JP Morgan: 5 Powerful Ways Women Are Using Wealth From the Great Transfer
Written by
Gabrielle Olya
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Molly Sullivan
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The “Great Wealth Transfer” — the transfer of $124 trillion in assets to heirs through 2048 — is underway, and many women are already benefiting from it. A new J.P. Morgan study found that 63% of women respondents ages 61-plus have received an inheritance, and 45% of Gen X women and 39% of Gen Z and millennial women expect to receive one.
The study also asked women who have already received an inheritance what they did with the money — 45% invested it, 43% used it to pay off debt, 41% used it to fund travel, 33% supported family and friends and 28% donated it to charity.
In this “Financially Savvy Female” column, we’re chatting with Alpa Patel Vitale, west division lead for wealth planning and advice at J.P. Morgan Wealth Management, about the best ways for women of all generations to use inherited wealth.
What are some of the best ways for women who inherit wealth to use their funds for both short- and long-term goals?
For short term, think about setting up an emergency fund, paying down debt and having enough cash on hand to fund your needs. Long-term goals will really vary between each person and their circumstances. Many women may have kids or parents they need to care of, or wish to save up to buy a house or travel, or prioritize early retirement.
Above all, it’s important to take your time and not feel rushed to make any big decisions about these funds. Having a plan is really important if you inherit money. Consider working with a financial advisor, as they can help you determine your goals and put together a tailored plan to help reach them with your new wealth.
Nearly half of women (45%) who inherited wealth invested it. What are some of the best ways for women to invest a financial windfall?
Everyone’s financial situation is different, so how you choose to invest the money depends on your goals, priorities and time horizon.
When thinking about where to invest your inherited funds, gauge your tolerance for risk and timeline. Do you want to take on riskier investments for a return in the short term, or focus on investments that are less risky and generate returns in the long run?
Diversification is also important to remember when investing. Don’t put all your eggs in one basket. Think about consulting a financial advisor who can help you understand where to diversify your funds and adjust your portfolio as needed over time.
A high proportion (43%) used funds to pay off debt. How can you use a windfall to strategically pay off debt?
It can be helpful to focus on paying off higher interest rate debt first. The money you’ll save by paying it off could be greater than what you could earn by investing.
How can women who inherit wealth find a balance between using this wealth for the now and the future?
It can be overwhelming to receive a large sum of money and have to figure out what to do with it. One way to approach this it to organize your money into different buckets based on your goals. One bucket can be for possible investments and large purchases you expect [to make] in the next nine to 18 months, such as buying a car, planning a vacation or making home improvements.
Another bucket can be for funds you don’t plan to spend in the next 18 months. This money can be invested toward longer-term goals, like retirement, saving for a child’s education or building wealth for the future.
Having buckets in place can help your plan move from uncertainty to intentional progress. Give each bucket a role, and your wealth will have direction — and likely give your goals momentum.
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