Investing an inheritance

If you’ve received an inheritance, you may be thinking about ways to make the most of it. Perhaps you want to take a holiday, put the money towards your children’s education or pay off your home loan. You may also want to consider how you could use your inheritance to boost your retirement savings.

While you’re thinking about your options, putting the funds in a term deposit or high interest savings account may offer a higher interest rate than your everyday bank account.

Choosing what’s best will depend on your level of debt and income, appetite for risk and overall financial situation, including how close you are to retirement.

Here are some options to consider:


1. Pay off debts

Paying off debts can reduce your financial stress now and in the future. It’s wise to pay off loans which charge you the highest interest rate first, such as credit cards, car or personal loans, store cards and short term loans.


2. Build your super balance

Putting money into super can be a tax-effective way to increase your retirement savings .There are rules around super contributions that you need to be aware of, for example:

  • Excess non-concessional contributions are taxed at 49%. However, you can generally withdraw any excess contributions tax free although a deemed earning amount will apply to the excess contributions and will be taxable to you personally.
  • You could choose to keep the inheritance outside super and set up an arrangement with your employer to contribute more to super from your before-tax income – also known as concessional or salary sacrifice contributions. Concessional contributions don’t attract income tax and instead are generally only taxed at 15%. This means you could lower your taxable income. Money you draw from your inheritance could supplement the income you sacrifice.

It’s also important to remember that money you put into super is generally not able to be accessed until after you retire.


3. Invest in shares or property outside super

Depending on how comfortable you are with taking investment risks, you could invest some of your money in assets with the potential to grow in value, like shares or property.

Shares and property are two key investment types, sometimes referred to as asset classes. Others include cash and fixed interest. All investment types carry their own risks and benefits and if you invest in a mix of them, you may be able to minimise the chance that all your investments will perform poorly at the same time. This is what’s known as diversification. It’s important to understand the risks involved and seek advice if you’re not sure.


Investing in property

What are some of the benefits of property investment?

• The rental income you receive may cover your loan repayments.

• You may be able to claim a tax deduction for some of your expenses.

• It can offer a lump sum payment if you decide to sell.

What do you need to consider when investing in property?

• You will need to pay tax on any income you make.

• There are high buying costs, including stamp duty.

• If you have a variable rate loan and interest rates go up, so do your repayments.

• You run the risk that your property may decrease in value.


Investing in shares

By buying shares you are buying part ownership of a company. If the company performs well, you can benefit from share price growth. Equally, if the company performs poorly, your share performance will suffer.

What are some of the benefits of shares?

• They can be bought and sold quickly with relatively low transaction costs.

• Potential returns from shares include an increase in the share price, also known as capital growth.

• You may make a capital gain, where you sell your shares for more than you paid for them.

• Some shares also pay income in the form of dividends, which are distributions paid out of the company’s profits to its shareholders.

What do you need to consider when investing in shares?

• Markets can be volatile, meaning share prices can fluctuate frequently. This is why shares are considered a higher risk investment.

• Brokerage fees – these are what you pay when you buy and sell shares.

• You’ll need a broker, which can be an online trading platform or a stockbroker.

• Any form of investment has its benefits and risks.


If you’ve received an inheritance or want to know what to do with your surplus cash we’d love to hear from you!  To book a free consultation to improve your position, or to get a recommendation from the Fortress Extended Family, please call our office on 07 4646 4970 or contact us on

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Information on this site may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.

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