What to do with $100,000 windfall or spare cash?

Instead of splurging it all, think of ways to invest and grow that amount, experts advise

- Angela Tan

Landing a surprise windfall after years of skimping and saving to get by would likely spark a wild spending spree for many of us, but the smart move would be to hold fire.

That initial euphoria could lead you to splurge it all – lavish meals, a down payment on that dream car, travel or the home renovation you have been wanting to do for years.

It would certainly be enticing but it pays to pause and consider if there is a financially smarter way to use that extra cash, whether from an inheritance, a lottery win or some other stroke of luck.

While it may not bring you instant gratification, using an unexpected windfall strategically might set you on the path to fulfilling a long-held financial goal.

The Sunday Times asked financial experts about how to put a $100,000 lump sum to work and bring you closer to financial resilience.

BEFORE YOU START

Mr Aaron Chwee, head of wealth advisory at OCBC, says that before you splurge on the series of mystery collectible toys sold by Pop Mart or blindly dive into trending stocks, take a moment to assess if your financial plans are still relevant.

"Consider both your short- and long-term financial goals, what you intend to use your monies for and when you will need them," he says.

"For instance, if you have a wedding coming up or renovation works, you may need to set aside more money. If you have outstanding loans with high interest charges – for example, rates of more than 7 per cent – you should aim to pay them off first."

Ms Lorna Tan, head of financial planning literacy at DBS Bank, advocates clearing outstanding non-secured debts like personal loans and credit cards, especially those that attract high interest as outstanding payments can quickly snowball.

Missing a monthly payment on a credit card can result in high fees on existing and new balances, and hurt your credit score. At the same time, paying the minimum sum can incur late payment charges.