Investing an Inheritance: What You Need to Know

An inheritance may be expected, or it may be a complete surprise. Either way, when we receive one, we worry that others do not: What should I do with the inheritance?

When it comes to investing in a windfall like an inheritance, there are many options. Spend it on a sports car? Donate it to charity? Invest it? And if the latter, how?

Let’s focus on the investing options. The steps for this are relatively simple.

First, determine appropriate asset allocation. Such an allocation should take into account the fact that no one knows how the market is going to perform.

Ideally, your assets should be divided among different types of investments based on your financial goals and appetite for risk. This is a mix of stocks, bonds, and other investments.

Next, you would invest the inheritance based on that mix of assets. You could do this all at once, which gets your money working more quickly and does not leave you too conservatively invested in cash for a period of time. Or you could use an approach called dollar-cost averaging, which involves investing the inheritance a little at a time. With this approach, you can take on less risk by slowly investing small chunks at a time rather than throwing it in all at once.

Regardless of which approach you choose (other than the sports car), we can help you determine the appropriate asset allocation.

Please reach out if you have received an inheritance or expect one in the future and would like assistance with this investment.