So you’ve survived the long, arduous process of fighting for a settlement claim and you’ve received your payment. You have several options now as to what to do with your settlement and you may not be sure what to do first.

What do you want to accomplish?

If you received the settlement as compensation for continuing health care issues, then of course, that’s where the majority of it should go. Along with that is using the payout to cover debts incurred as a result of extensive medical treatment. If you don’t have health care or disability-related issues, you might just be looking for a long-term strategy that includes an investment plan.

Keeping cash on hand.

It’s common to use the money first to pay down debt. That’s usually a wise choice, and if you decide to reduce or eliminate your debt, you’ll also most likely want to include investments in your overall picture as well. A generally conservative approach is to set aside enough in cash and other safe investments to cover at least three to five years’ worth of living expenses. Beyond that, especially if you will be relying on investments to support you indefinitely, it’s important to invest money for growth in order to combat the effects of inflation on purchasing power over several years.

Investing the difference.

How you specifically invest your settlement depends on your attitude towards risk and financial markets, but in general, mutual funds based on stock indices, such as the S&P 500, sufficiently outperform more expensively managed mutual funds, providing enough of a rate of return to combat inflation. A good way to learn more is to contact a financial institution where you already hold accounts or other low-cost mutual fund companies and ask for a prospectus on their index funds. This will give you historical performance data of the fund and whether or not it has outperformed the stock index that it tracks. You may also qualify for price breaks when making larger investments.

If you have a financial planner who knows your situation well, they can give you more specific investing advice that’s tailored to your situation. If you don’t have one, you can ask your accountant, your lawyer or even your friends and family to refer you to one.