What to do with an inheritance

Deciding how to use an inheritance wisely can be overwhelming. With the help of our Newcastle Financial Planning Advisers, we share some options to consider.

When a loved one passes away finances are likely the last thing on your mind. However, if that loved one chooses to leave you an inheritance, it’s worth taking the time to consider your options for investing and growing those funds in a way that will honour their memory.

If you’re looking for guidance of what to do with the inheritance, our Newcastle financial advisers can help you reflect on your financial goals and priorities and establish a plan for the new funds. Newcastle Advisors, Matthew McCabe shares some of the options you could consider.

Deciding what to do with an inheritance?

“An inheritance can provide that financial boost needed to get financially ahead in life and bring forward an individual’s goals,” says McCabe.

Generally, people receive an inheritance in the form of liquid assets such as cash or shares, illiquid assets such as a property, or as sentimental possessions that have no monetary value.

When deciding what to do with an inheritance you should first consider your financial goals and what you would like to achieve in the short, medium and long-term. From there, you can take steps to determine how the inheritance can be used to help achieve them.

Your individual goals as well as your stage of life and investment timeline will influence how you choose to use an inheritance. There are numerous tax effective ways a person can receive an inheritance to minimise tax payable, which again are dependent on individual circumstances and should be considered with the help of your Newcastle financial adviser. More broadly, some options for using an inheritance include:

Paying down debts
Purchasing property
Making additional contributions to superannuation
Investing funds in a diversified portfolio
Establishing an inherited property as an investment property to earn an income

The way you choose to use an inheritance is individual to you, right down to the way you may choose to invest the funds. As McCabe explains, a diversified investment approach “should be guided by your risk profile, in other words your appetite for understanding and taking investment risk.”
“At the end of the day, it all comes back to the individual’s short, medium and long-term goals and then implementing an investment strategy which will give them the best chance of achieving them,” he says.

Managing emotions when making financial decisions

As well as helping you to establish your goals and a strategy to help achieve them, McCabe explains that a financial adviser can also serve as a source of accountability, assisting you to implement the decisions you’ve made at what can be a challenging time. “One of the struggles we see with new clients who have just received an inheritance is the challenge to remain objective and to try and minimise emotion in the decision making process,” he says.

“People can sometimes see receiving an inheritance as a burden – a financial ‘windfall’ that they don’t want to make a mistake with,” explains McCabe. “This in-turn can lead to a lot of stress and even end up with the funds lying dormant for a long time because the individual has ‘frozen’”.

If you’re feeling overwhelmed about deciding what to do with an inheritance, consult with your loved ones or our Newcastle financial adviser who can help guide you through the decision-making process.

Our experienced Newcastle Financial Planning Advisers can help you develop a strategy to help achieve your financial goals.

Book your free consultation

Our Newcastle financial planners also have offices in Sydney and help clients across the local areas including Newcastle Financial Planning(Merewether financial planning, The Junction financial planning, The Hill financial planning, Bar Beach financial planning, Newcastle West financial planning, Hamilton financial planning, Adamstown financial planning, Redhead financial planning, Whitebridge financial planning, Kotara financial planning, New Lambton financial planning, Mayfield financial planning), Maitland Financial Planning (Morpeth financial planning, Lorn financial planning, Rutherford financial planning, Aberglasslyn financial planning, Metford financial planning, Beresfied financial planning), The bay (Medowie financial planning, Fern Bay financial planning, Fullerton Cove financial planning, Anna Bay financial planning, Nelson Bay financial planning, Shoal Bay financial planning, Tea Gardens financial planning, Hawks Nest financial planning), Lake Macquarie Financial Planning (Cardiff NSW financial planning, Glendale financial planning, Speers Point financial planning, Fennell Bay financial planning, Bolton Point financial planning, Coal Point financial planning, Toronto financial planning, Valentine financial planning, Belmont financial planning, Eleebana financial planning, Warners Bay financial planning, Caves Beach financial planning), Hunter Valley Financial Planning (Muswellbrook financial planning, Scone financial planning, Pokolbin financial planning, Cessnock financial planning, Singleton financial planning, Broke financial planning, Rothbury financial planning), Central Coast Financial Planning (The Entrance financial planning, Bateau Bay financial planning, Berkeley Vale financial planning, Tuggerah financial planning, Wamberal financial planning, Terrigal financial planning, Erina financial planning, Avoca financial planning, Gosford financial planning, Woy Woy financial planning, Picketts Valley financial planning) & Sydney Financial Planning (Castle Hill Financial Planning, Rouse Hill Financial Planning, Dulwich Hill financial planning).

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