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3 Important Tips for Beginners Investing Your Inheritance

September 27, 2022 | Investment

Is Australia unprepared for the largest intergenerational wealth transfer in history? Within the next 20 years, an estimated $3.5 trillion will be transferred from baby boomers to younger Australians, putting Australia on the verge of its most significant wealth transfer to date.1

Despite this, 76% of Australians don’t have a will, and 53% of parents haven’t talked to their children about their will or legacy.2

An inheritance is a gift, but it can also lead to a hefty tax burden if the money isn’t handled correctly. So, it’s critical to learn tax-efficient strategies for managing these assets for future success.

The Definition of an Inheritance

Inheritance is passing assets from one person to another after someone dies. Cash, property, and investments are some examples of assets.

To use inheritance wisely, it’s best to prioritise how you plan to invest it. If the inheritance is seen as a windfall, you may pass it directly on to your children. Also, paying off debts or setting aside emergency funds are common practice. Age, risk profile and financial position are valuable factors in deciding inheritance options.

Experts say that 80% of inherited money goes to persons over 50, meaning most beneficiaries are nearing retirement.3 So, it is also worth evaluating whether you should make additional contributions to your superannuation pending eligibility.

3 Helpful Tips for Investing Your Inheritance

If you’re just starting out in the investment world, consider the following three tips:

  • Investing in Superannuation  

Investing your inheritance through superannuation is a tax-effective method for growing and sustaining retirement funds and can often lead to more desirable outcomes in the long term.

This option can be beneficial due to low concessional rates for earnings and contributions and tax-free withdrawals after the preservation age.

Investing an inheritance via superannuation can provide you with the opportunity to compound wealth that otherwise may not have been achievable.

  • Diversify Your Investment

With funds not used to grow a superannuation balance, you can still consider the option of an investment portfolio outside of superannuation. Investing an inheritance can help you grow your portfolio and build a vehicle for passive income.

Divvy up your investments to ensure your portfolio is diversified. Investing in a mix of ETFs, bonds, and shares based on your risk appetite can produce a solid risk-adjusted return for an inheritance.

You may be tempted to put your inheritance in a bank account since it’s safe and convenient, but this possibly isn’t the best use of the money. You will likely only be earning a basic cash rate which will put your inheritance at risk of being eaten away by inflation. You want your inheritance to help you achieve your goals. A financial planner can help you examine all your options and manage an inheritance to its greatest potential.

When examining these investment options, it’s crucial to examine your risk tolerance, as all investments depend on your risk profile.

  • Review your Investment Regularly

It is vital to review your investment regularly to ensure it’s still performing well and that it aligns with your financial goals.

When you first inherited the money, you may have had specific goals for using the funds. However, over time your goals may have changed. It’s important to review your goals, investment performance and returns periodically to ensure that your investment strategy is still aligned with them.

If it’s not, you may need to make some changes to your strategy. For instance, if your inherited investment is put in a high-risk investment, you may want to consider selling it and investing the proceeds in something more conservative as you age, to preserve your capital.

Use Your Inheritance to Your Advantage!

When you inherit money, it can be a windfall. However, it can also be a lot of responsibility. You may feel pressure to invest the money wisely, so it can provide for you and your family for years to come.

It may be advisable to get expert assistance while investing your inheritance. An experienced financial adviser can also help you manage the emotions of inheriting money. If you’re not sure where to start, consider talking to a financial adviser about a clear strategy for how to invest your inheritance.

To get access to award-winning experts on wealth creation in Australia, Coastal Advice Group has you covered. We are a team of financial advisers who cater to investors from all stages of life, from young professionals to retirement and aged care. We provide reliable financial advice to help you grow your wealth in the best way possible. Coastal Advice Group has offices located in Newcastle, the Central CoastSydneyPort Macquarie, and Byron Bay.

Call us or book online to secure your first appointment with us today and get started!


  1. https://www.afr.com/policy/economy/baby-boomers-to-pass-on-224b-a-year-by-2050-20211206-p59f7d
  2. https://www.investordaily.com.au/markets/46187-australians-unprepared-for-largest-intergenerational-wealth-transfer-perpetual
  3. https://grattan.edu.au/news/the-story-of-inheritances-in-australia-and-why-it-needs-to-change/


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