You’ve come into a little money – perhaps a relative has left a bequeath, or your boss has given you a hefty bonus to reflect the great job you did on a recent account. Once the initial delight at being flush for funds has passed the first question you’ll ask yourself is the same one lottery winners are hit with when they’re told the big news. ‘What are you going to do with it’? How are you going to invest it?

Your winnings may not be so significant but every amount you choose to invest must be treated with respect, whether it’s $1K or $1M. Adopting a positive approach to your investing will set you in good stead regardless of the amount involved.

So, what should you do with the money? That can depend, not only on your individual circumstances, but also your stage of life. A young person starting out on their investment journey will approach things far differently to an older person who may no longer be earning a working income. Although we all need to save for our retirement years, our priorities will change as we move forward to reflect out changing circumstances.

Let’s look at the typical scenario of $10,000 and how each person could invest it depending on their stage of life.

Age 35

At this stage of life debt may be a big factor in the financial situation. You will most likely be heavily mortgaged, probably on a first home, with some consumer and car loans and may even be still paying off student debt. Repaying debt, especially if it’s expensive credit card bills, can be one of the most effective methods of improving your finances. An amount of $10,000 won’t give you a huge chance to diversify but cutting debt and freeing up interest payments to invest going forward could be your smartest move.

Age 45

At this stage of life debts are starting to come under control although you may have recently upgraded to a second larger, and more expensive, family home, and the kids are getting to an age where they become more costly to own! You are probably in a strong position earning wise however and need to get your investment portfolio well underway if it hasn’t started already. At this stage of life higher growth investments will be the main priority and you might find the share market or property syndicates being investments worth considering. Although you won’t want to lose your money you will be able to bounce back if you do.

Age 55

Consolidation is the name of the game. You need to protect what you have already developed while continuing to maximise growth. Now is a great time to be building your superannuation fund and the tax benefits of salary sacrifice will make this worthwhile. Chances are the kids are getting off your hands and your income earning capacity will be at its highest level – it’s time to make hay while the sun shines.

Age 65

You need to look after what you have, and asset protection is an important aspect of this. You may be in a great position to maximise your tax status through your super fund and this should be something to plan for. Your focus will probably be income investments rather than ones that have high growth prospects. Your shares may be ones with good dividend yields rather than growth driven companies that reinvest profits.

Always seek the advice of an expert – they’re called experts for a reason! Everybody’s situation is different and you need to plan accordingly to reflect your individual risk profile and earning circumstances.

If you’re trying to identify an investment goal or strategy, you don’t need to do it alone. A financial adviser (or planner) spends their days identifying and presenting opportunities to their clients. Our simple, quick, free service will connect you to the best independent financial advisers, based on your needs. Click here to get started.

The information in this article is general in nature and does not take into consideration your personal situation or circumstances. You should consider whether the information contained in this article is suitable to your needs and where appropriate, seek professional advice from a financial adviser or other finance professional.

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