Receiving inheritance money is a bittersweet thing. Nothing can quite outpace the grief you feel in losing a loved one, but the things they leave you can have long-term and lasting impacts on your life for time to come. Indeed, over a third of us that anticipate an inheritance find ourselves needing the money for one reason or another. But what might those reasons, be, and how might you smartly use your inheritance otherwise?
Paying Down Debt Obligations
Not many of us are without our debts, be they in the form of overdrafts, credit cards or even an outstanding mortgage balance. Debts of any kind can be deleterious to your long-term financial security, and should be seen as high-priority expenditures even outside the realms of receiving an inheritance.
However, if you are due to receive money from a loved one’s estate, you could be in a position to significantly reduce these obligations, and cut out a degree of expense afforded to interest repayments in the process. Probate loans are useful in this regard, wherein incoming inheritance money can be advanced before probate is granted and debts cleared much sooner as a result.
Pension
If you are lucky enough to be clear of any major debts, your inheritance money can still be used shrewdly to secure yourself financially. Your pension is a vital aspect of your financial health, protecting as it does the affordability of later life. Where possible, you should be adding as much to your pension as possible; your inheritance could be an opportunity to pay a significant sum into your pension and reap the rewards later.
Quality-of-Life Improvements
Of course, none of the above options are particularly thrilling ones when it comes to money management. While the circumstances of your inheritance are anything but joyful, the money you receive needn’t inherit that same sombreness. Indeed, money is there for spending – and the sum you receive from your loved one could be put towards something that would tangibly improve your life in the short term.
For many people, this might present as long-postponed renovation works on the home. If the money is ample enough to cover it, you could extend your home – improving its overall market value as well as giving you additional living space to enjoy.
Investing
Lastly, there are more direct and active ways in which you can invest the money you receive. If your inheritance sum is particularly large, investments might be your best bet – not only to grow your savings meaningfully, but also to protect the value of your inheritance against economic factors like inflation.
Investment is inherently risky, though, no matter how you engage with it. Placing some of your inheritance money in a stocks and shares ISA for investment in a global fund would be the least risky investment option, but more involved attempts to build a stock portfolio could also generate some more immediate returns.
