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mentally spending a non-existant windfall

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Recently I was lucky enough to receive a substantial windfall of shares. I knew about six months in advance what the likely amount of it would be and I planned to spend it mainly on a deposit for my first house.Having the time to decide how to spend it made me think that it might be useful to have an idea how I would spend any further substantial windfalls. This idea is also explored in Chapter 15 of The Bogleheads Guide to Investing which was the subject of a blog book review.

My favourite windfall would come from winning £125,000 on Who Wants to be a Millionaire and my least favourite is an inheritance from my parents, but I’ve decided that my general principles hold for any windfall above £5000. I would spend up to 60% of the total paying a big chunk off the mortgage, donate 10% to charity, spend 2.5% indulgently on myself and my family and up to 25% on having a large emergency savings pot. If there was any money left over, I’d invest it – probably after considering the options carefully for a few months.

What would you do with a windfall?

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