Inherited Investments and Don’t Know What to Do With It? Here Are All the Answers You’ll Need

Family LawAugust 10, 2021

If you happened to inherit investments from a loved one, would you know what to do? Most people don’t. According to new research, half of the people would be completely stumped in such a situation.

Many often make the mistake of selling the assets and adding the gained revenue to a current account. In a study, Hargreaves Lansdown also pointed out that middle-aged people and women are most befuddled when presented with such circumstances. It’d be a shame to lose all your inheritance by way of selling for a loss or due to inflation. With current market trends, the likelihood of that happening is very high.

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What to Do With Inherited Investments

If you know nothing about investing, inheriting investments might be quite daunting for you. As a rule of thumb, don’t sell the acquired assets unless there is an immediate need for urgent cash. So, with that in mind, let’s go through what you should do with inherited investments.

1. Overhaul the Portfolio

Everyone invests with different objectives and goals in mind. It is quite possible that yours might differ from theirs. You might have to tweak the risk tolerance, whether higher or lower, depending on your circumstances.

This basically means switching to safer assets and vice versa. If you’re not looking for income generation and want to maximize growth potential, you might need to look into different sets of investments. The biggest consideration of all is that if your goals are still 5+ years away, it’s best to let the investments grow.

Pexels | Best to let that wealth grow

2. Think About Tax

Most investors acquire assets held outside of a pension or Roth IRA, in which case your income will be subjected to taxes in the future. Here you can be proactive in sheltering your inherited investments. There are certain tax wrappers that might help you in doing so.

3. Take Practical Action

If the shares you’ve received are in physical condition, it is best to dematerialize them and hold them electronically. It is best not to find sentimental value in such assets. Dematerializing will help you sell your holdings whenever you see fit, without wasting any time.

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Bottom Line

If you inherit investments, the first thing to remember is that your loved ones left something behind for you for a reason. Make it count. Assets like investments, which can reap large profits in the long term, must be kept exactly like that. Instead of selling them off for some quick cash, hold on to them. Let the wealth maximize. Your future self will thank you for it.