Ways to invest in your future
Standard Bank mentions that financial windfalls or inheritances offer great opportunities for building a solid future.
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A financial windfall from an estate is always welcome. The trouble is, the more significant the amount received, the greater the temptation to spend it.
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Errol Meyer, senior manager Standard Bank Advisory Propositions said, “The most important thing to do is to resist temptation and take the time to make sound financial decisions. Banking the windfall for a few weeks while evaluating your options will give you time to come to terms with your new financial status, instead of making hasty or unwise decisions.
“The second thing to consider is family and friends. As tempting as it is to share your newfound wealth, whether from a sense of duty or a sense of goodwill, these inclinations should be shelved – at least until you have had time to sort out your own plans.”
Meyer advises looking at your present financial position and improve it by:
- Paying off existing debt. The more debt you have, the more interest you pay. With rising interest rates and costs brought about by everything from drought to the dropping value of the rand, paying off debt can help return you to financial health
- Pay off your bond. A home loan is a long-term debt that offers major benefits in terms of interest savings if it is paid off early. A paid-off home is a major asset for the future, which can be used to act as security for a loan access bond or personal loan
- Start savings or retirement plans. Invest your money or opt for a retirement annuity to bolster your pension or provident fund payout
- Consult a professional personal financial planner. They will consider your age, current financial position and your long-term ambitions and advise on a working financial plan to help you achieve your financial dreams.
Meyer said that the person willing money to someone else is also a key player in the process of ensuring that inherited money is correctly allocated. “A person planning their estate should be thinking about financial allocations to a surviving spouse, which should be viewed as a duty, and leaving money to people who would view the inheritance as a privilege.
“History is littered with examples of people who have inherited large sums of money, had a windfall or even won the lottery, but because they do not have ‘money skills’, they spend it and are broke within a few months or years.
“Knowing that you are not financially literate enough to build a financial future from inheritances and calling in a professional to help could be the best thing you ever do.”