An unexpected windfall may be preceded by the news of the passing of a loved one. When you are grieving, it is stressful to think about what to do with your inheritance. We hope these tips will definitely help you to find some closure.
Take time to grieve
Losing someone is hard and you are going through an emotional turmoil. So, first you should grieve your loss and let your body and mind settle down and accept the fact. It will be a stressful task to make some financial decisions when you are emotionally unwell. Reach out to your family and friends and share your feelings.
Don’t take any drastic steps with the inheritance and let it sink in for a good six to seven months. You can actually start to plan your financial goals before using the windfall. This will give you a clear idea when you actually start to move the wagon.
Know your inheritance
It is important to know what you are getting before you put any of it to use. An inheritance can come as an asset from different sources.
1. Property or a house
2. A retirement account
3. A trust account
Make a plan for what you want to do with your inheritance
Just like personal budgeting, it is important to assign your inheritance to support specific goals. You can either save or spend your inheritance depending on your needs.
Boost your savings
If you have an emergency fund, this is the right time to add more funds to the account and make it a considerable one. If you don’t have an emergency fund, now is the time to invest in one. Open a digital zero balance account and deposit approximately 6 months’ worth of living expenses into the account from the inheritance money you have received.
Kotak811 offers Zero Balance Account Opening Online using video KYC.
Why a zero balance account?
It is the perfect choice if you are looking to build up your emergency fund. Firstly, the account opening process is digital and can be done from anywhere, without the need to visit a bank. A zero balance savings account is a zero maintenance account; you can maintain a zero balance in your savings account and the bank will not charge you any fees or penalties for that.
So you get interest on every rupee you save in your zero balance account. Investing in your long-term goals like your child’s college or adding funds for your retirement is also a good idea.
Where to spend your inheritance?
Get rid of debts: Clearing your debts will save you from long-term and hefty interest rates. Clear any outstanding credit card payments (if any).
If you have already taken a home loan, use your inheritance money to pay off your monthly EMIs. This will free you from the burden of paying out of your income. Now is the right time to invest for someone who is thinking of buying a house. The money acquired as an inheritance can be used as a down payment towards the property. Have some fun: It is ok to plan a trip with your family now that you can afford a vacation. You can also invest in learning a new skill or nurturing your hobbies.
You can create a legacy in the name of your loved one and start a charity fund in their name.
Use your windfall wisely
An inheritance will definitely uplift your financial condition for the better. Understand all your options and invest the windfall for the betterment of your family and, if possible, contribute some to the development of the society.
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This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees, and contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.