Katie and Tom, a young couple, recently got a payout from a critical illness insurance policy of $200,000. They want to know how to spend and where to invest this amount.
If you are like Katie and Tom who want to improve your finances from an insurance payout, you can consider yourselves fortunate. This amount of money is ideal to boost investment plans. Though there are many other factors to look at, here are some ways how you can prioritize.
First, you can pay off your debts such as credit card debts since these could have interest rates. This is a good investment since you can save as much as 20% in paying interest. Second, considering salaries and taxes can also help determine the allocation of the money, budget management, and financial situation in general.
Third, although it can be tempting to go all out in paying the mortgage, it will be better to focus on your investments. Finally, you may seek advice from a professional financial advisor. They can provide a fair and objective opinion in creating your financial plan. This plan can help you attain your financial target for a specific period.