As a recipient of an inheritance, you are most likely experiencing a loss and some emotional turmoil. It is crucial then, that your first step after receiving an inheritance is… to do nothing.
Rather than rushing out and buying a house or a new car – or indeed, any financial decisions – it is important to think about what you want your life to look like long-term. Depending on the value of your inheritance, you should consider engaging a professional financial planner along with an accountant to discuss the implications of your inheritance.
How – and even if – you invest your inheritance will depend on your long-term goals. It is important to define what you want your life to look like – would you like to take an international holiday every year, buy a house, start a family, or have a passive income from your investments?
The higher the amount of inheritance and the earlier you are in your career, the greater the opportunity to make higher returns and achieve your financial goals in your life. Your choice of investment will depend on your risk appetite and when you need the money. For example, if you don’t want to touch the money until you reach retirement and are currently in your thirties, you will have a very different investment plan than somebody who wants to buy a house in three years.
The benefit of receiving an inheritance is that it provides you with a “step-up” to achieve your financial goals earlier than you might have thought possible. If you are still unsure how you want to use your inheritance, consider how the person who bequeathed the money might want you to spend it. They may have mentioned a goal that they had in mind for the funds or perhaps you shared a passion for a travel destination or hobby – this can inform your financial choices.
A financial planner can assist you in establishing a passive income stream which can provide you with financial freedom at an earlier age. Invested correctly, your inheritance could open avenues to work part-time or change careers to something you are truly passionate about. It could even be divided up with different portions of the fund invested for different goals.
The most important takeaway regarding receiving an inheritance is to never make any rash decisions – think about your long-term plan and goals before deciding how to invest your inheritance.
The team at Endorphin Wealth is happy to assist with your financial situation.
For an obligation free discussion, call us on 03 9190 8964, or schedule a meeting at endorphinwealth.com.au/contact/
