Home > Your Inheritance > Investing Your Inheritance in an Economic Downturn

Investing Your Inheritance in an Economic Downturn

By: J.A.J Aaronson - Updated: 20 Mar 2012 | comments*Discuss
 
Investing Recession Inheritance Property

If you have recently inherited, it is perfectly possible that you are concerned about your investment prospects. This is particularly likely if you have inherited a house; as property prices have collapsed, the value of your inheritance is likely to have plummeted. However, although the middle of a recession may seem like a terrible time to be investing, the poor state of the economy can provide some unique opportunities for those who have recently inherited.

Inheriting Property

If you have inherited property, the first thing to note is that it is currently very much a buyer’s market. Homeowners are having immense difficulty selling houses, and many are being forced to slash their asking prices by 25 per cent. If you do not immediately need to sell the property, you may therefore consider holding off until the market recovers. When lending resumes and the economy starts to improve, there is likely to be a big rush to buy. Those who have been holding off because of an inability to get a mortgage will be piling into the market when loans become more readily available again. This will push up property prices, putting you in a much better position.

You should remember, however, that it can be costly to maintain an empty property. After a year left vacant, for example, you are likely to have to spend a considerable sum to make the property sellable again. As such, you may consider letting the property while the market is still unfavourable. Lettings are holding up, as many prospective homeowners are being forced to rent because they cannot get a mortgage.

Inheriting Cash

If you have inherited cash, your prospects for investment are good. Although the stock market may have already bottomed out, placing some money in a market tracker may be a good idea. While you should be prepared for some volatility in the short term, you should remember that the market will almost certainly rise over the course of the next couple of years. You could quite conceivably see a 30 per cent gain in a relatively short space of time, particularly if government initiatives like the banks’ Asset Protection Scheme begin to show signs of success.

Given recent performance, however, many people have lost faith in stocks and shares as an investment, and you may therefore be reticent to put invest your money in this way. As such, you may wish to investigate alternative investments. Depending on the amount you have inherited, ISAs may well provide a good option. Falling base rates have taken a chunk out of the income that can be derived from ISAs, but there are still deals to be found that offer in excess of 4 per cent. Furthermore, ISAs are secure investments; if you are more concerned with holding onto your money in a low-risk environment until you are able to make it work harder for you, ISAs or National Savings and Investments are probably a good option.

Investing during a recession is a potentially difficult task. As such, you may wish to seek advice from a reputable financial advisor, with a demonstrable track record, before making any decision.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Latest Comments
  • Francis
    Re: Money Owed to and by the Deceased
    Afriend of mine lend me money a month ago.He suddenly died a few days ago.Do I still need to pay the money back.Ther was no…
    16 July 2018
  • Nat
    Re: Money Owed to and by the Deceased
    A friend lent me £10,000 we wrote something down ourselves and I signed and dated it. I would pay him monthly. He died…
    12 July 2018
  • VivK
    Re: Will Inheritance Affect My Council Tenancy?
    I have just inherited a bungalow in a different county from where I live and work. Will I be able to sell this…
    13 June 2018
  • InheritanceIssues
    Re: Money Owed to and by the Deceased
    Tutti - Your Question:Hi my friend gave me £20,000 and didn’t want me to pay her back however I insisted I made payments.…
    16 May 2018
  • Tutti
    Re: Money Owed to and by the Deceased
    Hi my friend gave me £20,000 and didn’t want me to pay her back however I insisted I made payments. She made a will and told…
    15 May 2018
  • Loanandinhertitance
    Re: Money Owed to and by the Deceased
    mother and father put a £40000 loan on the house they transferred/sold to brother. This was done formally in writing to be…
    27 March 2018
  • InheritanceIssues
    Re: Money Owed to and by the Deceased
    Alice Yelland - Your Question:My godfather wants to loan me £30,000, at a low interest rate of 1% per annum. He is elderly,…
    20 March 2018
  • Alice Yelland
    Re: Money Owed to and by the Deceased
    My godfather wants to loan me £30,000, at a low interest rate of 1% per annum. He is elderly, so what happens when he dies?…
    18 March 2018
  • Bishop
    Re: Money Owed to and by the Deceased
    I was wondering what would be the best way to find out if someone (individual or company) has taken, claimed or received…
    15 February 2018
  • InheritanceIssues
    Re: Money Owed to and by the Deceased
    RASH - Your Question:I gave my mother nearly £25,000 about 20 years ago to buy a share in her flat. Now she has died how do…
    20 December 2017