Elizabeth and Donald: Strategic Management of a $4.4 Million Inheritance

Elizabeth (47) and Donald (49) recently received a $4.4 million inheritance, encompassing property proceeds, cash, and legacy shares. Both are still working, with a combined superannuation balance of $1.1 million and a home valued at $1.8 million. They are focused on effective investment of their inheritance, ensuring a secure retirement income, and prudent management of their wealth, including planning for their children's future.

• Developing a strategy to invest the $4.4 million inheritance effectively.
• Securing a reliable and sufficient retirement income.
• Preserving wealth while managing risks.
•  Planning to assist their children with a home purchase in 5-10 years.

1. Investment Strategy:
   • Legacy Shares: Carefully reviewed and retained shares with significant legacy value and tax advantages, while divesting underperforming assets. Proceeds from sales were reinvested into higher-performing diversified investments.
   • Investment Bonds: Established two investment bonds, each with $300,000, to provide tax-efficient growth. These bonds will mature in 10 years, aligning with their goal to support their children’s future home purchase.
2. Superannuation Contributions:
   • Maximized Non-Concessional Contributions: Contributed $120,000 before the end of the financial year and planned an additional $360,000 in the following year. This approach leverages tax advantages and accelerates growth in their superannuation.
3. Diversified Investment Portfolio:
   • Direct and Private Investments: Deployed the remaining inheritance into a well-diversified portfolio, including direct investments and private assets suited for high-net-worth individuals.
   • Strategic Allocation: Implemented a balanced investment approach with a 60/40 blend of growth and conservative assets. This diversified strategy aims to balance risk and return, ensuring sustainable long-term growth.
4. Future Financial Strategy:
   • Contribution and Growth: Planned future superannuation contributions as eligibility rules change, ensuring continued tax efficiency and growth.
   • Allocated Pensions: Future transfer strategy for allocated pensions to minimize tax liabilities upon retirement, enhancing their financial efficiency.
5. Lifestyle and Spending:
   • Income Drawdown: Designed a financial plan to generate $200,000-$300,000 annually from their investments, providing flexibility and stability for their lifestyle.
   • Leisure Budget: Allocated $50,000 per year for holidays, allowing Elizabeth and Donald to enjoy their wealth while maintaining financial prudence.

• Enhanced Retirement Readiness: Elizabeth and Donald are positioned to retire on their terms, with substantial assets managed for optimal growth and income.
• Prudent Wealth Management: Their wealth is strategically diversified and managed to mitigate risks while maximizing returns.
• Financial Confidence: They have a comprehensive plan that ensures their financial security, supports their children's future, and provides peace of mind.
• Balanced Lifestyle: The plan allows for a fulfilling lifestyle, including regular travel, while securing their long-term financial goals.