✓ Mortgage & Debt Management
Should you reduce debt, invest, or do both?
✓ Superannuation Opportunities
Could contributing to super improve your retirement and reduce tax?
What Should I Do With an Inheritance?
What Should I Do With An Inheritance?
Receiving an inheritance can create opportunities that may not have been possible before. It can also bring important financial decisions, often at a time when emotions are already running high.
Whether you’ve inherited $50,000, $500,000 or significantly more, the decisions you make over the coming months may have a lasting impact on your financial future.
While many people immediately think about paying off debt or investing, there is rarely a single “best” answer. The right approach depends on your existing financial position, tax considerations, retirement goals and how each strategy works together.
This guide explains the key areas to consider after receiving an inheritance and how a structured financial plan may help you make the most of the opportunity.
Key Financial Strategies To Consider After Receiving An Inheritance
Receiving an inheritance creates an opportunity to strengthen your financial future in ways that may not have been possible before.
Rather than focusing on one decision, it’s worth considering how each of the following strategies could improve your long term financial position.
✓ Investing Your Inheritance
How can your inheritance support your long term wealth goals?
✓ Tax Considerations
What tax implications should you understand before making decisions?
✓ Emergency Savings
How much should you keep available for unexpected expenses?
✓ Retirement Planning
Could your inheritance bring forward your retirement?
✓ Insurance & Estate Planning
Should you review your insurance and estate planning?
The following sections explore each of these areas in more detail, helping you understand how different strategies may work together to maximise the long term value of your inheritance.
Should You Pay Off Debt Or Invest Your Inheritance?
One of the first questions many people ask after receiving an inheritance is whether they should use the money to pay off their mortgage or invest it for the future.
While reducing debt can provide certainty and improve cash flow, investing may create greater long term wealth. In many cases, the best outcome isn’t choosing one or the other, but finding the right balance based on your financial goals, tax position and tolerance for risk.
You Have Received An Inheritance
What would you like the money to help you achieve?
↓
01
Reduce Debt
✓ Lower interest costs
✓ Improve cash flow
✓ Create greater certainty
02
Build Wealth
✓ Invest for long term growth
✓ Strengthen retirement savings
✓ Create future flexibility
Combination Approach
03
Work Towards Both
✓ Reduce non-deductible debt
✓ Continue building wealth
✓ Balance today with the future
The right approach depends on much more than interest rates.
Your existing investments, tax position, superannuation, retirement goals and future cash flow can all influence the most appropriate strategy. For some people, a combination of debt reduction and investing may provide the greatest long term benefit.
Can You Reduce Debt And Continue Investing?
Many people assume they need to choose between paying off their mortgage and investing for the future. In reality, there may be strategies that allow you to work towards both objectives at the same time.
Depending on your circumstances, a debt recycling strategy may help you progressively convert non-deductible home loan debt into tax-deductible investment debt while continuing to build long term wealth. While it isn’t suitable for everyone, it can be a powerful strategy when implemented correctly.
A Simplified Example
The Goal Isn't To Borrow More.
It's To Change The Structure Of Your Debt.
Before Debt Recycling
Home Loan
$800,000
Investment Loan
$0
Investment Portfolio
$0
Total Debt
$800,000
→
SAME TOTAL DEBT
After Debt Recycling
Home Loan
$500,000
Investment Loan
$300,000
Investment Portfolio
$300,000
Total Debt
$800,000
For the right person, debt recycling can help improve tax efficiency without simply directing every available dollar towards paying off the mortgage.
Like all financial strategies, it should be considered alongside your cash flow, investment objectives, tax position and tolerance for investment risk.
Explore Debt Recycling In More Detail
Receiving an inheritance often creates an opportunity to explore debt recycling as part of a broader wealth strategy. Learn how the strategy works, who it may be suitable for and explore our interactive calculator.
Should You Contribute Your Inheritance To Super?
An inheritance may create an opportunity to significantly improve your retirement savings. Depending on your age and contribution caps, contributing some or all of an inheritance into superannuation may provide long term tax advantages while increasing the amount available to support your retirement.
While super isn’t always the right home for inherited money, understanding how it fits within your broader financial plan can be an important part of making the most of your inheritance.
Contributing to super can be a powerful strategy, however the amount you can contribute, the timing of contributions and whether super is the right destination for your inheritance will depend on your individual circumstances and long term objectives.
Want to explore this strategy further?
Should You Invest Your Inheritance?
Investing an inheritance can be an effective way to build long term wealth, generate additional income and support future financial goals. However, choosing where and how to invest should be based on much more than recent investment performance.
The most appropriate investment strategy depends on your objectives, investment timeframe, tax position and the role the inheritance will play within your broader financial plan.
For some people, investing outside super may be appropriate, while others may benefit from combining investments with strategies such as debt reduction or superannuation contributions.
Want to learn more about investing?
Ready To Make The Most Of Your Inheritance?
Receiving an inheritance can create opportunities that may not come around again. Whether your priority is reducing debt, investing, boosting your super or planning for retirement, the best outcome often comes from understanding how each strategy works together.
There is rarely a single “right” answer. The most effective approach depends on your financial goals, tax position, family circumstances and long term plans.
Every inheritance is different.
A personalised financial plan can help ensure inherited money works as hard as possible for your future, rather than simply sitting in a bank account or being invested without a clear strategy.
How We Can Help
✓ Develop a personalised financial strategy
✓ Identify tax effective opportunities
✓ Coordinate your investments, super and debt
✓ Build a plan designed around your long term goals
We'd love to help you explore the opportunities available and develop a strategy tailored to your circumstances.
We warmly welcome new clients and our door is always open.
Let us take the stress and hassle out of managing your financial goals so you can focus on the important stuff.