Q. Hi Tash, I’ve received an inheritance of $600k and am very overwhelmed… I just don’t know how to best use it! Our story is: I’m 40 and earn $130k per year and my husband is 35 and stays home with our four kids (12, 10, 9, 7) earning $10k per year. I have $200k in super, he has $30K and we don’t own a home or have any investments. We live in northern Sydney, around 45 minutes from work, but I am hesitant to buy property in this market, knowing also that we will eventually move further north when I retire (though my husband would like a ‘family home’). How should I best use this money to provide a good and secure childhood for my kids and ensure I have something for our future?
A. First of all, congratulations to you and hubby on bucking the trend. The world needs more stay at home dads!
I can understand that with an inheritance comes some pressure, so it may be worthwhile parking it somewhere low-risk (like an online saver account or term deposit) while you figure out what you want to do with it.
Now, unfortunately there is no silver bullet for investment, so here are a few things for you to consider.
1. Be wary of anyone telling you unequivocally to do “X” with the money.
Well-meaning friends and family are a good example. What they are doing is imposing their own values onto you, so it’s important to remember that what’s right for them is not necessarily right for you.
2. Define your goals.
It’s important to explore your short and long term goals together with your husband and agree on what you want your life to look like in five, 10 and 15 years. Would you like a career change or to retire early? Do you want to pay for your kids uni fees or would you rather they learn to pay their own way? How important is it that you buy your family home? Really take some time to reflect together and put pen to paper (goal, time frame, dollar value).
3. Get a will in place.
If you don’t have a will yet, or if this inheritance wasn’t factored into it, now is a good time to either put a will in place or review and update it.
4. Review your saving and insurance needs.
This is a good opportunity to top up your emergency savings. If any family member has any medical conditions that aren’t covered by insurance, now is a good time set some extra money aside in case one day you need it for things like emergency expenses or medical costs.
5. Brush up on your money knowledge.
Do some research about different investment options and their pros and cons, and identify what appeals to you and how much risk you would be willing to take.
Call me biased but I recommend our Making Cents of Money program to help you and your husband get on the same page, as well as give you important financial know-how to help you take the next steps (our members love it and I promise we make it fun!).
Financial planner Canna Campbell shares how you can save on your weekly grocery bill.
6. Consider getting personal advice.
Times like these are also exactly where personal financial advice from a good financial planner can come in handy. And if you’ve done all of the above before you meet them you’ll get even more value from the discussion! I’d be happy to recommend someone if you choose to go down that path.
They can help you decide your goals, clarify your investment time frame and what you want to achieve in returns, identify how much risk you’re willing to take and then guide you in investing accordingly.
Alternatively, if you feel confident enough to manage things yourself, then go for it! Check out our Investment blogs for some additional tips to help you out too. Good luck!