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 Â£125,000 on Who Wants to be a Millionaire and my least favourite is an inheritance from my parents, but Iâ€™ve decided that my general principles hold for any windfall above Â£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, Iâ€™d invest it â€“ probably after considering the options carefully for a few months.
What would you do with a windfall?
- spend your windfalls
- all about mortgages: repayment and interest only
- how to budget if your name is plonkee