People often dream of inherited wealth and fantasize about all the things they would do with the money. Most people talk about buying a mansion, cruising around the world in a yacht, taking lavish vacations, and engaging in shop-a-thons. While it can be fun to indulge in material things, the smarter thing to do is make investments to expand wealth.
Inherited wealth usually arrives in the form of inheritance from a deceased relative. However, large sums of money can also be awarded through lawsuits, financial investments, real estate investing, and lottery winnings.
It's smart to consult with a financial planner who can provide tax-saving strategies and advise which investment products provide the highest rate of return. When individuals obtain wealth through jackpot lottery winnings they can elect to receive funds as lump sum cash or establish a structured settlement to receive smaller payouts over the course of 20 years.
Structured settlements are also used when large sums of money are awarded through lawsuits. When litigants receive financial compensation caused by accident, injury, or medical malpractice the courts usually recommend compensation in the form of annuity payments to ensure Plaintiffs receive adequate funds to cover ongoing medical care and basic living costs.
When individuals obtain wealth through inheritance it's important to remember that loved ones worked hard and made smart investments to acquire the money. It is not uncommon for grieving heirs to go on spending sprees in attempt to soothe sorrows.
Instead of wasting inheritance money, spend time learning about various investment products that put your money to work for you. Consider using inherited wealth to start a business you've always dreamed of owning. Or, use money to invest in real estate, stocks, bonds, or financial products. Perhaps you have high levels of credit card debt that could be paid off.
In today's troubled economy it's important to put money aside for unexpected emergencies. Consider placing at least six months of required income into a high interest savings account. Spend time comparison shopping banks to obtain the best rate of interest.
A trusted source for savings account providers is BankRate.com. Be sure to read the fine print to determine if hidden fees exist. If banks charge monthly maintenance fees or require minimum balances earned interest could quickly be depleted.
Managing inherited wealth can be challenging for those who aren't used to having large sums of money. It can be advantageous to enter into credit counseling or enroll in a financial planning course. It's best to obtain financial information from experts such as Suze Orman and Dave Ramsey.
It's also smart to consider protecting inherited wealth for future generations. Inheritance money can be placed into educational funds, irrevocable life insurance trusts, or savings accounts and gifted to children or grandchildren when they reach major milestones in life.
Knowing you have money stashed away provides peace of mind and eliminates a heavy stress factor from your life. Don't make poor financial decisions when inheriting wealth. A big screen TV or expensive Sedan aren't going to improve your life. They might make you feel good for a while, but they won't expand financial portfolios.
We invite you to learn more ways to manage inherited wealth by perusing our personal finance article library. Topics include reviews of investment products, estate planning strategies for wealth protection, money management, debt help, and much more.
Published on June 14, 2011 at 02:21 AM