Whistle Blowing & Windfalls
Earlier this year, the Federal Government announced a Whistle Blowing policy, which offers a maximum of five percent financial reward to any whistle blower whose information leads to recovery of looted funds obtained through fraudulent means.
The programme is designed to encourage anyone with information about a violation of financial regulations, mismanagement of public funds and assets, fraud and theft or other improper activity that negatively impacts on the Nigerian government and people, to report it.
Recent reports comment about delays in the payment of the reward of N860 million to the whistleblower who made the N13B find 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 N860 million 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.
What To Do With A Financial WindFall
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 whilst 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, however, so do 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 could 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.
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 very difficult dealing with family & friends who will talk to you about getting loans, business deals, and “lucrative” tempting investment opportunities. News of a financial windfall quickly spreads and many stockbrokers, bankers, and other financial consultants will be keen to advise you on how to spend your money but don’t be pressured to part with your money too early.
Update Your Estate Plan
Seek the professional advice from a reputable Trustee company that specializes in trust and estate planning and can advise you on how best to structure your new wealth.
Having money makes it possible for you to affect the life of others. Who would you like to help? – siblings, parents, children, spouse, friends, charitable organizations. 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.
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.