What Can I Do With A Big Capital Gain?

Receiving a large sum of money is always good news! However, the good news can turn sour when you need to figure out how to manage it. With a huge variety of options, most people are left wondering what’s the right solution to handle their gain.

 

Unfortunately, you might be surprised to learn that there is no right or wrong approach. Indeed, as everyone has different needs and goals, your capital gain could serve a variety of purposes. Before you worry about budgeting the gain into your household finance and how to compute the tax impact, the most important question you need to ask yourself is: What will I do with the money?

 

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Invest in a business

Obtaining a commercial loan to launch a new business is no easy task. If you’ve been turned down by money lenders, your capital gain can help you finance your venture.

 

Using savings rather than a loan can simplify your business finance management as you don’t have to worry about paying it off. However, that doesn’t mean you shouldn’t give it your all to build a successful entrepreneurship path. Indeed, once the matter of business funds is resolved, you can focus on establishing your reputation as a brand.

 

Pay off your debts

According to an Experian consumer debt study, the outstanding debt in the U.S. hit over $14 trillion in 2020. However, the debt burden is spread unevenly across generations.

 

For example, Millennials record an average debt per person of $87,448, and Gen X have an average debt of $140,643. These debts often include mortgage, student costs (for themselves or their children), and costs related to their locations. Unfortunately, this amount of debt can make it hard to plan for retirement. Paying off your debts partially or fully via your capital gain can help unlock your future financial potential.

 

 

Get professional money management

If the capital gain is substantial, you might want to consider asset management companies such as Berthel Fisher to establish your financial strategy. Asset management and financial advice can be useful to establish a unique plan to secure your future.

 

It’s not uncommon to use these specialist services to help with retirement funds or secure your children’s education costs. Finance advisors are also familiar with the uncertainty that comes with sudden capital gains. They are best placed to explain the different options available based on your long-term goals and needs.

 

Spend it all

Last but not least, spending your money can have secret benefits you don’t suspect. Indeed, according to research from the University of Minnesota and Texas A&M University, purchasing luxury goods and services can deliver long-term happiness.

 

Purchases can occur to make you feel good, whether it’s indulging in a luxury spa day or booking a holiday abroad to relax. Unlikely consumption driven for the wrong reasons, the pursuit of happiness through informed and careful shopping leaves a long-lasting positive emotional imprint. Sometimes it’s as simple as wanting to feel good about yourself. After all, your happiness is worth the expense!

 

Saving, investing, funding, or spending, there are far too many options with a capital gain. However, once you understand what you want to achieve, you can focus on the right approach for you. Saving money is not always the best strategy when it comes to your well-being.

 

Consult with a financial advisor and a CPA on these important issues.

 

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Good luck!

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/