You have just inherited a substantial sum of money. You want to invest it, but how? Here are some common sense rules for investing the money from an inheritance as wisely as possible.
Having remained at the floor for almost 20 years, inflation is now on the rise again. A good reason not to let your inheritance sleep too long in a savings account, because doing so will erode your purchasing power in the long term.
If you are not an informed investor, the task can quickly become time-consuming and stressful. To ensure that inheritance remains above all synonymous with peace of mind, simplify your life. Establish your objectives and your investment horizon, and get advice on developing the best strategy, active or passive. When choosing the manager, pay close attention to fees, as these can make a huge difference to the final return.
Another must-have in investing, diversification should be your number one priority. Different asset classes, different sector and geographical categories, different segments in terms of capitalization and level of risk. In this respect, adopting a passive strategy is ideal: by investing through trackers, you can very easily be exposed to listed companies around the world and to bonds from the entire euro zone.
Does this inheritance constitute an important part of your heritage? It might be wise not to invest it all at once. Even if experience shows that, over the long term, it is always a good time to invest, investing the same amount at constant intervals solves the question of "market timing": by investing gradually, you smooth the market price in the weather. For example, you could split the investment of your inheritance into six payments spread over six months… Depending on the market conditions, easyvest can advise you on the best way to stagger your investment.
With increasing life expectancy, inheritance often occurs at an increasingly advanced age. You might therefore want to pass some of it on to your children, to help them with a property purchase, for example. In this case, the donation is probably a solution to consider. It is a way to organize the division of your assets during your lifetime, and often, to reduce the inheritance taxes that your heirs will have to pay when you die. You can accompany this donation with what is called an “side agreement”, which allows you to specify the terms of the donation (template document to download for free in our dedicated blog).