggers. These should give you some different perspectives on finance, wealth and opportunities. I'll of course be adding in my own comments and advice.
By "pfblogs" I'm also including websites that talk about wealth and business opportunities, not just saving or investing or personal finances in general. They're all kind of loosely tied with the same end goal: increasing your net worth. So without further adieu....
Chris of the Get Rich Project asks, what would you do if you didn't have to work? Chris says that if he won the lottery, he'd pay off the mortgage, take a family holiday, invest most of the money at 10%., etc., but stay with his current employer.
I already freelance, so I'm my own employer. That's not an issue for me. Seriously, though, I think I'd go crazy if I stopped working. I love to "work" on things I'm passionate about. It's not work if you enjoy it, is it?
But to answer Chris' question, I'd start exploring the stock market once again, maybe get an education on Forex (Foreign Exchange currency trading) and commodities. Stuff I was always too scared to try before, or didn't have enough money for. But I'd also try to build up my own portfolio of stocks to mimic an index. Sort of my own index mutual fund. And become a real estate mogul.
Thing is, when you have a large lump sum of money, the temptation might be to just sit on it. Or go crazy spending it all. But if you quit working, you suddenly have no other income. So that lump sum has to work for you, generate more revenue from savings and investments. You can park the money long-term, but most of the time, really large cash amounts get lousy interest rates.
So if you're fortunate enough to land a large windfall, you're probably better off splitting it up into several portfolios. Some of it is going to go to tax, so make sure you have a good accountant for advice. Set that amount aside, preferably in an interest-bearing savings account, if you don't have to pay it out immediately.
As for the rest of your money, spread it out. Keep in mind that the FDIC only insures up to $100,000 per person per bank. If you're going to park a lot of your windfall cash in something like an online savings account, split it up across several different banks. Not branches; banks. The likelihood of all them going belly up at the same time is likely very small.
Park it all safely if you don't know what to do with it until that time that you do. Me, I'd put part into cash (online savings accounts), part into real estate, and the rest into an index mutual fund. Depending on how much my windfall was, of course.
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