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invest your inheritance

3 Smart Ways to Invest Your Inheritance

For Australians, receiving an inheritance isn’t always something to celebrate. It’s actually a time of sadness and reflection for those who received financial windfall after the loss of a loved one.

After the mourning period, however, then comes the reality of what to do with such a sum of money or assets. If you want to make the most out of your inheritance, you need to be smart about it and manage it in a tax-effective way, so you don’t just lose it. Let’s look at some of the best ways you can invest your inheritance for long-term prosperity.

The Burden of Inheritance

Receiving inheritance comes with a huge responsibility. At first, you’ll probably be happy to get your hands on the financial windfall, but then reality sets in. The thought of having to manage a large sum of money could leave even the most accomplished person overwhelmed.

There’s also the matter of taxes. One misconception about inheritance is that it’s all tax-free or that you don’t have to pay taxes on it at all. While it’s true that you don’t have to pay federal tax on an inheritance, it’s not so with taxes at the state level. In Australia, each state has its own set of inheritance tax laws.

If you inherit from someone who isn’t a relative, you’ll need to pay tax on it. But if the deceased was your spouse or a lineal descendant (parents, grandparents, children, grandchildren and great-grandchildren), you can claim the inheritance as part of your tax-free threshold.

Find Ways to Invest Your Inheritance

One of the smartest ways to spend your inheritance is to invest it in a way that will give your money tax-free growth. This way, you won’t have to worry about taxes, and your money will have time to grow.

Here are some of the best investments you can make with your inheritance:

1. Investing an Inheritance into Superannuation 

One of the best ways to build your retirement nest egg can be by utilising your inheritance as a way to fund it.

The benefit of using inheritance to contribute to superannuation is that there are no tax ramifications. With other investments, the capital gains will be taxed at your marginal rate.

It is important to note that there are limits on how much you can pay into your super fund each financial year without having to pay extra tax, also known as ‘contribution caps’.

Your age and total super balance will also determine how much you can contribute to your superannuation as a personal contribution in a financial year. Learn more about the ATO contribution limits here.1

2. Investing in a Trust Fund

A trust fund is another way you can use inheritance for long-term financial security. By investing your inheritance in an investment portfolio held by a trust fund, you can earn returns on your capital while also reducing any taxes you may be forced to pay.

A trust fund is just like an investment account, except it’s usually used for long-term purposes. You can also use inheritance to create a trust fund for your family, for your children’s education or for the care of an elderly relative.

3. Pay down debt

With the average Australian carrying personal debt of approximately $46,0002 and the average new loan for people buying an existing property in Australia being $630,662 by May 20223, many of us are burdened with large debt obligations.

So an alternative to investing your inheritance is to reduce your debt obligations, especially those debts that carry large interest charges and fees, and those that are not tax-deductible, such as credit cards.

Reducing your debt obligations can result in not only an improvement to your daily cash flow, but can also bring other additional benefits such as an improved credit score and less stress.


The financial windfall you get from an inheritance can be a great way to help you invest in your financial future. However, you need to find smart ways to invest in a tax-efficient manner. Take your time to find an investment that will allow you to manage your inheritance in a way that enables you to grow your money while also keeping taxes at bay.

It pays to be smart about how you invest your money, no matter how big or small it is. Newcastle Financial Planning Group is here to help you create and manage your wealth properly so you can enjoy your dream retirement.

Our trusted and experienced financial advisers specialise in a range of services, from investment advice to insurance advice to retirement planning. Partner with us today and start taking control of your future and your finances. Call us or book online to secure your  first appointment with us today and get started!



  1. https://www.ato.gov.au/individuals/super/in-detail/growing-your-super/super-contributions—too-much-can-mean-extra-tax/
  2. https://www.statista.com/statistics/1227995/australia-average-personal-debt-value-by-generation/#:~:text=Average%20value%20of%20personal%20debt%20in%20Australia%202020%2D2021%2C%20by%20generation&text=A%20November%202021%20survey%20among,around%2056.8%20thousand%20Australian%20dollars.
  3. https://www.canstar.com.au/home-loans/average-home-loan-australia/


DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.
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