We all know someone from our township that lost a loved one was a beneficiary of inheritance of some sort. In most cases, it is usually inheritance money from a parent and in more tragic events, both parents. As we all know this is a very stressful time for any individual. Not only does one have to deal with loss and grief, but also plan how to spend their inheritance money. It comes as no surprise a couple of months down-the-line, we learn that the individual is broke - all their inherited funds have run out.  

All kinds of township rumours follow thereafter which lead to one conclude: lack of financial education resulted in funds-mismanagement on the part of the beneficiary. People do not necessarily acquire financial management know-how from school. We need to educate ourselves and learn different ways to spend money wisely.  If you were in the beneficiary’s shoes, how would you have spent your inherited money differently?  

Let’s delve into tried and tested ways (meaning they work) to invest your inheritance money. Before we look at where to put your inheritance money. You need to look at your personal financial situation, goals and needs for the future and answer questions like:  

• Do you need to cater for someone else’s needs, maybe your siblings?
• Do you have debts, maybe a car, house, credit-cards, store accounts?
• Do you need to save for an emergency or school-fees?  

Once you’ve gathered all your information, made all the calculations and it’s time to invest your leftover money. Try by all means to get professional guidance from a financial advisor or financial planner for assistance. Remember, it’s important to make a wise investment.  

In March 2015 the South African Revenue Service (SARS) launched Tax Free Investment accounts (TFIA’s). A must-have for youth because they are 100% tax-free (NO tax on capital gains or any interest earned on your money.) They have an annual contribution limit of R30 000 and a lifetime limit of R500 000 per person. Various licensed banks, long-term insurers and service providers offer TFIA’s, visit your nearest branch to enquire. Plus you can choose from different types of TFIA’s to invest your money such as:  

• Fixed deposits
• Unit trusts (collective investment schemes)
• Retail savings bonds (by the National Government)
• Certain endowment policies issued by long-term insurers
• Linked investment products
• Exchange traded funds (ETFs) that are classified as collective investment schemes  

Once you have your TFIA set up. Your service provider will send SARS investment information twice a year and send you (the taxpayer) a tax free investment certificate (IT3) annually. Like anything that involves large amounts of money. It is imperative to get the right guidance from a professional because they are countless scams out here. Investing your inheritance after using a portion of it to pay-up important things, is the greatest way to go about creating a financially-free future for you and your family.

By Martha Chauke