Difference between revisions of "Managing a windfall"

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A '''windfall''', in personal finance, is defined as an amount of money that a person gets unexpectedly. Windfalls can range in magnitude from small additions to an individual's wealth to a significant increase in fortune.  Since a large windfall almost invariably means huge changes in a recipient's life, psychological and emotional factors are often the most important factors determining outcomes.
 
{{Warning|"Most financial practitioners agree that well over 50 percent [of windfalls] are lost in a relatively short period of time. NBC News reported that more than 70 percent of lottery winners exhaust their fortunes within three years." -''Larimore, Lindauer, and LeBoeuf (2006). The Bogleheads' Guide to Investing. Chapter 15, p.180: Wiley. ISBN 978-0471730330.''}}
 
{{Warning|"Most financial practitioners agree that well over 50 percent [of windfalls] are lost in a relatively short period of time. NBC News reported that more than 70 percent of lottery winners exhaust their fortunes within three years." -''Larimore, Lindauer, and LeBoeuf (2006). The Bogleheads' Guide to Investing. Chapter 15, p.180: Wiley. ISBN 978-0471730330.''}}
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==Common sources of windfalls==
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* '''Legal settlements'''
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* '''Inheritances'''
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* '''Gifts'''
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* '''Lottery winnings'''
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* '''Insurance settlements'''
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* '''Retirement lump sums'''
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* '''Sudden increases in income'''
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Other common sources of receiving large lump sums: <ref name="Guide">Larimore, Lindauer, and LeBoeuf (2006). ''The Bogleheads' Guide to Investing''. Chapter 15, p.180: Wiley. ISBN 978-0471730330. </ref>
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* '''A real estate sale'''
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* '''The sale of a business'''
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* '''Widowhood and divorce'''
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==Managing a windfall==
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==See also==
 
==See also==
 
*[[Financial planning]]
 
*[[Financial planning]]
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==References==
 
==References==
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<references/>
  
 
==Notes==
 
==Notes==

Revision as of 07:18, 4 September 2012

A windfall, in personal finance, is defined as an amount of money that a person gets unexpectedly. Windfalls can range in magnitude from small additions to an individual's wealth to a significant increase in fortune. Since a large windfall almost invariably means huge changes in a recipient's life, psychological and emotional factors are often the most important factors determining outcomes.

Common sources of windfalls

  • Legal settlements
  • Inheritances
  • Gifts
  • Lottery winnings
  • Insurance settlements
  • Retirement lump sums
  • Sudden increases in income

Other common sources of receiving large lump sums: [1]

  • A real estate sale
  • The sale of a business
  • Widowhood and divorce

Managing a windfall

See also

References

  1. Larimore, Lindauer, and LeBoeuf (2006). The Bogleheads' Guide to Investing. Chapter 15, p.180: Wiley. ISBN 978-0471730330.

Notes

External links