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• Investing an inheritance

Question:
I just received an inheritance of US$1-million from a relative in the USA. I don't really have any other assets and have no idea how to invest it. I have a R150 000 bond and some other small debts to pay first. I'm 54 years old and divorced (no liability there) with three adult, unmarried daughters.

Answer:
Receiving so much money out of the blue is everyone?s dream come true! I am glad that ? unlike most people who would run out and spend, spend, spend ? you acknowledge the need for some careful planning.

Many people in their 50s realise that their financial planning has been almost non-existent and at that age they are aware that they should 'do something' about it.

A golden opportunity for some solid planning, and thereby a secure future, has arrived on your doorstep. Don?t be tempted to use a large portion of your inheritance on those things that you want, but don?t need, until you have secured your retirement needs.

Paying off all debt is usually a good place to start and it would appear that even after that there will be a large amount of money to invest. At the current exchange rate, US$1-million is about R7.5-million.

Ideally you should consult with a Certified Financial Planner who is qualified to advise you in these areas that you will have to take into consideration:

• How best to invest the money so as not to pay too much income tax.

  There are so many different types of investments, from very safe to very risky, and it?s best to speak to someone who understands how they all work and can explain them to you in a way that you understand. There is such a thing as investing money 'too safely' (click here to learn more) because you could lose a lot to tax and inflation. Conversely, you shouldn?t invest too riskily if you have no idea how share investments work.