What to do with a windfall

Charmaine White has never heard of anyone who regrets paying off debt.

“There’s no risk in paying off your debt,” White says. “No one’s ever come to me and said, ‘Why did I pay off my mortgage?’ ”

White is an Investment Advisor at Prospera Credit Union, and one of the areas in which she specializes is helping clients deal with a sudden windfall. It’s not that exciting, but getting rid of debt is likely to be White’s first recommendation if you go into her office after receiving a significant amount of money.

“Every situation is different. Tell me everything about you, and I’m going to look at the big picture,” White says. “The more I know about you and your family—everything from what tax bracket you’re in to what interest rate you’re paying on your credit cards to whether you’ve got ailing parents or kids that are dependent on you—the better the recommendations I’m going to make. They’re going to be tailored to you.”

White recently worked with a couple that received an inheritance and had never had much of a financial plan. The first thing White did—the same thing she does with all clients—was learn everything about the couple’s financial situation and anything in their life that might affect it.

The husband and wife were about 10 years from retirement, and they still had a mortgage and some consumer debt. After reviewing the file and learning about their pension situations, White determined they were on target for a comfortable retirement.

“I recommended they pay off their mortgage and all their credit cards,” White said. “They weren’t in a high tax bracket, so we put as much of the remaining funds we could into their tax-free savings account. They’d never had one before, so they were each able to put in $57,500.

“The husband had a hobby that he was really passionate about,” White says. “He really wanted to put some money towards it, and I encouraged him to do so because you have to live for today, too. It doesn’t all have to go towards debt and the boring stuff.

“Finally, we put the rest of the money in laddered GICs, and now they’ve got money that will be available to them every year for travel, their hobbies and to keep maxing out their TFSAs.

“That was them. If I had the same conversation with you it might be completely different.”

The advice doesn’t end there at Prospera, as White likes to meet with her clients at least once a year to ensure their financial situation is still rock solid.

If you’ve had a recent windfall and would like some advice in deciding what to do with it, White or another Prospera advisor can help.