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In An Era Of Financial Windfalls, Avoid This Mistake

In this era of economic and investment volatility, fortunes are being made -- and lost!

Whether you just won the lottery or earned a huge bonus for performing more procedures than any of your partners last year, here’s important information about what to do next.

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If you’re fortunate enough to come into a windfall, it’s important be aware of a mental accounting mistake known in behavioral finance as the “house money effect.”

After a lucky roll of the dice, gamblers fall victim to the “house money effect,” thinking of winnings as a separate pile of cash that could afford to be lost, when that “funny money” is really no different than any other assets.

Whether you received an inheritance, took an employee buyout, won a lawsuit settlement, or sold your business, home, or yacht, you don’t want to make this mental accounting mistake by treating a windfall cavalierly.

Before you do anything foolish, stop; take a breath, and think strategically by creating a plan to build on the opportunity by making a strategic plan.

Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.


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This article was written by a professional financial journalist for Henrickson Nauta Wealth Advisors Inc. and is not intended as legal or investment advice.

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