Melissa Rivers inherits $100 Million from Joan Rivers’ estate: 5 Pointers for Inherited Wealth
Now that Melissa Rivers has inherited $100 Million from Joan Rivers’ estate, according to US Weekly, it might be a good time to stop and reflect, say some experts. Even those with lots of money who inherit even more wealth can tend to spend and over spend. Witness reports of financial challenges by Robin Williams and Michael Jackson. If you spend more than you take in, then the base of your wealth will shrink. If your assets or investments do poorly, your base of wealth will shrink. Take steps MAINTAIN or GROW your wealth and don’t fall into the traps that so many do with newfound wealth or “found money.” So what should someone who hits the lottery know?
- Most “Found Money” is Gone. Just when you think you’re on Easy Street, you start depleting your savings. Most inherited money is spent early and often. Same for so called “found money” like the kind you win at the lottery, or get from a settlement or unexpected windfall from a sale of real estate or a lucky day trading stocks. Understanding this is half the battle to saving and growing your wealth. You’re going to screw up if you don’t have a plan: even a basic or simple plan. It’s easy to spend, so get a jump on the “game” by gettingthe right mindset from the get-go. Not having a plan runs the risk that your disorganization can prove too costly and you’re off Easy Street and down a dead end street where there’s no turning back.
- Invest for Yourself. Financial planners suggest “paying yourself first” by creating auto-debits or regular, automatic deposits of money into investments such as low cost index funds like the many offered at Vanguard. Others refer to this savings and investment as creating a “slush fund” to regularly deposit cash into for a rainy day or your retirement. Yes, you still need to plan for retirement even with a boat load of cash. Why? Your spending habits WILL change with this new found wealth, and inflation (yes inflation WILL return) can eat it away if you merely keep it in cash.
- Focus Shift: Preserving Your Wealth. You’ve made your wealth: now learn how to keep it. Boring is good. Avoid the hype or sexiness of investment products or the promise of incredible rates of return. You’ve won: you’ve got a LOT of money. You don’t need to hit the investment ball out of the park; you need to save what you have . Don’t blow it. Avoid pitches for annuities, investments in nightclubs, your neighbor’s startup and focus more on a well diversified portfolio of marketable securities, index funds and ETFs or mutual funds. Nix the desire to invest in that new sushi restaurant that will certainly be all the rage or that private placement whose prospectus you can’t understand. Keep it simple: and keep it!
- Temper the Purchases. Your spending habits will change, so consider a budget -yes , abudget – or how much you are, or are not, saving.
- Estate Plan. With so much inherited, there’s a lot on the line if you unexpectedly check out. Is everyone who you want to inherit going to? Consider making sure your estate plan is established and up to date. Do it now and the choices are yours.