100k Inheritance: The circumstances by which you receive a $100k inheritance may be sad and unexpected. While money cannot replace the life of a lost loved one, we want to give you simple pieces of advice to ensure you get the most out of your family legacy. And even set up financial goals for the next generation.
The big picture
Whenever anyone receives any large sum of cash, their first instinct may spend it on big-ticket items or taking a holiday that goes beyond what you really mean.
However, if your loved ones have been kind enough to leave you a sum of their wealth after they pass away, you’re granted the honour and obligation of stewarding that wealth, to carry on their legacy and pass to your next generation.
As learning how to get this money work for you, it requires a level of thought and some financial education.
What not to do
In his life, Andrew Baxter saw many people using their inheritance to splurge on a holiday, nice fancy clothes, etc., realised that short-term endorphin release ends as quickly as the money draining out of their account.
When you stop and think about it, do you really need that new Mercedes? Or that Louis Vuitton handbag?
If you really needed it, you would have a plan in place to save, before the inheritance came into play.
Our first piece of advice when it comes to large, unexpected sums of money coming into your account: don’t incur any large capital outlays on anything that isn’t an income producing asset.
There’s nothing wrong with nice cars, or flashy clothes, but buy those on your own merit.
Invest in property
Property has been the mainstay Australian investment over time, with prices steadily increasing and rental returns remaining fairly solid. And depending on where you’re financially at the time, buying an investment property may a great idea for you.
A $100k inheritance will get you into the market with a house up to $500k, based on the 80% LVR rule here in Australia. However, this is where we need to take serviceability into account.
If you’re 19 years old and still at university and use the inheritance money to buy an investment property, but what about the serviceability of the loan? Can you really afford the mortgage repayments while living on a student budget?
If that’s you, we would say that the notion of buying a property would kind of go out the window.
On the other hand, if you already have a mortgage, ask yourself if you can afford to service another one. The idea may sound great in theory, but you need to quickly come before you find yourself in a rut.
These are all factors that host Andrew Baxter recommends considering before making your decision to buy with your newfound inheritance.
The stock market – for the active and passive
If you’ve looked and invest in property and realize not the best fit right now, look at the stock market.
Investing in the stock market has the potential for greater returns, the ability to manage risk and the flexibility to either be active in your approach or completely passive.
For the passive investor, host Andrew Baxter recommends diving into Exchange Traded Funds (ETF) or even Index Trackers. Using these services will alleviate the stress of individual stock picking or the fee structure of a managed fund.
For someone looking to be active with their newly invested $100k inheritance, generating income through financial options is the best. Andrew Baxter’s Australian Investment Education specifically teaches everyday Australians how to generate up-front and immediate income from the stock market using a strategy known as Cashflow on Demand.
Stocks and property – A great plan to get ahead
Let’s take the example of the 19-year-old who’s still at uni and they invest in the stock market today.
Fast forward to 2025, their money has been working hard for them and generating an income. They’re 25, with a stable job post-university, and able to service a mortgage.
All of a sudden, they have the ability to purchase a property, while also continuing to trade the stock market.
This approach may seem slower and less exciting, but making wise investment decisions will help you set up for the longterm.
After all, if you’re one of the lucky who has been gifted a $100k inheritance, make sure you leave it in a better position.
If you’re interested in learning more about investing in the stock market, contact Andrew and his team at Australian Investment Education today.
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