(M/23) Inheriting $400,000, what should I do with the money? (8 Month UPDATE)

[maeflower]

Hey r/ausfinance

8 months ago I posted to this subreddit explaining my current situation and in seek of some guidance on some possible ways to invest $400,000 that was coming my way. Heres the link:

https://www.reddit.com/r/AusFinance/comments/55xsxk

Update:

So, next month I'll be receiving 1/3 of the inheritance money ($130,000ish) - the remaining money will be held in a testamentary fund until I turn 25 (roughly a year). I'm still studying full time at UNI and working part-time. Currently saved up $20,000 of my own money, -$5,000 from last year due to a recent very large expense.

Since the post last year, there has been a few things I've done in preparation for receiving the money:

• Recently sought out a Financial Planner - His currently preparing me a statement of advice. I've explained to him that my aims for the investment in the sharemarket are long term (7yrs+), and that I understand that market corrections/crashes are practically imminent and shouldn't necessarily be making any rash decisions based on the current market trends (i.e. OMG! Sell! Sell! Sell!). My current thoughts are to invest roughly 50% of the total inheritance - 30-40% with the help of the financial planner and the other 10-20% in ETFs through Vanguard. My ultimate goal is FI/RE.
• As you might have guessed, I'm planning on dividing up the capital into chunks:
  • 50% Sharemarket
  • 40% Deposit for future IP or PPOR
  • 10% Liquid cash (Emergency fund, potential wedding money, newer used car, etc.)
• Currently planning on getting a Will made up so that I can detail where I want my assets to go in event of my death (yikes). I'm planning to propose to my girlfriend soon also (the ring is currently getting made), so a prenup may be in order aswell - we've somewhat spoken about it, she actually supports it.
• Opened a new bank account with ING - offers a far better interest rate comparing to Commbank.
• I'm trying to further educate myself on investing - currently reading The Intelligent Investor in my spare time. Some other book/blog/site recommendations would be much appreciated.
• Meeting with my accountant in a few weeks for advice on how to efficiently save money on tax. I'm not well educated in this field.

​

Considering the following, is there anything else that I should be looking more into? Any advice when dealing with Financial Planners? Does this planning sound ideal for FI/RE? Let me know your thoughts. Thanks in advance for the replies and again for everyone that contributed in the previous post, it's greatly appreciated!

 

[latestnews]

@maeflower FYI, if your goal is FIRE. You may want to post this to /r/fiaustralia too

 

[danil999]

@maeflower

My ultimate goal is FI/RE.

think carefully before you put money in to super at the young age 24.

The money is locked up until you are 60, which will not help you reach FI-RE.

 

[dac2015]

@danil999 Agreed, and increasingly it looks likely that 60 will be 65 or 70 by the time we actually get that far.

 

[maeflower]

@danil999 Great advise. I was thinking just yesterday of salary sacrificing for when I start working full time. I'll definitely keep this in mind, thanks.

 

[andrealadona]

@maeflower I'd encourage you to meet with more than one advisor

 

[goldencrownofthorns]

@maeflower Prenup.

 

[maeflower]

@goldencrownofthorns Yeah, definitely planning on get getting a prenup made. Thanks.

 

[rhonds]

@maeflower Just a small note on this- Binding Financial Agreements are very easy to overturn in the Family Court. One of the key things most people don't realise is that any major event that occurs after signature (such as marriage/kids) can invalidate the whole document. They need to be updated regularly, with both parties seeking independent legal advice (so you cannot go to a solicitor and ask them to represent you both). I see this a fair bit- I perform valuations for family law solicitors for divorces, and the number of times one party says "But we have a BFA!!!" is ridiculous- especially when it was last updated 10 or so years previously.

 

[maeflower]

@rhonds Thanks for the insight. I'll keep this in mind moving forward.

 

[wowdarling]

@maeflower So, hmm, does this mean it's best to put the money in a trust instead? So you control it, but don't own it?

 

[dlyc]

@wowdarling No - the very element of this control means that the courts can and will include this as part of your assets in a family settlement.

 

[resjudicata]

@dlyc What if the trust is controlled by others as well? Say family? Is there anyway you can protect your wealth apart from updating a prenup every few years?

 

[dlyc]

@resjudicata The courts do have the ability to essentially "look-through" a contrived structure. It's a very complex area of the law, but in reality if the dominant purpose of your "restructuring" is to avoid having to split this with your ex-partner, then a professional is likely not going to be fooled.

 

[wowdarling]

@dlyc welp

 

[resjudicata]

@maeflower Put it in a trust and a prenup shouldn't be necessary. A will will be though.

 

[msavage]

@resjudicata Family court has no problems ripping your assets from a trust.

 

[dlyc]

@msavage Correct - see my replies above.

 

[michaelsayen]

@maeflower Re: financial advisors. Be careful. Their 1st priority is their own financial situation, which may or may not align with your financial goals and interests.

This is not an ad, nor is it advice, but I've found the barefoot investor to be a useful resource (as a layperson) for understanding investing and getting ahead. I've never used the paid service, just the free stuff on his website and mailing list, which in my opinion is very informative.

Good luck

 

[maeflower]

@michaelsayen I'm quite a sceptical person by nature, so I plan on researching the advise that he provides before going ahead with anything. I'm now even considering to maybe get a 2nd or 3rd opinion.

I've found Scott Pape to be a very valuable resource aswell. Thanks for the recommendation.