Greg and Michelle: Strategically Investing a $1.1M Inheritance for a Secure Future

At age 60, Greg and Michelle received a significant inheritance from Michelle’s late mother. The inheritance, which included proceeds from the sale of the family home along with shares and cash, presented an opportunity to enhance their financial stability but also required careful planning. With their retirement approaching, they needed to invest the inheritance effectively while addressing their current and future financial needs.

• Investment Strategy: How to effectively invest the inheritance to align with their current life stage and future goals?
• Cashflow Management: How to restructure their finances to generate a reliable annual income of $100,000?
•  Superannuation Review: How to integrate the inheritance into their existing superannuation accounts and overall investment strategy?

To address their concerns and meet their financial objectives, we crafted a comprehensive strategy:

1. Maximizing Non-Concessional Contributions (NCCs): We recommended that Greg and Michelle contribute the maximum allowable non-concessional contributions into their superannuation accounts. This approach not only enhanced their retirement savings but also provided tax advantages.
2. Superannuation Restructuring: We restructured their superannuation accounts to hold allocated pensions, optimizing the management of their retirement funds. This adjustment increased their total superannuation balance to $1.68 million, providing a solid foundation for future income.
3. Investment Strategy: We established a diversified investment portfolio with the remaining inheritance, focusing on tax minimization and balancing risk with return. The required rate of return was set at 6% to achieve their target income levels without drawing down on capital.
4. Cashflow Restructuring: We developed a plan to fund their current living expenses of $15,000 per month through a combination of surplus cash, regular withdrawals from their investment portfolio, and minimum pension drawdowns. This approach ensured a stable income stream while preserving their investment capital, and will reduce to $100,000 per annum once cash reserves are depleted.

• Optimized Investment: The diversified investment strategy, combined with the tax- efficient use of the inheritance, positioned Greg and Michelle for financial stability and growth.
• Enhanced Superannuation: Maximizing NCCs and restructuring superannuation accounts strengthened their retirement savings, ensuring long-term financial security.
• Reliable Income: The plan provides a dependable income of $100,000 annually, covering living expenses and allowing for a comfortable lifestyle without depleting their capital.
• Peace of Mind: With a clear and strategic investment plan in place, Greg and Michelle can confidently manage their newfound wealth, knowing their financial future is well-secured.