What if $100,000 came your way?

 What if $100,000 came your way?

Let us suppose for a minute that you had $100,000 cash in the bank. What would you do? What would your thought processes be? Not so easy is it? What would a “Think Rich” person do who gets the same amount?

If you are a “Think Rich” person you have your house in order. You live within your means and you have a plan for your future financial, it is that plan which will give you the place from which to start your thought process. Let us walk through a thought process that most often manifest itself as a series of questions that will hopefully get us to the highest and best use of the funds. These are the kinds of questions rich people would ask of themselves.

Some of these questions are:

• What are the tax consequences of this money?
• Is the money parked in an interest bearing account?
• Where could this money be invested to get the highest rate of return?
• Should I look for long term or short term investments?
• What is the current direction of interest rates?
• What can I do with this money that will increase my yearly cash income for a long period of time?
• Do I have the time or skills for a active investment or should I seek a passive investment?
• How will this money effect or change my rich plan?
• Do I have the needed skills for the intended use or do I need assistance?

Some questions of importance where answered when you made your get rich plan:

• Do I like passive or active investments?
• How much risk am I willing to assume?
• What rate of return do I think is a good rate of return?
• What investments am I interested in?
• What are the various rates of returns on the various investment options?
• Do I have an emergency fund?
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Most people who get a large sum of money and who do not have a plan generally are broke with in six months of getting the money. This happens because they where not prepared and lacked the financial management skills to do otherwise. Most people think of money as necessary to survive and they know they are suppose to save some for when they get old. What they should have been taught is that money is also a tool that can make them more money. They only need to learn to use the tool, to do that they must change the way they think about money.

The rich get richer partially because they have money working for them everyday, but mostly because they consider the highest and best use of the money that comes their way. We all make money mistakes, we all look back and say we should have done this or that instead. I am guilty of making bad decisions about money every week, but I know that I only have to get it right half the time to get ahead. The other thing I know is that in order to get it right half the time I have to work at it.

My Advice to anyone who has to decide what to do with a large sum of money is? Park the money in a money market account and take your time making decisions. If you do nothing for six months but plan and research your options, then you did the right thing.