What to Do When an Investment Pays Out

Many investments are created with a specific time frame in mind. For example you might start investing in a particular financial product so you have some cash to spend on the vacation of a lifetime when you hit a certain age in life. You might have an investment come to fruition when your child reaches the age of eighteen, or when you reach a certain age in your working life. There are as many deadlines and goals for investments as there are people saving for them.

But sometimes you may not have any specific goal at all. You may just see the potential of saving a certain amount every month for, say, ten to fifteen years, in a particular savings plan. These plans tend to offer more potential for earnings than a standard savings account because they are often tied into the stock market. They’re one of the easiest ways to save for those people who dislike a lot of risk.

So what do you do when your investment pays out? There are several options worth considering.

#1: reinvest the money somewhere else

This is a good idea as you will have a lump sum to put into any new investment pool. Look around for potential opportunities and decide what level of risk you are content with.

Consider also whether you will continue adding money to your investment in future, rather than leaving the capital to hopefully appreciate over time.

#2: spend the profits but reinvest the capital

This is another option you could consider that will give you the best of both worlds. Let’s say you invested $5,000 over a period of time and you’ve earned $300 on that investment. You could use the $300 to spend on something while reinvesting the capital into something else.

Of course a lot depends on the plans you have for the future. Take your time – ideally in the run up to the investment reaching fruition you should think about your options. Even if the bank or organization you have your investment with offers you something else you should always look around and see what other options there are for you.

#3: spend the lot – after all we all have to splurge once in a while

Investing is important. But so is enjoying life and if you’ve been saving consistently for a long period of time it would be fair enough to feel as if you’ve earned a reward.

The important thing is to make sure you don’t just fritter the cash away. Think about how you could use it to improve your life. Maybe a new car is a good idea. Perhaps you’d like to renovate your home. There are lots of options here.

As you can see it is worth spending some time considering these three courses of action. This will enable you to figure out which one is best for you given your current situation – which may be very different from when you originally entered into the original investment.

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