Invested wisely, an inheritance is a great opportunity to get ahead financially. But what’s the best way to invest it?

If you’ve come into a large sum of money, you want to make sure you make the most of it. So is it better to pay off your mortgage or invest it for retirement?

Paying off the mortgage

According to the Australian Bureau of Statistics, around one in three Australians owe money on their home – the average Australian household with a mortgage is paying $1,800 a month in repayments1 .

So if you have a mortgage, you might want to consider using an inheritance to pay it off faster, reducing the amount of interest you pay – and freeing up extra cash to invest elsewhere.

Investing for retirement

In general, we’re living longer than ever before – and that means that you’re likely to need more money for your retirement.

Putting your inheritance into super is a great way of giving your retirement savings a boost, so you can enjoy a better and more secure lifestyle in your later years. As investing through your super is generally more tax effective than outside the super system, you may get more from your money than if you invested directly in shares or a managed fund.

But remember, once the money is invested in your super, you generally can’t access it until you’ve retired.

Making the right decision

So how is the best way to use your inheritance? As always, it depends on your own circumstances and needs — as well as the amount you receive.

As a starting point, ASIC’s MoneySmart Super vs Mortgage calculator can help you compare the results of investing your inheritance money. But remember, these calculations are estimates only, and don’t take your other financial circumstances and goals into account.

So even if the calculator works out that you would be better off investing in super, you may prefer to put the money on your mortgage and use the equity to upgrade or renovate – or even purchase an investment property. Similarly, you may want to keep the money available to redraw for lifestyle reasons, for example, to take time off with your family or to start a business.

On the other hand, your circumstances or tax situation may mean you’re better off putting money into super now, then paying off your mortgage in full once you can access your super savings.

Find out more

An inheritance can be a great opportunity – but the best way to invest it will be different for everyone. So speak to us on |PHONE| to help you make the right decisions.


1. Australian Bureau of Statistics (2013) 4102.0 – Australian Social Trends, April 2013

Important information and disclaimer

Any advice in this communication is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice in this communication we recommend that you consider whether it is appropriate for your personal circumstances.  Any tax estimates are intended as a guide only and are based on our general understanding of taxation laws. They are not intended to be a substitute for specialised taxation or financial advice or a complete assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent and financial advisor before making any decisions.