If you have won the lottery or received an inheritance or a settlement of some kind, then you know that you have a lot of decisions that you are going to have to make. One of the main decisions is do you want to receive your money as an annuity settled in structured payments or would you prefer to get cash for a structured settlement now? There are pros and cons to both but the purpose of an annuity is to spread out your earnings over a time and that may not be what you are looking for. Getting cash for an annuity can be very beneficial to you if you have plans of ways to reduce debt or invest your money. While the purpose of an annuity can give you an income over a long period of time, it can also make it seem like you never came into a lot of money because of how spread out the payments can be. Let’s look at few things that getting a lump sum can do for you and then you can decide if you want to sell your annuity for the lump sum or not.
- Getting out of debt- Almost all Americans have debt of some sort that is hanging over their head. If you receive all your money at once, you can call each of your collectors and offer to settle with them at a lower price. Your debt will be all paid off and you will probably still have a lot of money left, depending on how much debt you had.
- Paying medical bills- If you had an accident then you will probably need to pay your medical bills before you can receive treatment.
- Paying off credit cards- You probably opened up a lot of credit cards in order to build credit, which is a good thing. But, after a while, high interest credit cards can become a burden. Being able to pay those off will help you to get out from under them and be able to invest your money is lower interest ways that will still build credit for you.
- Buying a home- Investing in a home is a great way to build credit, invest and just generally live! Whether it is an investment property that you plan to rent out or your dream home that you have always wanted for you family; the purpose of an annuity to give you payments over a period of time will not help you be able to buy that home. If you get enough of a lump sum, you could even purchase the home outright and this will save you a lot of money every single month.
- Traveling- Everyone has a dream to travel and to see the world but you may actually be able to achieve that dream! Having an annuity will give you a little each year that you could go somewhere with, but having the lump sum will give you travelling possibilities that you ever dreamed would ever happen to you. You could see the entire world before your money runs out.
- Starting a business- This is a great endeavor to start if you receive a lump sum of money because you won’t have to worry about a working capital loan or a business loan, it will be all your money and you can start turning a profit immediately as long as your business model works out as you expect it to.
- Going to college- Maybe you’ve always wanted to go to college but never had the opportunity because you didn’t qualify for financial aid or granted or scholarships or anything like that and you simply couldn’t afford it. Having a lump sum of money will allow you to pay for your own college tuition or maybe send your children as well as pay for books and board.
A good purpose of an annuity is to teach you how to be smart and financially wise when suddenly coming into a lot of money. However, if you do decide to sell your annuity and opt for a lump sum, you can always direct your questions to a financial adviser where you can get advise and instruction on how to invest your money properly and efficiently.