Three things to do with inherited money

Have you inherited money and don’t know what to do for it? Here are three ideas to consider.

It’s thought that the average inheritance in the UK is around £11,000, which is a relatively small amount when you think of high-profile estates and their distribution.

However, it’s still important to use this money sensibly and responsibly, while ensuring that you profit as a beneficiary and do justice to the memory of your lost loved one.

But what exactly should you do with the cash that you inherit? Here are some ideas to keep in mind as a beneficiary.

1) Consult with financial experts

Depending on the precise amount of money that you inherit, you may want to start by consulting with financial experts and wealth managers.

The reason we say this is that liaising with financial planners will require a financial investment, and this may not be worth the trouble when dealing with particularly small amounts. Defined benefit investment consulting can be more helpful for you.

However, the average inheritance amount of £11,000 is a significant sum of money, and we’d recommend working alongside financial advisors to utilise this as effectively as possible.

When dealing with wealth managers, for example, they can recommend viable savings and investment options, while creating a long-term investment plan that leverages your inheritance for long-term gains.

2) Invest and save as much as possible

While you may want to use some of your inheritance to pay down debt, it’s definitely worth creating a disposable amount of cash that can be committed to savings or investment options.

As we’ve already touched on, financial and wealth managers can help to create a viable investment portfolio to suit your needs, but it’s also important that you budget your inheritance payout sensibly and strive to get the most from this capital.

How you invest and distribute the cash depends on your own personal circumstances. For example, larger amounts of cash can be invested in real estate and blue-chip stocks, while smaller inheritances could drive forex and small-cap share investments.

You can also distribute your investment options according to your age, with a greater emphasis placed on stable assets such as bonds as you grow older. 

3) Pay off your debts

Currently, inflation in the UK is at a 40-year high of 9%, with this affecting the cost of everyday essentials such as food, fuel and gas.

Because of this, households are likely to see their debt levels mount in the near and medium-term, creating a scenario where an inheritance payout may be used in part to pay down outstanding debts.

These include one-off debts and long-term liabilities such as your mortgage, while you may also want to pay off some of your student loan in some instances.

Remember, this may reduce your monthly payouts and help you to save more over time, improving your financial outlook for the future.

Photo by Towfiqu barbhuiya