Tag Archives: Children

Investing an inheritance from $10,000 to $100,000 whatever your life stage

By Robert Wright /November 21,2025/

Receiving an inheritance may be a once in a lifetime financial opportunity that also coincides with a very difficult, emotional time in your life. Whether you inherit $10,000 or $100,000, your age, life stage, risk appetite and financial preparedness are likely to play a key role in decisions about how and where to invest.

Many Australians are likely to be left some form of inheritance, most likely from a parent, at some point in their life, with 81% of retirees currently expecting to leave wealth behind.

The average amount Australians expect to inherit is $184,000, according to research commissioned by Colonial First State*.

And while one in two Australians consider up to $10,000 a sizeable amount with which to start investing, the research shows the average amount most Australians consider to be a sizeable investment to own is more than $600,000.

Investing an inheritance may help close that gap. Following are some general thought starters to consider by age, life stage and size of inheritance but please consult a financial adviser for advice relevant to your personal situation.

Also consider your risk appetite. Generally, the more risk you’re willing to undertake, the higher the potential reward may be. However, higher returns come with a higher risk that the value of your investment may fall.

In general, if you only have a short time frame to invest, lower risk investments could be a safer option as they’re less likely to fluctuate in value.

What to do when you first receive an inheritance

The first thing to do when you first receive an inheritance, particularly if it comes at an unexpected time, is to consider your options.

That may mean putting it in a high interest savings account or a mortgage offset account while you decide what to do.

Then consider your goals. Do you need to pay off debt? Are you looking to build long-term wealth? Pay off your home loan? Build a diversified investment portfolio? Or invest for the kids?

Most people with a six figure amount to invest will consult a financial adviser, although it can also be cost effective to obtain one off financial advice for smaller amounts.

Inheriting assets like shares or property, such as the family home, can also have different capital gains tax implications if you decide to sell, so getting tax advice may also be important.

In your 20s

In your twenties, it may be helpful to pay off any high interest debt or build an emergency fund to cover three to six months of living expenses. Otherwise, the earlier you invest, the more time your money has to grow and compound.

$10,000 to invest:

• A growth oriented exchange traded fund (ETF) or managed fund may allow money to grow while offering flexibility to access it later if needed.
• A voluntary contribution to super, allocated to growth or high growth, can be a tax effective investment that compounds over the long term if you’re within the super contribution caps, or limits, although you generally can’t access it until you reach age 60 and have retired.

$100,000 to invest:

• Low touch investors might consider a diversified range of shares via set and forget growth ETFs and managed funds, such as a US shares themed ETF or a long-term growth managed fund.
• It may be worth consulting a financial adviser to start building a diversified growth portfolio of managed investments.

In your 30s

For many, the thirties are about getting into the housing market.

$10,000 to invest:

• A high interest term deposit or savings account that offers some growth may be a good option over a short time frame.
• A voluntary contribution to super may allow you to save for your deposit faster using the First Home Super Saver scheme. The tax rate is generally 15% on earnings in super, while the amount of your contributions you can release to buy your first home increases in line with the shortfall interest charge rate (currently 6.78%).

$100,000 to invest:

Starting a family or looking to enjoy a little extra income?

• Dividend focused ETFs may help generate a passive income stream.
• If property investing is more your thing, you may have enough to invest in a growing regional market or a real estate investment trust (REIT).

In your 40s

At this point, many Australians who have a mortgage are looking to reduce it.

$10,000 to invest:

• Those with a mortgage that’s more than 50% of the value of their home might consider paying it down or putting their inheritance in a mortgage offset account.
• If a mortgage is less than 50% of the value of the home, it may be worth considering shares as average share market returns most years can be higher than average mortgage interest rates – again, there are many low cost ETFs and managed funds available.
• Or consider making a one off voluntary concessional (pre tax) or non-concessional (after tax) contribution to your super and investing it in a long-term, high growth shares investment option, a gold or silver themed ETF or the growth focused managed fund of your choice.

$100,000 to invest:

• Thinking about paying for the kids’ education? Investment bonds can be a good option to include in the mix as withdrawals are tax free after 10 years.
• Some investors may consider debt recycling by paying down the mortgage and then applying for a new loan to buy an investment property. Interest on the new loan is generally tax deductible so those interest payments can be offset against your income to reduce the amount of tax you pay.
• For those who can afford to invest the money outright, it may be worth building a diversified portfolio of ETFs or managed funds. Global and local shares have historically offered among the best returns. We can connect you with a financial adviser if you’d like help to invest.

In your 50s

After the age of 50, it’s often a good time to maximise pre tax and after tax super contributions to harness some of those tax advantages.

$10,000 to invest:

• Have you reached your annual super contribution cap limits? You can contribute up to $30,000 a year in concessional contributions, which are generally taxed at the concessional rate of 15%. These include compulsory employer contributions and salary sacrifice, as well as voluntary personal contributions (which could include a tax free inheritance) for which you claim a tax deduction.
• Alternatives might include investing in income producing shares that usually pay a dividend, income or dividend ETFs or REITs.

$100,000 to invest:

• If you haven’t fully used your concessional contributions cap in any of the previous five financial years (and your total super balance was less than $500,000 at 30 June of the most recent financial year), you may be able to use those unused cap amounts to make additional catch up contributions over the standard concessional cap amount (currently $30,000).
• Non-concessional super contributions (up to $120,000 a year to a maximum super balance of $2 million) are not taxed on the way in and are an effective means of growing your super quickly. While you can’t claim a deduction against these contributions, they compound relatively quickly in the super environment. Depending on how much you have contributed in prior years, you may be eligible to contribute up to $360,000.
• Investors who are likely to need to draw on their investments in the next few years, might consider including some fixed income securities or managed volatility funds alongside higher risk investments, such as shares.

In your 60s

Many people approaching retirement focus on preserving capital against sudden falls in value but there are also real costs in going too conservative too early.

From age 60, you can also access super if you meet a condition of release, such as retiring from a job. You can access your super regardless from age 65.

$10,000 to invest:

• It may be helpful to pay down any remaining debt or top up super.

$100,000 to invest:

• After 60, be cautious with gifting, as it may affect your eligibility to receive the government’s Age Pension from age 67. Gifts over $10,000 per year or $30,000 over five years will still be counted among your assets when it comes to Centrelink means-testing.
• For those who have reached their super contribution cap limits, it may be worth topping up your spouse’s super.

 In your 70s and beyond

Enjoy your retirement. Most investors are focused on capital preservation and income generation and it may be worth using the bucket strategy with the goal of making your money last longer. At the same time, don’t forget to tick off the things on your bucket list.

$10,000 to invest:

• Keep some money in cash or term deposits for accessibility.

$100,000 to invest:

• A mix of fixed income investments, REITs and conservative managed funds may help reduce risk, alongside higher growth shares or managed funds that you don’t expect to access in the next five years.

Whether you inherit a modest sum or a substantial windfall, align your investment strategy with your life stage, goals and risk tolerance.

For smaller amounts, many Australians manage without advice but for larger inheritances, professional advice from a financial adviser and an accountant can help you navigate tax implications, diversify your investments and plan effectively for the future.

* Colonial First State research conducted with 2,250 Australians online between January and June 2025.

 

Source: Colonial First State

Supporting your kids, without sacrificing your own retirement

By Robert Wright /July 30,2021/

In the past, wealth was often passed on through an inheritance. But with our longer lifespans, and the higher cost of living (especially housing), the desire to help our kids while we’re alive and well is increasing.

If your children are young, you may have twenty or thirty years to save and invest on their behalf, while also saving for your own retirement. If this is the case, it pays to put a strategy in place early on.

For those nearing retirement age, or already retired, you may have a large lump sum you’d like to gift to one or more of your kids. Giving money is a wonderful thing to do, but it’s not always simple. It can have tax implications, and may affect your income support payments from Centrelink. On the other hand, gifting may enable you to increase your government pension payments or benefits, if done right.

So how can you help your children without compromising your own financial security and comfort in retirement?

Ensure you’re on track for a comfortable retirement

Before you give away your wealth, it’s important to remember that you need to fund your own retirement for many years.

Australians are living longer than ever, with more years spent in retirement. If you were to retire at age 60, and live to 90, that’s one whole third of your lifetime spent in retirement.

As well as wanting to enjoy your retirement through travel or leisure activities, older age often comes with more medical and health expenses.

So it’s really important to make sure you have enough funds saved and invested to get you through. This might sound selfish, but in reality, it means you won’t become a financial burden on your children later in life.

How much will you need to retire, and, how much can you afford to give away now? It’s always best to seek professional financial advice to ensure you have enough put away to see you through. A financial planner will be able to give you tailored advice about the impact of your giving on your retirement plans.

What am I giving money for?

Next, consider what it is you’d like to help your son or daughter with. Are the funds for a property deposit? To pay for a wedding? Education expenses? This might offer some clue as to the right amount of support.

Following on from this, consider how many children you need to help. If you gift funds to one child, do you need to match that for others when the time comes? If you have several children, but some are doing better than others, do you need to help them all equally?

Balancing the family dynamics around money is important, as it can be a sensitive issue. The last thing you want to do is cause a rift in the family over some perceived inequality. If you do have several children you need to help, keep this in mind, as it will limit how much help you can offer each child.

Giving an incentive

Often the best way to support children financially is to match their own contribution. Rather than purchasing something outright, offer to base your assistance on their own savings. This also means they have a vested interest in the item, which means they’re likely to treat it more carefully.

How should I give money?

If you receive the Age Pension or other benefits from Centrelink, there is a limit to how much you can give away. The gifting rules allow you to give $10,000 over one financial year, or $30,000 over five years. You’ll need to let Centrelink know when you’re planning to give a gift of this type.

If you’re considering giving your children a substantial amount of money, it’s worth taking the advice of Dr Brett Davies at Legal Consolidated. He recommends always giving funds as a loan ‘payable on demand’, not as a gift. Creating a written loan agreement helps keep the money in your family, even if things don’t go to plan.

Consider this. You gift your daughter $400,000 to buy a house. Five years later, she divorces from her husband and the house is the only asset of the marriage. The Family Court awards half of the value of the house to the husband, including $200,000 of your donated funds.

If you instead had a valid loan agreement in place, the loan must be paid out before the assets are distributed. Hence, the $400,000 comes back to you, to do with as you please. 

Always seek professional legal advice when drawing up a loan agreement to ensure that it’s compliant with the law, properly worded and correctly executed.

Get professional advice

If you’re nearing retirement and looking to give up work, downsize your home and/or gift funds to your children, it’s important to seek financial advice.

A financial planning professional will be able to give you tailored advice about the impact of your planned giving. They can also help you work out a strategy for meeting multiple goals, such as giving to several children while funding your own comfortable retirement.

Source: Money & Life

How to help your children with buying property

By Robert Wright /July 16,2021/

With property prices rising at a record rate in many cities across Australia, the ‘bank of mum and dad’ is playing a bigger role than ever as many parents feel pressure to assist their children in buying a home.

For many Australians, home ownership is not just seen as the great Australian dream, but it also represents financial security and an important step in adulthood.

However, rapidly escalating prices, particularly in highly-desirable capital cities such as Sydney and Melbourne, has put that first step on to the property ladder out of reach for many young people. This in turn has led to many children turning to their parents for assistance.

According to the AFR, parental contributions are averaging more than $89,000, an increase of nearly 20 per cent in the past 12 months. In fact, the ‘bank of mum and dad’ has about $34 billion in loans, making it the nation’s ninth-largest residential mortgage lender.

For parents who want to help their children into home ownership, there are a number of strategies and pathways to consider.

Contributing to a deposit

Most lenders recommend prospective home buyers have 20% of their loan available as a deposit, and contributing to this deposit is often what first comes to mind when parents think of how they can help their children, as scraping together a deposit is generally considered the most difficult step in buying a first home.

If you are contributing a cash amount, make sure you have clear discussions with your children about any expectations related to your contribution – for instance, if you are making the contribution in lieu of leaving them money in your will, make this very clear and don’t hesitate to put it in writing, especially if you are doing this for one child but not others.

Acting as guarantor

A guarantor home loan is when someone, in this case a parent, offers up part of their home equity as security to top up the buyer’s cash deposit.

It means the buyer only needs a small deposit or sometimes none at all, and avoids paying costly lender’s mortgage insurance (LMI).

It’s crucial that you only agree to act as guarantor if you have full confidence in your child’s ability to make their loan repayments. If they default, you will be liable and your own home may be at risk.

Providing a loan

Whether through an official loan provider or a private agreement between parent and child, you may be in a position to loan your children the money they need to buy a home or for their deposit.

Keep in mind that this assumes they will be able to make their official home repayments as well as paying back the initial loan, and it is important to have honest discussions that clarify how they will manage this, and a timeframe for repayment.

Always put your well-being first

It may sound selfish and like it goes against what we’re told as parents, but it is crucial that older Australians put their own financial security first.

If you are simply not in a position to assist your child, do not feel pressured to put your financial wellbeing at risk in order to help them, especially if you have doubts about their ability to manage the repayments and responsibility of a home loan.

In this case, have a frank discussion with them about your will and what you will be able to provide for them after you have passed. You can also direct them to seek professional financial advice from your adviser which may help them understand how they can work within their own financial limits to move towards home ownership without your assistance.

Source: Money & Life

Should you give your teenager a credit card?

By Robert Wright /July 20,2020/

We live in a culture of smartphones, WIFI, home delivery, online shopping and online gaming, where most needs and wants can be met almost instantly. With so much temptation to spend, it’s vital to teach your kids the money skills to help them enjoy financial wellbeing as adults. But should you give your teenager a credit card?

Pre-paid, debit or credit?

You might like to start with a pre-paid card or a debit card, so there’s a limit on what they can spend. Set the rules on what it can be used for and how much they can spend. If they manage the process well, and if you’re confident that they’re responsible enough, you could give them a credit card (which would be a supplementary card connected to your own, as children under 18 cannot have their own card).

Before you give your teen a credit card, take the time to have a conversation about credit card fees, interest rates, and how spending irresponsibly can give you a bad credit rating, which is bad news for their future. Be clear that they will be responsible for all expenditure on the card – if they can’t afford it with cash, they shouldn’t put it on the credit card.

Rules, limits and know-how

Giving a teenager a credit card may seem risky or even irresponsible, but it can be a great teaching tool if the right conversations, rules and limits are put in place.

Before you give your teen a card, be sure to speak to them about how it works, how to be responsible with it and how to avoid financial trouble, including:

• How interest works – it’s important that they understand that a credit card is like a loan and if they don’t pay it back on time, they’ll be charged interest.
• Paying it off in full every month – show your teen a credit card statement and explain that if they only pay the minimum amount, they’ll still be charged interest.
• Paying on time – show them where they can find the due date for payments and help them to set up reminders to pay on time every month to avoid interest.
• Avoid overspending – teach your teen to keep track of their spending, and to never spend more than they earn. Use the credit card’s app to keep a tally on spending.
• Start with a credit limit lower than they earn – it’s a good idea to start with a credit limit that is not more than what they earn in a month. For example, setting a low limit for a teen may be $500 maximum so they can consistently pay it off at the end of each month.

Understanding ‘buy now, pay later’ services

The growing popularity of ‘buy now, pay later’ services such as Afterpay, Openpay and zipPay means it pays to help your teen understand how they work, and what the risks are.

These services allow shoppers to buy a product, take it home and pay for it in instalments via an online ‘buy now, pay later’ account, which deducts your preferred debit or credit card. Added to that, while the buy now, pay later provider might not charge interest on your purchase, you may still have to pay interest to your credit card provider if you don’t pay the full amount owing on your credit card by the due date.

Leading by example

While knowing the ins and outs of debt is important, one of the most powerful ways to help your kids develop healthy money habits is to lead by example. Our ideas about money are formed in our childhood, so if your kids see you living with healthy financial habits, they’re more likely to form those habits themselves.

Source: AMP