Smart Strategies For Managing Your Inherited Wealth

Inheriting wealth can be a blessing or a curse. On one hand, it can be a great boon to your financial security, or it can be a major source of stress if you’re not prepared for it.



If you’ve suddenly come into a large sum of money, whether it’s from a relative or a business, it’s important to take the time to develop a plan for what to do with it.

The Basics of Personal Finance

Before getting into the specifics of developing a wealth plan for your inherited money, it’s important to understand the basics of personal finance. The fundamentals of personal finance include:



• Saving
• Budgeting
• Investing
• Debt Management
• Retirement Planning
• Insurance Planning

When it comes to managing your inherited money, you’ll want to make sure you have your finances in order before you start investing. That means having a budget, tracking your expenses and income, and knowing your debts. If you don’t already have one, you should think about setting up an emergency fund so you can deal with any unexpected financial challenges that come your way. 

The Difference Between Personal Finance and Investment Planning:

• Personal finance is the art of managing your money in the most efficient and effective way.

This includes budgeting and saving, debt management, retirement planning, and insurance planning.



• Investment planning is the process of making strategic investments in order to achieve a long-term financial goal.

When it comes to your inherited wealth, you’ll want to focus on creating a sound personal finance foundation before considering any investing decisions. Investment returns can only help you reach your long-term goals if you have the financial discipline to manage your short-term expenses properly. A solid personal finance plan can help you manage the size of your inheritance and the amount you’re able to invest. 

Why Do You Need a Wealth Plan?

Once you have a firm understanding of the basics of personal finance, you’ll want to move onto developing a wealth plan. A wealth plan is a comprehensive approach to managing your financial life. It includes setting goals, developing a strategy to reach them, and putting the right processes and systems in place to ensure success. When you’re dealing with a large sum of money, especially if it’s a windfall like an inheritance, it’s important to have a plan for how you’re going to use it. A wealth plan can help you define your goals, build an investment strategy to realize those goals, and develop a plan to protect your inheritance from taxes, lawsuits, and other potential threats. 

Key Components of an Effective Wealth Plan:

There are several key components to an effective wealth plan.

• Goal setting

You’ll want to determine why you want the money, what you want to do with it, and how long you want to keep it. These goals should be measurable, attainable, and reviewed regularly in order to ensure you’re on track.

• Develop an investment strategy that fits your individual financial situation.

This includes selecting the right investments and developing a properly diversified portfolio that is in line with your risk tolerance and time horizons.

• Make sure you have the appropriate insurance coverage in place as well as estate and tax planning strategies.

This will help you protect your assets and minimize the impact of fees and taxes on your investments.

• Build a legacy with your inheritance.

This could include donating regularly to charity, creating a scholarship or supporting a cause that’s important to you. You could also explore ways to invest in socially responsible and investments that make a positive impact. This could include investments in clean energy or community development projects. Creating a legacy with your inheritance can be a great way to benefit your community, while also leaving something lasting behind.

Inheriting a large sum of money can be exciting, but it can also be overwhelming. That’s why it’s important to take the time to develop a wealth plan to manage your inheritance.

We can help you with understanding the basics of personal finance, developing an investment strategy that suits your individual needs, and protecting your assets with insurance and tax planning strategies. Call us on (817) 238-1360 or EMAIL us to book an appointment today.