You open your Lotto247 lotto results email, you see that all your numbers match, you’ve done it, you’re a millionaire…
Once you see the lotto results that show you are a big winner, chances are that the first thing that you are going to think about is what luxurious items you are going to rush off to buy. While that is a very fun idea (and you should definitely spoil yourself), it may not always be the smartest idea.
Here is a list of the top 5 rookie mistakes that the newly rich make that you should avoid:
Buying mansions or multiple houses with no proper planning
Buying a house is a big commitment and a big investment. You should not be in a hurry to buy a house after your winning lotto results. You should first speak to a real estate specialist who will be able to advise you which areas are good investments to buy in and whether it is a buyer’s or seller’s market. Remember, that the bigger the house you have or the more houses you have, the higher taxes and maintenance costs are going to be. You might be able to afford it now, but will you still be able to in a couple of years?
Putting all of your eggs in one basket
No matter how much you win (big or modest), you should NEVER put all of your newly acquired wealth into one market or thing. This means don’t put all of your money in just property, or just business, or just savings, etc. The more you diversify your portfolio, the better your chances of being able to stay rich in the long term.
Buying super expensive cars that lose value fast
A Lamborghini, Maserati or Ferrari may be your dream car, but owning one too soon can become a nightmare. The insurance on these cars are often exorbitant, not to mention the service fees and the price of parts. Cars are also a decreasing asset that lose value very quickly (especially the high-end models which aren’t easily re-sellable secondhand).
Buying a yacht/helicopter/plane without thinking it through
While buying these luxury modes of transportation may seem beneficial, there are lots of hidden costs that you will need to consider. Some of these include operators, docking fees, permits, petrol, maintenance, insurance, and many more. If you have to indulge in this lifestyle, rather rent or pay for individual trips (just not too frequently!).
Investing in long shot businesses/buying lots of businesses
As soon as the lotto results are announced and people start finding out that you are wealthy, you can expect a lot of business proposals coming your way. Not all of them will be bad for you, but make sure that you invest or buy in an industry that you are actually familiar with and make sure to speak to a wealth advisor and business manager about it beforehand. Do not just go around investing in or buying business just because you can afford to - there is no guarantee that it will become a good investment.
Now that we have told you about rookie mistakes to avoid, can you think of anything that we have left off the list? Let us know in the comment section below.