The $10,000 question: What would 5 money experts do with a sudden windfall

The $10,000 question: What would 5 money experts do with a sudden windfall

Picture it. You’re walking down the street on the way home from the pub when you stumble on an old coke bottle by the side of the road. In a fit of anger you pick it up to hurl it into the open bin across the road, when out pops a genie!

Unfortunately this isn’t the normal kind of genie who hands out three wishes at a time, but in return for your promise not to boot his magic bottle into the trash, he does agree to fork over the princely sum of $10,000 in a brown paper bag (he’s really fond of that bottle).

Now it may be tempting to blow a sizeable chunk of your new found (magically tax-free) wealth on a fancy dinner and shopping spree (especially with your housemate on your case looking for their own share of the spoils), but what about thinking a bit further into the future to those financial goals you’ve always wanted to achieve.

Intrigued? Well, whether it’s becoming debt-free (hint: this is a popular option) or improving your home, a $10,000 windfall could really help you on your way to hitting those goals. But for some real sage advice, we asked five of Mozo’s top money experts…

What would you do with $10,000?

Invest at a level that suits you – Peter Marshall, Mozo Product Data Manager

That’s a tough one!

My advice would be to always pay off debt first – paying interest on a loan when you don’t need to is one of the biggest wastes of money I could imagine! If you’re lucky enough to be debt free though, I’d look at placing the $10,000 in an investment with decent returns and a risk level that you’re comfortable with.

For me that would be peer to peer lending where the returns are usually quite a bit higher than a bank deposit, but the risk of losing capital is lower than something like playing the stock market. Some peer to peer lenders allow you to choose what type of borrowers you’re willing to fund and the return depends on how much exposure you have to riskier borrowers.

Wave goodbye to credit card debt – Kirsty Lamont, Mozo Director

As exciting as it would be for anyone to have a $10,000 windfall, the first question you’ve got to ask yourself is – do I have any debt? And if the answer is yes, especially if it’s high interest debt, then it’s time to reduce it or get rid of it altogether.

Given that credit cards tend to be one of the most common forms of high-interest debt Australians accrue, then this should be your first port of call as those interest payments are likely to be the ones that are costing you the most.

And if $10,000 doesn’t go far enough towards clearing your credit card debt for good, then one option you could opt for is taking advantage of a balance transfer credit card with no balance transfer fee to give you the chance to pay it off slowly.

Fund a cosmetic renovation – Steve Jovcevski, Mozo Property Expert

I’m sure this has been popular advice already, but I wouldn’t hesitate towards putting that $10,000 towards home loan repayments or any other outstanding loan.

But if you’re in a position where you have neither, you could turn that $10,000 into a money maker by reinvesting it in your home or investment property. A cosmetic renovation like refitting your kitchen or bathroom, or even just adding a fresh coat of paint could potentially add an extra $50-$100 of rent a week depending on what you do. A small renovation also has the added bonus of improving the value of the property itself!

Enjoy yourself (and travel) – Nathan Warne, Mozo’s Resident Data Whiz

First of all, I’d recommend that anyone who has debt in the form of a loan or credit card should put that $10,000 towards paying it off straight away, otherwise if they have a home loan they could put it into an offset account.

Personally I don’t have either, so I’d take $500 and spend it on something fun, then book a holiday with the rest of it.

If I didn’t need to pay for all of my travel expenses upfront I’d put the cash into a savings account with a decent interest rate in the meantime, and then if some of that was to be spending money for overseas then I would transfer it to a transaction account with a debit card that has no international transaction fees – ING or Citi for example.

Stash away for a rainy day – She’s On The Money, Mozo Personal Finance Blogger

Well, I recently came out $3,611.98 on top during Mozo’s sharemarket experiment, so part of me thinks I would immediately start my real life stock portfolio.

The more realistic part of me (and there is one, even if it’s buried pretty deep) would take the waaay more boring route of sticking it all in what The Billfold has delightfully dubbed a F*ck Off Fund. Which is really another way of saying I’d start myself an emergency fund, because after all, you never know when something unfortunate might happen.

In fact, I wish I’d had that genie money on hand after I jumped into the pool with my phone last Christmas.

So yes, I’d keep a stash of cash tucked away in a savings account for a rainy day and would suggest the same to anyone – unless you have debt piled up, because that’s the first place to start. Obviously.

The $10,000 question: What would 5 money experts do with a sudden windfall was last modified: February 2, 2018 by Tom Watson

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