7 powerful strategies to maximise your inheritance

September 12th, 2014 by

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Dan Woodruff

Dan Woodruff

Certified Financial Planner & Chartered Wealth Manager at Woodruff Financial Planning
Financial Planning helps you to navigate and anticipate significant life changes. I want to help you to ensure your money is managed wisely to give you the financial security that will fund the future and lifestyle that is important to you.

7 powerful strategies to maximise your inheritance

7 powerful strategies to maximise your inheritance


Are you about to receive a sizeable inheritance? If so, you’ll grasp the importance of this unexpected money. This once-in-a-lifetime opportunity won’t come around again, so you’ll want to maximise it.

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Before you fritter away your precious inheritance, you should consider what your goals are for this money.

Key points

  • 7 powerful strategies to maximise your inheritance
  • Advantages and disadvantages of ways to spend your inheritance
  • Get our free guide “How to make the most of your inheritance”

Seriously consider how to maximise the power of your inheritance. This special opportunity won’t be repeated if you waste it.

7 powerful strategies to maximise your inheritance

Here are 7 powerful strategies to maximise your inheritance. You can exploit more than one of these forgotten tactics.

  1. Invest in your lifestyle

    An inheritance is unexpected money and is therefore a free bonanza, right? Why shouldn’t you spend this free money?
    This is often where people start when thinking about an inheritance. You may be tempted into spending some or all of your inheritance on things you’ve missed out on in the past. You could use the money to change your life in a number of ways. Spend on your deepest wishes: home improvements, a holiday home, a brand new car or a fancy holiday.

    Depending on the decisions you make, this might mean that you waste the opportunity of the inheritance. In return you’ll get the benefit of the lifestyle improvements. Just remember that the unexpected opportunity of your inheritance is not likely to be repeated, so be careful about what you spend your money on.

    Advantages:
    You get instant gratification and improvements to your lifestyle without having to pay for it.

    Disadvantages:
    Once spent, the money will be lost forever, so only exploit what you don’t need to rely on for the future. If you overspend now, you may permanently impoverish your future prospects.

  2. Invest in your skills/education

    You could invest in your future by using your inheritance to fund an educational course, or to re-train in a new career. Your inheritance could give you a boost to earn more money in the future. From this perspective, not only would you get lifestyle benefits through learning, but you could also earn more income in the future.

    You may itch to leave behind a dreary job you hate. Your inheritance could be the green light you have been waiting for. Your inheritance could be used to fund course costs, living costs while you train, and even provide you with cash to live off while you develop your previously untapped skills into a valuable income.

    Don’t underestimate that learning a new skill for income takes time and application. Having the money available does not guarantee success. If you’re just interested in pursuing a hobby then money is of secondary importance.

    Advantages:
    You get to pursue an interest or develop a new career using the inheritance, but with less risk.
     

    Disadvantages:
    Spending the money on your education and skills does not guarantee a better income in the future.

  3. Pay off your debts

    If you have a mortgage, loans or credit cards this should be a serious consideration to forever guarantee you a secure future. Most people overlook this idea and miss out as a result. Any debt you eliminate now will have a permanent benefit in 2 ways.

    The first is that you will wipe out the monthly expense of the debt. This could help you to save dramatically more to jumpstart your future, or massively boost your spending on lifestyle now.

    The second is that you will save on all that interest you are paying towards your debt. In the long run paying off your debts will benefit you massively. Just don’t be lured into running up more debts once you have paid these off.
    We advise that you pay off your debts starting with the most expensive by interest rate.

    Advantages:
    You will save the valuable cost of your monthly payments, and in the long run will save on interest paid out to your lenders.

    Disadvantages:
    You will lose the ability to spend the money now in exchange for saving money in the long term.

  4. Fund a business venture

    You might use your inheritance to explore a business venture. The money you have been given could be used as a buffer for income while you build up your business, since this can take a lot longer than you might think.

    You might also use the capital to fund the initial expenses of the business such as equipment, staff and marketing.

    Be wary about this option. Starting a business is not for everyone. It can be a fabulous way to make money, but also an easy way to destroy legacies if you are not prepared to put the time and effort into developing new skills. Sometimes, having the capital means that you take greater risks with your money.

    As with the option to develop your skills, having the money available does not guarantee success. You will have a better chance of success than if you didn’t have your inheritance, but building a business is not easy.

    Advantages:
    You will have capital to start your business, pay its costs and yourself an income while you get established.

    Disadvantages:
    Having the capital to start a business does not guarantee success. If the business does not work out, you could lose your inheritance with little to show for it.

  5. Invest for your future

    Investing your inheritance is a tried and tested strategy to build a secure future for yourself and your family.

    By investing for the future you aim to accumulate your wealth to allow you security. You can exploit your inheritance to fund your lifestyle costs both now and in the future.

    There are varied investments that you could explore with your inheritance, such as:

    • Stocks and shares investments
    • National Savings
    • Rental property
    • Bank savings

    The decisions you take now are tremendously important for your future. You should only enter into investment as an option for your inheritance if you are confident of your skills.

    Advantages:
    You can use your inheritance to accelerate capital growth to improve your future. Your investments should be accessible in the future when you need them, depending on the choices you make now.

    Disadvantages:
    Investing money in any area can be fraught with difficulties. Be cautious in your approach so that you do not lose money making mistakes.

  6. Invest for income

    The alternative to investing for future growth is to invest your inheritance for income. You obviously want your money to grow, but your investments could be structured in such a way as to maximise your income prospects, to fund your current lifestyle costs. This might be appropriate for you if you have limited income prospects now.

    Advantages:
    Your inheritance could boost your income prospects significantly, meaning a better lifestyle for you and your family.

    Disadvantages:
    You should be wary before making complex investment decisions. Take your time to think carefully about the investment choices you make. The alternative could be costly errors or tax problems down the line.

  7. Give it away

    A final option could be to give some or all of your inheritance away to your family or to charity. If you feel you do not need the capital it makes sense to see it put to good use while you are still fit and healthy to enjoy seeing this. The money is no use to you after your own death, so perhaps you could consider helping out family members in need of a little assistance. You could help them in a number of ways – with lifestyle costs, paying off debt, building a nest-egg, or funding a business.

    Advantages:
    Your get to see your inheritance put to good use while you are alive, rather than after your own death. Seeing the inheritance used will give you more pleasure than knowing it will be spent after you are gone.

    Disadvantages:
    Once given away, it will be difficult to get your inheritance back, so be careful about how much you give and who you give it to.

What should you do next?

We have developed a free guide on how to maximise your inheritance, full of insider knowledge and crammed with powerful expert tips. Just fill out your details in the form below to get more information on strategies and ideas for making the most from this opportunity.

You could also read our case study on what Derek did with his inheritance.

 


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