Millennials, inheritance and planning for the future

Staci West 16/07/2019 in X Millennials

Even since I was a little girl I can remember my Dad joking that, when he retires, he and Mum are going to sell their house and split their time living with each child – based on where the best weather is at the time. This new ‘retirement living arrangement’ works out as a 4-month rotation.

This plan has been relayed so many times that, when I met my husband, I informed him of such as a precursor to marrying into my crazy family. Luckily my Dad is nearing 70 and shows no signs of retiring yet – unless it’s golf season when all work grounds to a halt anyway…

And, while this plan might have seemed mad to me a few years ago, it’s actually turning into a trend. What’s more, as people are living longer and longer, it’s now not so unusual to have multi-generational families living together, where parents and children are both retired. Indeed, their number is set to double by 2039*.

“A son can bear with equanimity the loss of his father, but the loss of his inheritance may drive him to despair.” – Niccolo Machiavelli, Italian diplomat

Many millennials today are relying on an inheritance to boost their finances and help them get on the property ladder.

A study by Charles Stanley found millennials expected to inherit on average £129,380** – but official statistics in the UK show the average inheritance is currently £48,000.** Not only is this a big gap between expectation and reality, but most millennials are also misguided in when they believe they’ll inherit that money.

I’ll use my family as an example. My sisters are both millennials in their thirties. Every one of my grandparents made it to 90 (my grandmother, Dot, is 93 and feisty as ever).

Assuming (fingers crossed) my parents make it to the same ages as their parents, I’ll be nearing 50 and my sisters 60 before we receive an inheritance – not an ideal time to be buying your first house!

Yet, research shows one-in-seven** millennials expect to inherit money before the age of 35 – that’s maths I don’t understand. The U.K.’s Office for National Statistics agrees with me: they found the average inheritance age for millennials are likely closer to 61**.

So perhaps its time for millennials to face the truth and consider investing towards their goals now instead of relying on a windfall the future.

Four Elite Rated funds to consider:

Baillie Gifford Japan Trust – launched the same year as millennials, in January 1981, this trust offers excellent growth opportunities by investing in small and medium-sized Japanese companies.

Find out which investment trusts could make you a millennial millionaire in our guide to investment trusts

Hermes US SMID Equity – similar to above, the fund invests in small and medium sized companies in the United States, which provide a product or service not easily replicated by competitors.

Listen to our investing on the go podcast to learn about one such company that’s starting to tackle the problem of plastics in our oceans.

BMO European Real Estate Securities – this fund invests in property-related companies, as opposed to physical property – like companies that own residential complexes, property developers and housebuilders.

Waverton European Capital Growth – investing in medium and large-sized companies throughout Europe, the fund is highly concentrated with 30-40 holdings, but aims to make long-term investments in growing companies with strong management culture.

Watch as we talk with manager Chris Garsten on how Europe has changed in the past 20 years while he’s been running the fund and the effects of recent European elections.

Investing now means you can put your potential inheritance to use later in life, for example paying off your mortgage instead of starting one, or adding a lump sum to your own retirement pot.

*Source: St. James Place, July 2019
**Source: Charles Stanley, February 2019

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions.Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice.Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.