While there are millions of people who continue to invest for decades before reaching their dream financial goal of a few crores; there are a few lucky ones who receive a windfall of money out of the blue.
Anoop, an auto driver by occupation and a native of Sreeevaraham in Thiruvananthapuram, has recently won Onam Bumper lottery amounting to ₹25 crore. After taxes, he is set to receive a windfall of ₹15.75 crore.
The amount is quite big not only for an autorickshaw driver, but for any middle-class person anywhere in the world.
We spoke to a few experts and asked what he should do with the money he received. This is what they said.
Amol Joshi, Founder of Plan Rupee Investment Service believes that he should be careful before investing in the schemes that promise to multiply money in a short money, and instead, he should invest in a prudent way.
“He should invest a part of money to secure monthly expenses. There are a couple of ways to do this. He can invest in a fixed deposit (FD) with a scheduled commercial bank. Second, he can buy an annuity. Although we don’t recommend annuities because they are taxable just like a salary but in this case, he must safeguard his foreseeable future first. He can also invest in RBI bonds which will give me 7.1 percent, higher than FD. In fact, most jackpot winners end up losing all their money. So, he should be careful of not investing in the schemes that promise very high returns. Instead, he should invest in a prudent way and take help of professionals,” said Joshi.
Ravi Saraogi, co-founder, Samasthiti Advisors suggests barbell investing strategy where he can first invest in safe instruments before taking the risky road ahead.
“The lottery winner can invest somewhere between ₹2-5 crore in the safe assets such as real estate, debt funds, government saving schemes so that whatever happens afterwards, the family does not run into any financial woes. The balance money can be kept in debt and equity for a host of financial goals such as education of children, retirement etc. He can also invest some money in suitable alternative investments like AIFs, REITs, InvITs and international investing for greater diversification. Since his portfolio is large, he can afford to invest in these assets. All in all, he can follow a barbell investing strategy wherein he can first invest in safe instruments following which he can take risky bets to earn higher returns,” he said.
At the same time, Ankur Kapur, Founder of Plutus Capital, says the winner should do the planning and secure his future.
“After securing the future, whatever extra money he has can be allocated in the high-risk assets. However, there is no plain slate solution to this,” said Kapur.
No matter what he decides to do, the windfall is not a sure-fire way for his better future ahead.
As American author Michael Mandelbaum has rightly said, “The windfall of great riches can, if mismanaged, make things worse, not better for the recipients.