inheritance

Recently, a couple asked me for advice on how to invest funds that they had just received as an inheritance. They didn’t need the inheritance for themselves, and they wanted to pass it along to their children (four children with a wide range of ages).

The couple’s oldest child was married and wanted to buy a house, so gifting to her now made a lot of sense. “What stocks should we invest in for her?” the clients asked. “None,” I said. “Money that you want to use in the short term should be in cash or short-term bank deposits because it needs to be safe. Investing it in the stock market has risk.”

As the next two children wouldn’t need the money for the next four or five years, they could afford to take some risk and try to grow their gift. A broadly diversified portfolio that included stock and bond funds could increase their chance of growth. Before getting started, though, I explained the level of the risk and tried to give the clients a sense of what to expect with regard to volatility.

Should you invest aggressively?

The couple’s youngest child was only 14 and would not need the money for some time. The couple thought that they could afford to take more risk with his portion and invest it all into stocks. I warned them that even though the stock market has traditionally offered stronger returns than other asset classes, growth is not guaranteed and they could lose money. In the end, the couple chose to use a “money manager” to handle this part of the portfolio as they felt that professionals could do a better job than they could at diversifying and managing these funds.

To find out more about using a money manager, watch a 12-minute video: Profile-Financial.com/sma. To start a conversation about handling your investments, call my office (02-624-2788).

Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd. www.profile-financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

Published November 29, 2016. November 2019, updated September 2022

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