Dear Scott,
I’m a single mother raising two children on my nursing wage. I have just paid off my house in Tasmania and am now adding 10% to my super each pay. I don’t renovate or travel far. No dishwasher and a broken oven. It has come to my attention that I am to inherit $3 million from a relative. This is generous but wealth like that brings complexity. I have set myself up to retire on $42,000 per year when I’m 65. I don’t need more and I prefer the simple life of living within my means. And I want my children to do well in their own right and own a home eventually. However, I don’t want to take the satisfaction of doing it themselves away. I was thinking of purchasing a large parcel of land in Southern Tasmania to protect it from developers in the future. What would you do?
Grace
Hi Grace
You are obviously a weirdo.
However, your weirdness comes from a place of deep contentment, wisdom, and living your values.
You have something that most people will never have:
ENOUGH!
Yet while it’s true that wealth does bring complexity, it also has its advantages, especially for a single working mother. So if I were in your shoes I’d divide the inheritance into three accounts:
First, I’d put a small amount in an online savings account for emergencies (and to fix your oven!).
Second, I’d put a large amount into an ethically invested index share fund (given you’re bent that way).
Why would you want to do this?
So you can be in a position to do the ‘Barefoot Property Ladder’ with your kids. You can incentivise your kids to save as hard as they can by matching their house deposit savings, dollar for dollar. (And remember, your kids may not choose to live in Tassie. If they instead choose to live in Sydney, you’ll need a bloody big ladder!)
Finally, I’d set up a private ancillary fund (PAF), which is a type of charitable trust. You donate money into the PAF and receive an immediate tax deduction. Then each year you can use the money to give to the charities you choose. The key is to get your kids involved in deciding where to donate this money. Who knows, hopefully some of what you’ve got will rub off on them!
Scott.