Sat 20 Aug 2005
Scotsman
THIS year's lucky Big Brother winner, Anthony Hutton, went home last Friday night with a pot of £50,000 after runner-up Eugene took the other half of the £100,000 prize fund. After the Geordie dancer has secured an exclusive deal with the latest gossip magazine and been signed up to appear in an advertising campaign, more income will no doubt follow - but it won't be an endless pot.
The chances of winning a reality game show are relatively slim. However, you may come into unexpected wealth through other means - a long-lost relative may leave you a substantial amount in their will or your numbers might come up in the Lottery.
Around two-thirds of the UK regularly play the Lottery, with millions won every week. But recent media coverage on winners squandering their millions suggest that some planning is needed.
If you are one of the lucky ones who finds themselves "in the money", what should you do with your new-found wealth?
If, like Anthony, you come into £50,000, there are many ways you can manage your fund to maximise its potential.
Whether you are a safe long-term planner looking for a secure financial future, like Eugene, or a risky investor looking for short-term gain, like fun-loving Anthony, you should seek some advice to plan what you do with your money.
Lucky lottery winners have invested in a huge variety of assets - from property and home improvements to cosmetic surgery and purchasing a piece of the moon. Enjoying an extravagance or two is expected, but planning for the future is crucial.
So, after you've splashed a little cash on the mandatory new luxury car and exotic holiday, how should you invest your remaining pot of gold? If you favour the quiet life, you should opt for safe bets. A good place to start is to clear any debt, especially on credit cards, where you can be paying up to 20 per cent interest per month.
The less risky route could include a mini cash individual savings account (ISA) - a deposit account offering tax-free savings. This could earn you around 5 per cent per annum. But you can only invest up to £3,000 each year, which won't make a huge dent in your winnings.
If you wished to follow a balanced risk strategy, a capital investment bond might be more suitable.
This type of contract allows you to invest any amount for any length of time. The risks associated with such bonds vary depending on the investment fund you choose: low, medium and high-risk funds are available. Investors can also receive a tax-deferred income of 5 per cent of the original capital over 20 years.
For those whose remit is high-risk investment, the stock market is a good option. Many enjoy the thrill and excitement of the stock market. You can opt to invest in a well-known company - perhaps one in which you have a personal interest, such as your employer or favourite football team - or a sector that has been tipped to do well in the current climate or over the long-term. The options are endless.
Your investment manager or financial advisor will help identify the type of investor you are and what your goals are.
Shares carry with them the possibility that you could lose some, or all, of your investment, but that risk is rewarded by the fact that, on average, shares will outperform inflation, savings, bonds and property over the longer-term.
If you are not seeking high risk, it may be useful to invest in more stable companies that have a more balanced risk profile, such as utility shares. If, however, you are looking for more aggressive growth, you can buy into smaller companies that have a no dividend policy and are rapidly expanding. Investing in different companies and sectors will increase diversification and reduce overall risk.
Anyone fortunate enough to find themselves thousands of pounds better off, whether through reality TV, Lottery or inheritance, should see it as a great opportunity to prepare for a financially-secure future, whichever route you choose.
While that may not be as fun as showing off in a brand spanking new Maserati, you'll reap the benefits in the long-term.
