• What to Do With Newfound Cash Whether It's P100,000 or P1 Billion

    You just came into money that will change your life. Now how do you make that cash grow?
    by Aneth Ng-Lim .
What to Do With Newfound Cash Whether It's P100,000 or P1 Billion
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  • Let’s be honest. We all want to get rich quickly, and one proof was the long lines in lotto counters around the country these last few weeks, as the Ultra Lotto 6/58 climbed to a record Php1 billion jackpot.

    Now we know two people won and will share the Php1,180,622,508 prize, and there were another 100 bettors who got five correct numbers out of the six combinations, earning them Php169,930 each. We now have 102 people who are the object of envy of the entire nation.

    Stuck in traffic for two hours last week, I was chatting with our Grab driver who was excited about the possibility of being a new billionaire. He has been spending Php24 for a ticket every week for the last three months, hoping for a lucky break. I told him the odds are 1 in 40 million, and he looked at me like I was raining on his parade.

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    So I asked what he will do should he end up winning and he said, “Magtatago kaagad ako. Mahirap na baka walang matira (I will go into hiding because the money may be gone as quickly).”

    That’s actually the first smart thing he said to me during the long ride. Financial experts in the United States usually give this piece of advice to lottery winners in that part of the globe. If you want your winnings to last, keep a low profile and maintain anonymity to keep money predators away.

    A one billion lottery win comes once in a lifetime so let’s aim for something that’s more within our reach. What if you were one of the 100 who won Php169,930? Let’s assume you have claimed your prize and paid taxes if any and you are sitting on your windfall. What do you do next? Consider these tips we polled from financial advisers on what to do with your newfound cash.

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    Try the 50/50 rule

    One financial professional suggested lottery winners set aside half of their winnings for their future, and then go crazy with the other half. You deserve to reward yourself and your family so why not travel to your dream destination, or surprise your parents with gifts that they would not usually buy for themselves. Personally, I would lean more towards 80/20, invest 80% and then spend the 20% guilt-free for my family and me.

    Pay off debt

    We all have them, whether it’s a credit card balance or an appliance installment loan or mortgage payments on a car. Pay off as much of your debt as you can, and start off with the ones that are charging higher interest rates. Debt payments can be a drag on anyone’s cash flow, and now that you can afford to, make sure to pay it off and save on those finance charges and interest fees asap.

    Learn from others’ failures

    Since the names of lottery winners in the Philippines are withheld, it’s not easy to find out what they did with their winnings, or if they are still mega millionaires today. If we look beyond our shores, we find sadly many examples of lottery winners who were made more impoverished for it!

    One of them was Lou Eisenberg from Brooklyn, New York, who won US$5 million in 1981, also the largest lottery payout at that time. Twenty years later, he was living in a mobile home after gambling his money away. Whatever amount you won, it will run out unless you spend frugally and make it grow with wise investments.

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    Get professional help

    One hundred thousand pesos is an excellent place to start an investment portfolio. With your prize money, expect to be at the receiving end of well-meaning suggestions from people on what you can do with it.  You can listen to family and friends on ideas, but an independent financial professional who is not connected with any bank, insurance company or investment firm can give you an objective view on what investments are right for you.

    Have a financial plan and stay the course

    After consulting a financial professional, work on a roadmap for your financial future. Do you want to start saving for a retirement nest egg? Or how about an education fund for your kids? You can also review your assets or lack of them and decide what you need. If you are renting now, maybe you need a home and can use part of your prize money as down payment? How about a car that can ease your family’s commuting burden? That car may even provide another income stream should you decide to sign up as a Wunder carpool driver or join the Grab fleet.

    Discover the magic of compound interest

    You can also leave the Php100,000 to grow and see compound interest work its magic. Say you choose or decide on an investment with your new advisor that will provide at least a 10% interest each year That Php100,000 will become Php161,051 in five years, or Php259,374 in 10 years. Leave it longer and see it grow to Php672,750 in 20 years! 

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    Jackpot winner or not, always spend your money with a real purpose in mind. Remember that it is a finite resource and many people, lottery winners included, have learned this the hard way.

    Aneth Ng-Lim began her career as a writer and happily returns to her journalism roots after working as a communications specialist in the government and the private sectors. While working for a bank as a consumer education head, she honed personal finance skills and increased her money smarts. A woman empowerment champion, she is a proud mom to two teenage daughters.

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