Balancing act to reap rewards of a legacy
MORE than half of us expect to receive a six-figure inheritance from our parents at some point, and most of us would stick it straight in the bank.
However, this may not be the best place for your money over the longer term, as returns on cash continue to trail inflation.
Almost four out of 10 expect to inherit between £100,000 and £500,000, while more than one in five are hoping for between £50,000 and £100,000.
Around half believe the best place for inheritance money is in a savings account with less than one in five investing in the stock market, according to new research from Quilter Cheviot Investment Management.
Client services director Pamela Reid said cash may seem safe but if you leave it there for the long term you could end up financially worse off: “Inflation has consistently eaten any returns you may have received from a bank account.”
Stock markets are riskier but more rewarding if you can invest for the long term, Quilter Cheviot’s figures show.
Over 20 years, the average cash account has delivered a total return of 83 per cent, against 161 per cent on the FTSE 100 and 213 per cent on the MSCI World index.
You have to balance that against the danger of paying a large lump sum into today’s volatile markets, and drip feeding smaller amounts may be better.
Reid suggested spreading it between a range of different stocks and funds, saying: “An investment professional can help you make the right decisions.”