WHAT WOULD YOU DO WITH A FINANCIAL WINDFALL?

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

Most of us dream about what we'd do if a financial windfall came our way. Those dreams may be closer to reality than you might think.

The U.S. Census Bureau projects that the ~nation's 76 million baby boomers will begin retiring in 2011, and many of these people will receive lump-sum payments from their retirement plans. In addition, a 1995 Cornell University study found that these same boomers stand to inherit $110 billion, a figure that is estimated to increase to $340 billion by 2015.

What do people typically do when they receive a financial windfall? To find out, the Forum for Investor Advice, a nonprofit investor education organization, recently surveyed households that had received large sums of money. Many of the respondents were from moderate- to low-income households. Nearly half had income of less than $50,000 a year, yet 30 percent of the respondents received payouts of $100,000 or more.

Where did these people get their money? No one won the lottery. Forty four percent received it from a retirement plan, 22 percent inherited it, 7 percent received their windfall from an insurance settlement, and 27 percent received it from other sources.

Surprisingly, fewer than half of these people were happy or excited. Some even expressed anxiety.

Recipients used very little of the money to pay off debt or buy luxury items. Fifty-four percent invested their entire windfall, and nearly nine out of 10 invested at least some of the money. Mutual funds were the most popular investment, chosen by 54 percent of the respondents. Stocks were the choice of 28 percent.

However, most of the recipients were not experienced investors. Only 14 percent said they considered themselves extremely or very knowledgeable in investing matters. But 60 percent of the recipients turned to financial professionals for help in investing their money, and 96 percent of these people were satisfied with the assistance they received.

Investment professionals strongly influence where the money was invested. For example, 60 percent of those who received advice invested in mutual funds. They also were twice as likely to invest in bonds than the do-it-yourselfers, who were more likely to invest in certificates of deposit.

Those who received help said their primary concerns in selecting a professional were investment knowledge and experience. Fees were considered most important by only 1 percent of the respondents.

This survey reveals good news: People who come into large sums of money are usually diligent in handling it. If you're ever in this situation, don't turn your gain into a loss. Protect yourself by exercising caution and seeking professional help.

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.