4 Reasons Why Inheritance is Not a Guarantee of Success
If you have particularly wealthy parents, it’s nice to think that you will later on inherit their assets. Your inheritance could become your comfort zone, especially if you know how much your parents have in the bank.
Once your parents pass and the money is passed down to you, what’s next? Will you be able to stay wealthy as they did? Will you be as successful as they were?
Inheriting wealth does not automatically mean you will be successful. You can still end up broke, and you may even have to borrow from a registered money lender once you run out.
Here are four reasons why inheritance does not guarantee success.
Money can always run out
No matter how much money you inherit from your parents, grandparents, or even great-grandparents, that money is still limited. If you do not manage it well, your inheritance will soon run dry, especially if you keep splurging on expensive items that do not generate income.
Preserving generational wealth requires a lot of discipline and money management skills. You need to be able to continue building wealth, even if you’re not making as much of a fortune as your ancestors. Otherwise, if you keep spending your inheritance without self-control, you will inch closer and closer to being broke.
The government will take some of it away
The Ministry of Finance has abolished the inheritance tax for Singaporeans whose deaths come after 15 February 2008. Despite this, the wealth you inherit is still subjected to other forms of taxes, like stamp duties when you buy additional properties.
In other words, you may not be getting 100% of the value of the assets passed down from your parents. And you will continue to pay taxes for anything else you do with that wealth.
Family issues can cause severe losses
If you are not on good terms with your parents, grandparents, siblings, or other relatives, your inheritance may be in jeopardy. Greed, envy, and conflicts in the family can steal what is rightfully yours. You may not get all of the assets that should be yours if ever.
Your parents, in particular, have the biggest influence on how much you will inherit. If they have issues with you, they may withhold your inheritance or pass it down to another family member. If not, they may decide to give you only a small slice of the pie.
You are not investment-savvy
You can be rich through your inheritance, but it doesn’t mean you can stay wealthy forever. In particular, if you are not skilled in handling money and in business, that wealth may not last very long. Remember that money can always run out, and mismanagement is the fastest way to drain your inheritance.
You need to know how to keep growing the money you inherit. Learn business skills, wealth management, and legitimate investment vehicles.
In particular, learning the proper places to park your money is key. Avoid the temptation to invest in the latest financial fads just because you have the money to do so. You may become the victim of a million-dollar scam otherwise.
Wise investing and wealth management lets you grow your money. Eventually, you can pass it on to your children – not just the money, but the skills you gained to build that wealth as well.
Conclusion
Inheriting wealth from your parents is great, but it is not a guarantee of success. You may be wealthy because of your inheritance, but you need to be wise if you want to stay wealthy in your lifetime. You need the skills to keep growing your money. If you manage to cultivate that, you will be passing the wealth and skills down to your children.
