inheritance

Recently, a couple with four children of various ages 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.

The couple’s oldest child was married and wanted to buy a house, so getting her share of the funds 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. The stock market carries 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 odds 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. So the clients thought that they could afford to take more risk with his portion and put 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 that portfolio as they felt that this would be the best way to diversify and manage these funds.

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

Douglas Goldstein, CFP®, is the Director of Profile Investment Service, Ltd., which specializes in helping people who live in Israel with their US dollar assets and American investment and retirement accounts. He helps olim meet their financial goals through asset allocation, financial planning, and using money managers.

Published November 29, 2016. November 2019

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