How to invest lottery winnings?

How to invest lottery winnings

No, this article is not going to be about WHAT to invest it in. What it will be about, however, is HOW to invest lottery winnings, or what to pay attention to when choosing the investment tools. It is better that way, because knowledge in this area is of universal nature and it’s not like it’s going to get out of date.

Return on investment

Everyone wants to make as much money as possible. Which is why Forex or binary options enjoy so much popularity. You are almost sure not to make any money on this, because any method that can potentially bring few dozen or even few hundred percent return in such a short amount of time also entails huge risk. In this case, about 90-95% of participants lose in this game. And by “lose” we don’t just mean lack of profit but also loss of capital. Which makes it a good idea – even with aggressive strategies – to rely on more realistic profits that can be around 10-15% in the best case scenario (not counting stock revenues, but that requires a lot of luck).

Diversifying

Putting all the money in a savings account and exchanging it all to Bitcoins are equally idiotic ideas. Every investment has to be diversified. Let’s assume then that you’re checking the UK Lotto results, it turns out you have won the equivalent of 10 million zloties. Put some of that money in a good fund, then invest some in real estate, wine, garlic, stocks or whatever else, but always make sure that part of the resources make money while another part protects you from serious losses.

By placing everything in one basket, you bear a huge risk, and by playing too safely with the entire amount you deprive yourself of chances to considerably multiply the winnings. The only thing you can do blindly is making the decision on how aggressively you want to play. Are you thinking more of 2, 5 or 10%. Each of these options requires another path of action, but each of them requires using different instruments.

Follow the data

It doesn’t matter what’s the rank of the expert that is advising you to participate in a particular investment. Nobody’s word is worth as much as careful analysis of particular tool’s data. Acquaintances, family, friends, coworkers – you can’t trust them completely. Of course – they may want your good, but it’s about more than just good intentions.

You should use help from analysts and carefully evaluate what actually lies behind the description of every investment. You have to understand the instrument you’re using. It’s difficult, since even bankers don’t understand them all (see the causes of the 2008 recession and building extremely complicated derivative instruments). If you don’t understand something, you have no chance of evaluating profitability of an investment.