Whistle-blowing and windfalls

The programme is designed to encourage anyone with information about a violation of financial regulations, mismanagement of public funds and assets, financial malpractice, fraud and theft or other improper activity that negatively impacts on the Nigerian government and people, to report it. Recent reports about delay in the payment of the reward of N860m to the whistleblower, who made the N13bn to be found in an Ikoyi apartment. According to the chairman of the Presidential Advisory Committee Against Corruption, “the man who blew the whistle on the N13bn found in an Ikoyi apartment is not sufficiently stable to handle his N860m reward.” He went on to say the whistleblower will need some financial advice. Sadly, it is estimated that up to 70 percent of recipients of a windfall, will lose it within just a few years, if it is not properly managed. What would you do if you suddenly came into a large sum of money? Would you make a down payment on a property, buy yourself a new car, start a business, put it away for your retirement, or just go on a spending spree? A financial windfall presents you with unique opportunities as well as challenges; nearly every facet of your financial life will change. Whether expected or as a complete surprise through a gift, a large bonus, a retirement payout, the sale of a business, a severance package, an inheritance, or a lucky lottery ticket, here are some tips to help you make the most of it.

Take time to adjust

The first few months after receiving a financial windfall is usually a time of adjustment. Before you start to make major decisions about your money or your life such as acquiring a new home, changing career, booking the holiday of a lifetime, buying that dream car or depositing the money in a money market account for a time so that it earns interest while you spend some time redefining your objectives and life goals, educate yourself about money matters, and create a long-term plan for the funds. A financial inheritance may come from serious injury, a divorce settlement, a lawsuit, or a death. The psychological impact can be overwhelming and may range from elation to anxiety, fear, shock, confusion, or depression. Take some time to reflect on this life change.

 Seek professional advice

Most people simply do not have the time or the expertise to adequately manage their personal finances, especially large sums of money. Seek professional advice. An advisor will look at your objectives, priorities and risk tolerance and help you develop a financial plan tailored to your unique situation. You are responsible for your money but make an effort to build your basic knowledge of investing. Reduce your debt Coming into unexpected wealth gives you an opportunity to pay off your debt or at least to reduce it. You can reduce the balance on your mortgage or on your car loan, and certainly any expensive credit card debt can be reduced or completely paid off. Your decision should be determined by the interest rate you are paying on the debt as compared with the investment return you envisage.

Invest wisely

You cannot afford to ignore the basics of wise investing because of your windfall.  Determine how much risk or volatility you are comfortable with. It pays to be conservative initially; you can get more aggressive later. To protect your wealth, build a diversified portfolio to include cash, stocks, bonds, mutual funds, and real estate. This is a good way to reduce risk whilst balancing value and growth.

Beware of “lucrative” investment opportunities

 It can be particularly difficult dealing with family and friends who will approach you about loans, business deals, and “lucrative” tempting investment opportunities. Don’t get pressured to part with your money too early. News of a financial windfall quickly spreads and many stockbrokers, bankers, and other financial consultants are keen to advise you. Update your estate plan Seek the professional advice from a reputable trustee company that specialises in trust and estate planning and can advise you on how best to structure your new wealth.

Help others

Having money makes it possible for you to affect the life of others.  Who would you like to help your siblings, parents, children, spouse, friends, or charitable organisations? Investigate philanthropic opportunities that are aligned with your own values and determine the best way to lend your support.

 Spoil yourself a little

Enjoy this windfall and spend part of it on something you’ve always wanted but perhaps could not afford before now. Determine how much you can really afford to spend in this way, then make a list of all the things you will like to pay for outright – a new car, a vacation, some jewellery, or your favourite gadget. Perhaps you would like to spend some money on friends and family. When correctly handled, a windfall can provide huge benefits that will continue beyond the lifetime of the initial recipient and can grow into a lasting financial legacy. Some people will be able to build on their financial windfall, while others will become overwhelmed and, regretfully, may end up far worse off than before.]]>