Smart and handy tips to ensure that your lump sum or windfall in the form of inheritance, refunds, stock option money and others provide you with a lifelong financial edge.

Edited highlights

0:28 We will tell you how to make large sum of money or a lump sum, last a life time and help you meet your needs

1:17 It is not uncommon to find people squandering lump sums

1:42 This discussion is not about severance pay or premature retirement money since they require you to replace a regular income

2:15 This discussion is not about severance pay or premature retirement money since they require you to replace a regular income

2:21 It could be a liquid account or a separate savings account

2:31 To make the lump sum last you for long, you will need a financial plan

2:55 Figure how much you need to pay taxes for your lump sum or windfall

3:13 Next, find out whether there are tax saving investments or tax deductions available to you

3:29 For instance, you have capital gains tax saving bonds like REC Bonds that provide tax deduction under Section 54EC

4:17 Examine if you can claim more deduction from sections already providing tax deductions such as Section 80C

4:33 Net of taxes, find out the part of the lump sum or windfall available to you

5:15 Earmark 25% of the lump sum, net of taxes, for expenses that you need to incur

5:43 After meeting all the urgent expenses, you could consider buying things that you want

6:06 Retire, repay, partly or full prepay any costly loan

6:35 Remember, returns from investments, especially market-linked investments, can be uncertain, loan EMIs aren't

7:01 Prepaying loans frees you to aggressively invest for future needs

7:37 After loan prepayments, invest in higher risk, higher reward, investments like equity funds

8:19 You can choose from SIPs and STPs of mutual funds

8:31 Over 8-10 years or more, you investments made from lump sum grows

8:41 You can also have mutual funds portfolios for child's higher education and your retirement

8:56 25% of lump sum money, net of taxes, needs to be invested in growth investments

9:26 If some money is still left, you can bolster your liquidity position by investing in liquid funds

9:49 If you have a good liquidity position, consider investments in PPF since they provide tax deductions for contribution, interest and maturity proceeds

10:15 Consider earmarking 10% of the lump sum, net of taxes, to bolster your liquidity position