Each of us has parents whom we love deeply, but who will one day pass away. And when they do, any assets they had accumulated during their lives likely will be passed on to their “next of kin,” meaning you and your siblings.
When that happens, you may be startled to find in your hands anywhere from thousands of dollars to one million or more.
At this point, you may wonder, as I did, what to do with it. Should you put it in the bank, where it will earn 0.5 percent interest or less, while the bank uses your money to invest and earn a lot more in profit for itself?
Probably not. So you’ll likely want to invest the money in some way so that the higher returns you can expect will be yours to keep. The Certificates of Deposit offered by banks will get you a guaranteed two percent or so annual interest (if you’re lucky). But naturally you want, as I did, to try to earn more. You may consider putting money in the stock market, which has historically returned about eight percent a year on stocks held for long periods of time.
But if eight percent doesn’t cut it for you, you might scout around, as I did, for higher-yield investments. This, however, is where things can get dicey. As the investment advisers always say, with higher return comes higher risk. And with very high return comes very high risk — so high that you may lose all your money, as I did.
My dad passed away in 1969 and my mom in 1998. When my Mom passed, she left my sister and me a total of about $900,000, including the value of her home. My sister and I are dear friends, so we had no problem dividing the inheritance right down the middle, giving my family $450,000. We tithed to the church, and then proceeded to ponder how to make the remainder work for us and multiply as rapidly as possible. We had grand visions of doubling and tripling our money in a short period of time and then using the proceeds to fund all sorts of providential projects and branches of the movement.
So, with my wife’s acquiescence, I searched around for an investment vehicle. I asked a church brother who had recently (red flag!) gotten into the investment advisory business if he could recommend a good, very-high-return (red flag!) investment. He put me in touch with some financial-world acquaintances of his, who explained to me about a scheme to buy certain financial instruments at a discount and then resell them closer to the market price. I thought I understood it at the time, but I didn’t really, deeply grasp it at all (red flag!). I didn’t think to run the investment scheme by any professional third party (red flag!). And I didn’t have any idea (red flag!) of hedging my bets by breaking up my assets into several smaller investments. I was just way too trusting, and, yes, greedy.
So I wired $250,000 to an account at the Bank of Scotland in 1999, and never saw the money again. The people who originally explained the investment to me assured me they were as bewildered as I at the disappearance of the money and claimed they had lost tens and even hundreds of thousands in the affair, too. By the time I finished trying to track down the money and the mastermind of the affair, the statute of limitations had passed for getting the FBI or Securities and Exchange Commission involved.
So, a word to the wise regarding your inheritance: Be content with safe, relatively low-risk investments, as with traditional and Roth IRAs, stock and bond mutual funds, money-market funds, and even bank Certificates of Deposit.
If you’re looking for somewhat higher returns (as can be the case with investments in real estate, certain businesses, or particular stocks), become thoroughly familiar with the property, business, or company you’re thinking of investing in. And get multiple streams of feedback from independent sources about the investments.
Doing this, your money will remain safe, and you’ll be rewarded with assets that grow and compound, and that can be a blessing for your family and (through your tithing) for God’s Providence!