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Inherited some money from a family member or friend? How you put your inheritance to use is entirely up to you. Here are just a few ways to put inherited money to good use.
Spend it
After coming into some money, many people’s immediate reaction is to spend it. If you do choose to spend it, make sure that you’re spending it wisely. Think about purchases that can bring you long-term joy or enriching experiences. A few examples of ways you could constructively spend your money include:
- Putting a deposit down on a home: Mortgage deposits can be very expensive nowadays. Now could be an opportunity to buy your first home if you’re not already a property owner.
- Clearing debts: Paying off your current debts could be a sensible option, reducing your outgoing payments each month and possibly preventing you from paying less interest in the future.
- Paying to learn new skills/gain new qualifications: You could pay for a course. This could be anything from driving lessons to a university course.
- Funding a wedding: If you’ve been saving up to get married, you could consider spending your money on a wedding.
- Travelling the world: Travelling is good for the soul and you could build many enriching experiences from it. If you’ve always wanted to travel, now could be your chance.
Save it for later
Some of that money could be worth setting aside for a later date. Think about the future and how you or others can benefit from it. By putting it into a savings account, you can build interest on it. A few good reasons to save your money could include:
- Starting a rainy day fund: Your inheritance could offer a safety blanket against any future disasters that you may otherwise have to borrow money for.
- Passing it down to kids or grandkids: Money could be passed down to kids or grandkids as a trust fund or money for their studies.
- Save it for retirement: You could also set aside the money to enjoy when you retire to help complement your pension.
Invest it
By investing your money, you could grow it. £5000 could become £10,000 in several years time. This will give you more money to spend or eventually pass down. Some investment strategies can be risky, so you’ll need to do your homework. Some of the ways you can invest your money include
- Investing it in stocks or bonds: You could invest your money into a diverse portfolio of stocks. Alternatively, you could look into various bonds.
- Investing it into forex/crypto: By reading a currency pair, you may be able to make money trading foreign currencies. Alternatively, you could try buying cryptocurrency and letting your money grow.
- Investing it into something tangible: There are many tangible things you can invest in such as property, gold or rare collectibles. These could increase in value over time or you may be able to make money restoring or renting out to tenants.
- Starting a business: Got a business idea that you think you could be profitable. The money could go towards launching your startup.
Is my inheritance taxable?
When inheriting money, it’s important to consider whether that money is taxable. If a person’s estate is worth more than £325,000, then you will likely have to pay inheritance tax. Any returns you make through investing your inheritance can also be taxed. Make sure to look into this before choosing to spend, save or invest.
