What Would Scott Pape Do?

Hi Scott

What would Scott Pape do? This year I will receive an inheritance, around $400k, and I want to be sure I make the most of it. I am 37 and single, and that is unlikely to change (I can send photos!). I earn $77k a year and have a $250k mortgage on an unrenovated flat worth maybe $300k, $3k in credit card debt, $75k in super, $2k in shares, and exactly $0 in savings. My two sisters and I will be financially assisting my mum in the future. Please tell me: WWSPD?Thanks,

Leonie

Hi Leonie,

I’ve been told that my advice is like a comfy pair of undies: it may not be sexy, but it’s reliable, faithful, and it never changes. With that in mind, here’s what I’d do:

First, I’d do nothing for three months. You’re single. You have no dependants. You now have $400,000. There are very few people who get the chance to hit ‘reset’ on their adult lives -- you do. You don’t want to have regrets in 20 years’ time.

If you decide you want to stay in your flat long term, I’d do the following: pay off the mortgage, set aside $30,000 for renovations (less if you can), clear your credit card, and deposit $10,000 in a high-interest online savings account (Mojo). If it were me, I’d also donate some money -- remembering that ultimately the best way to honour the person who gave you this money is to manage their money well.

That’ll leave you with roughly $100,000. You then have the option of buying an investment property, investing in shares in your own name, putting money into super, or marrying a moron. The most tax-effective thing you could do is to make a voluntary contribution into an ultra-low-cost growth-orientated super fund. If you do, you’ll be on track to retiring with $2 million. That’s what I’d do. Finally, I’d save up your wage and take outrageously good holidays each year.

Scott