The Worst Thing To Do After Coming Into A Ton Of Money
The Worst Thing To Do After Coming Into A Ton Of Money: Buy A New House, Says An Advisor To The Ultrawealthy
Alicia Adamczyk Mon, August 14, 2023
Those lucky enough to benefit from the Great Wealth Transfer or another windfall, heed this financial advisor’s advice: Think twice (or five times) before buying that dream vacation home. You may come to regret it.
That’s according to Paul Karger, cofounder and managing partner of wealth advisory firm TwinFocus, which manages over $7 billion for ultrahigh-net-worth families. Karger advises all of his clients—who range from centimillionaires to billionaires—to wait six months to a year before making any big purchases when they come into sudden wealth. Give your emotions time to even out.
But the advice is applicable to anyone who receives an inheritance, is retiring, or, say, wins the Mega Millions’ record $1.58 billion jackpot. Though it can be tempting to go on a spending spree, any large purchase like a home needs to be thought through—even if you think you can easily afford it. There are plenty of unknown costs; they’re called money pits for a reason.
“I’ve seen clients purchase large homes in faraway locations that they ultimately realize they will not use frequently and end up being a major ongoing financial burden that took several years to sell,” Karger tells Fortune.
It may sound like a nice problem to have, but Karger is serious, and mostly referring to second or third homes. There isn’t as big a market for these pieces of real estate as there is for primary residences, especially since the pandemic, and they can be extremely expensive—and illiquid. That can lead to trouble down the line, especially if you’re not prudent with the rest of your wealth. Though you may be able to afford to buy the home, there are plenty of monthly or annual upkeep costs that need to be accounted for ahead of time.
Of course, homes aren’t the only possible bad investments out there.
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/worst-thing-coming-ton-money-155429933.html