WealthWeek

I have come into some money recently ($20,000) and I’m worried that I’ll spend it before I am able to invest it and grow it into something substantial. My problem is, I just don’t know where to begin. What should I do with it? Please advise.
- Roxy, Chicago

Roxy, that’s a good question but it would be hard to advise you without knowing a bit more about you, your personality and your circumstances. For instance, what are you comfortable with (in terms of investing)? Some people are risk takers, while others are risk averse. And, some people fall somewhere in between. What is the state of your current financial situation?

Truth be told, yes, there are plenty of things you can do to invest the money. And, you’re right on the ball with your line of thinking — i.e.: investing it before spending it all.

Here’s what I would do (assuming you have no investment knowledge, which seems to be the case):

• Decide how much of this money you want to spend and, for lack of better words, ‘blow away’ on yourself. You might find that you want to spend 10 - 15% and that’s okay. After all, life is meant to be enjoyed!

• Take the remaining money and throw it into a term deposit account that pays reasonably well (not too hard to find these days) and vow not to touch it… Be disciplined.

• Speak to a financial advisor for advice on how to invest the money in your savings account. This person will help you plan a good strategy according to your goals, investment style, your personal circumstances, etc. Also, start reading up on investing if that interests you and learn about the different investment strategies you might be drawn to. Sometimes, doing this will help you and your advisor make better plans for your money.
• Going forward, whatever investment vehicle you choose, ultimately, save 10% of your monthly income an apply it towards your simple savings account and/or your investment vehicles. This discipline will open doors for you down the road, trust me!

The road to wealth is not a mysterious one. A series of small, disciplined steps is what gets you towards the prize. And, keep in mind, as you progress, momentum kicks in down the road — small gains today will be larger gains tomorrow. This is the beauty of compounding.

To your success,

Eff Jay