You might feel on top of the world thinking of what you can do with it all, whenever it happens.
But it’s important to remember that regardless how you received it, what you do with it has the potential to shape not just your life, but generations after.
Challenges of the Suddenly Wealthy:
Our Investing Solutions: Managing an inheritance involves more than mathematics. There are often feelings of guilt or worry of dishonoring the wealth received. We create responsible portfolios that balance growth and stability, while discussing ways to help cement your next generation’s legacy at the same time.
Our Investing Solutions: The sale of one asset presents the opportunity to buy another. That might be something practical, like assets that can provide a continual income stream. It could be buying another property or plot of land. Maybe both. Probably more. You tell us your wealth goals and we’ll take it from there
Our Investing Solutions: Sales, stock options and inheritances are taxed differently. And that difference can mean a big swing in how much you get to keep. We work with you, your CPA and attorney(s) to invest your lump sum in the most tax-efficient manner possible.
Wells Fargo Advisors does not provide legal or tax advice.
Our Investing Solutions: Some people are born spenders. Receiving thousands or millions instantly can pave the way to poor decisions. Our financial advisors can set spending guidelines and provide wealth counseling that sets boundaries while also giving the freedom to enjoy.
Questions the Suddenly Wealthy Ask Us:
Accessing your proceeds is table stakes, especially if you owe taxes. A general rule of thumb is to outpace inflation and meet your financial obligations in the most risk-free way possible. This might mean investing in a CD or municipal bond and/or building treasury ladders. Your specific situation will demand a specific solution.
There’s no hard or fast rule. You can invest lump sum or portion the investment of sale proceeds over time. In fact, it’s often better to consult a financial advisor to avoid rushing into a decision you might regret later.
This is where we recommend working with a CPA and a financial advisor together. You’ll likely be in a new tax bracket, need to file new forms (e.g. 1099-R or Schedule D), want assets to step up in basis and more. Managing an inheritance involves navigating tax implications just as much as investing any inherited wealth itself.
Wells Fargo Advisors does not provide legal or tax advice.
Give some to charity. Buy a modestly priced bucket list item. Evaluate your debt. Think about life in 20 years. Invest prudently. All of the above, really. And our wealth managers will help you do it all in a financially responsible way.
Safely is the keyword. All investing involves some risk in. Generally, short-term goals should be in low-volatility assets, including high-yield Savings accounts. Medium-to-long-term goals open up more strategies and planning, including ETFs, mutual funds, individual stocks and emerging sectors. Whether to invest by lump sum or dollar cost averaging is a conversation to have with your financial advisor.