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How to make the most
of an inheritance
By Sam Jackson, Investment Adviser with Churchgates
An inheritance may be a blessing, but it can also come with a lot of complexity and important decision making. If
utilised wisely, an inheritance can assist in establishing a new profession, finishing education, purchasing a new home, planning for retirement, or saving for unforeseen eventualities. However, if inheritance is not properly handled, it does not endure as long as many people believe. As a result, to properly capitalise on the opportunity, you must understand how to manage it appropriately.
What should you do with an inheritance?
When you initially receive your inheritance, it may feel like you will have financial stability for the rest of
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your life. However, such bequests must be carefully handled for the advantages to last in the long run.
Stop, think, and plan
It is essential to avoid making hasty judgments while planning how you will use your inheritance. It is normal to be tempted to quit your work as soon as you inherit, or to utilise the money to buy your dream car. However, it is critical to take a step back, analyse, and make smart financial decisions.
Clear your debts
As much as you may be inclined to spend your windfall on a big-ticket item, the most prudent initial move is to clear your debts. Make an inventory of your financial status, including any debts, mortgages, and credit card bills, and
make a plan to repay them.
Repayments should generally be prioritised in direct relation to the interest rate you are paying. Credit card payments, for example, are often more costly and have a considerably higher interest rate than mortgages. Consequently, pay off high interest credit card debt and personal loans first, before progressing on to lower interest rate liabilities.
Paying off debts with your inheritance may not feel like an exciting transaction, and it is tempting to believe that you will not feel the benefit of this. However, being debt-free can relieve you of financial stress, provide more freedom, and allow you to live more comfortably within your means.
In some cases, the commitment to pay off debts before investing should be
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