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Royalty Checks-What to do with them?

If you receive periodic royalty checks, you no doubt smile every time one arrives. But what's the best way to handle these checks from a financial point of view? Here are a few ideas.

1. Make it last a whole year:

Take the net amount of the check and divide it by 12 (months). Deposit the entire check into an account that allows automatic monthly disbursements.

Set the monthly disbursement to 1/12th the amount of the net check, to be deposited into your checking account on the first of every month. You will have a monthly income for the rest of the year with this method.

2. Make monthly interest by purchasing T-Bills.

If you want to earn interest on the monthly disbursements, you can buy T-Bills that mature in varying intervals, allowing you to have access to cash monthly.

T-Bills are considered risk free because they are backed by the US Government. You can buy T-Bills without commission at various places, including TD Ameritrade, and directly from the US Treasury. If you have an investment account at TD, your advisor can buy T-Bills for you at no charge.

You can "ladder" the T-Bills to mature regularly to provide the same monthly income as in #1 above, but with some added interest. There are other interest-bearing instruments, too.

3. Invest part of the check

If you think there is a portion of the check you will not need for living expenses, you could designate an amount to be invested in a long term growth portfolio of commission-free and no-load index funds and ETF's. Long term portfolios, if properly allocated, can grow your assets over time. An investment advisor can help you set this up.

There are other ways to handle royalty checks, too. If you'd like advice on what might be good options for you, please feel free to call me at 818-679-2891, or email me at trizzo251@gmail.com.