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How to invest Colorado divorce settlement proceeds

At the end of a Colorado divorce, many spouses receive a windfall in the form of a cash settlement. This can come from the sale of marital property, or could be a one-time payment in lieu of alimony. Regardless of where the money comes from, where it goes is of top concern. By wisely investing the proceeds from divorce, newly single spouses can build toward a stringer financial future or secure their retirement needs.

One of the common misconceptions involving post-divorce investment is that the proceeds should be used to pay off an existing mortgage. While eliminating one's housing debt is often a good financial move, in many cases there are better ways to invest your money. A good guideline is to determine exactly how much one could expect to make from investing that money in other ways versus the monthly cost of the mortgage. If the investment income exceeds the housing expense, then it is generally better to invest that money elsewhere.

Another consideration is the degree of investment risk that one is comfortable with. For newly divorced individuals nearing retirement age, more conservative investment vehicles may be the best option. For those who still have the majority of their working lives ahead of them, more aggressive investment strategies could yield greater returns.

When deciding how to invest a cash infusion derived from divorce, the best course of action is to carefully evaluate your current financial scenario, goals and risk tolerance. By investing divorce proceeds wisely, one can help secure their financial future. Many newly divorced Colorado residents find the process of planning for their future as single people to be empowering, and carry that momentum forward into their new lives.

Source: Fox Business, "Best Use of Divorce Cash Before Retirement?" Dr. Don Taylor, April 8, 2013

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