Should I Invest or Spend a Lump Sum of Money?

By Angela Tague, Contributor, on May 2, 2017

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I need to make a decision. Later this year, I’ll receive a beneficiary payment from a family member’s estate. As a small business owner, I plan to act responsibly and use the funds to propel my career forward and add security to its future. It’s what this particular family member would’ve liked; she encouraged and adored my writing, so I know I’m moving in the right direction.

But, where should the funds go? Should I invest or spend? As an entrepreneur, there are several avenues to consider: investing in business development and tangible needs, padding the retirement account to make the future more comfortable or spending funds now to ensure the health of the overall business.

Invest in the Business

My initial thoughts were to allocate the majority of the funds directly into the business. I could attend industry conferences and networking events on a more frequent basis, hire an assistant, have access to technology upgrades as needed and give my home office a much-needed makeover.

These changes would feed into the day-to-day business operations by making my working environment more productive and building relationships to secure ongoing writing contracts. By investing in my 8-year-old business now, I can grow it faster and ultimately generate a larger annual income year over year.

Save for Retirement

Of course, my thoughts also drifted to the future. Things are rolling along just fine, so why not add a lump sum to my Roth IRA to build the account faster? As a 30-something, self-employed individual, I know I don’t put enough away each month, and this financial addition would give me peace of mind.

I’ve also contemplated adding short-term investments to my portfolio. What if I retire early due to an illness or disability and don’t have access to my IRA (without a penalty) due to a young age? This upcoming payment would make it easier to start these types of investments.

It’s never a bad idea to prepare for the future. The sooner I tuck away unexpected funds, the longer they can grow for when I need them later.

Spend on Self-Care

Finally, I’m a huge cheerleader for making time for yourself as an entrepreneur. We put in countless hours building our dreams and often forget to take care of our number one business asset: our health.

I know I need to take more time off, schedule vacations, go to yoga classes more often and not hesitate to visit the doctor. But, when you’re busy building a business every day — and you love what you do — the days pass quickly. Sometimes, you don’t realize you’re burnt out until you hit rock bottom.

Putting an emphasis on self-care also ensures the overall health of my business. When I’m sick or unable to work, everything pauses momentarily. The healthier and more resilient I am on a daily basis (thanks to self-care), the more productive, stable and successful my business will become.

When you’re solely responsible for your income, think carefully about each sum of money you receive unexpectedly and which aspect of your life it could enhance. I’m still contemplating what to do and where I’ll notice the greatest benefits. Of course, it’s possible I’ll allocate funds to each of these three areas, adding more stability and balance overall to my career and life. Invest or spend? Maybe both.

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