The tokenisation with regard to the ownership structure of conventional assets will have a profound impact on SMSF holdings and compliance.

A key industry stakeholder has forecast the impact asset tokenisation will potentially have on the SMSF sector and the challenges a shift to this type of ownership structure will raise.

Tokenisation is the process of creating digital ownership of an existing asset and usually involves breaking it down into a collective of smaller pieces.

“For example, instead of one investor needing to buy a $10 million property, the ownership could potentially be divided into thousands of digital tokens,” SMSF sector veteran Hellen Molloy explained in an online post.

Molloy pointed out the process can apply to any asset, such as property, government bonds, private credit, and shares or managed funds.

To this end, she noted it has the potential to change how assets are bought, sold, owned and administered.

“It could also allow large assets to be broken into smaller pieces, potentially giving investors access to investments that previously required very large amounts of money,” she said.

Given tokenisation will likely have an effect on all asset classes, she predicted it has the potential to impact the SMSF sector in a significant way.

“In the future, an SMSF might have a portfolio containing Australian shares, property, Bitcoin, tokenised bonds, tokenised property and tokenised private investments,” she estimated.

However, she acknowledged this would be accompanied by compliance issues that will need to be resolved.

“Our SMSF system wasn’t originally designed for this and that raises some big practical questions,” she recognised.

“[Questions like] who legally owns the tokenised asset? Who holds it in custody? How does the accountant value it? How does the auditor verify it exists? How does the SMSF administrator record it? How does the trustee prove ownership? What happens when it is sold? How is it taxed? What protections exist for the investor?

“These are the kinds of issues the financial industry needs to solve as tokenisation grows.”

She expected the shift to tokenisation will increase in the immediate future and noted the consequence this will have on the country’s retirement savings framework.

“[It] means Australia’s superannuation and SMSF ecosystem needs to understand how trustees will safely own, hold, value, administer, audit and eventually transact these new forms of assets,” she pointed out.

By: Darin Tyson-Chan | August 26, 2026 | smsfadviser.com

The post Tokenisation to change SMSF landscape appeared first on Professional Wealth Services.

A high number of people plan to use super to extinguish their mortgage as more people expect to retire still holding that debt.

A significant number of Australians below the age of 35 expect to retire with mortgage debt, with many planning to use their superannuation to clear it, new research released by Vanguard has found.

The “2026 How Australia Retires” report released yesterday stated 48 per cent of gen Z Australians and 37 per cent of millennials expected to retire with a mortgage compared to 23 per cent of gen X and 24 per cent of baby boomers.

The figures were drawn from a survey carried out in February of a nationally representative sample of more than 1800 Australians aged over 18 that also found of those carrying a mortgage into retirement, 39 per cent planned on using superannuation to pay off their mortgage in one transaction.

A further 45 per cent would continue to make repayments, 16 per cent would sell their home and use the proceeds to pay out their mortgage debt, while 14 per cent were unsure how they would deal with the issue.

“These findings highlight a clear generational pattern, with younger Australians more likely to expect housing debt in retirement,” the report stated.

“This is consistent with the trend of more Australians carrying housing debt for longer. Australian Bureau of Statistics data shows that between 2000 and 2020, the proportion of Australian households with a mortgage increased from 32 per cent to 37 per cent, while the proportion owning their home outright fell from 39 per cent to 30 per cent.

“The fact that many younger Australians expect housing debt in retirement has important implications for retirement planning.

“It may also influence how superannuation is used, with some Australians likely to draw on their super to repay housing debt, rather than relying on it solely as a source of retirement income.”

Vanguard Asia-Pacific managing director Daniel Shrimski added the benefits of life-time super could be undermined by housing costs.

“Younger Australians may accumulate larger super balances than previous generations, thanks to higher contribution rates and more years in the system, but if a greater share of those savings is needed to pay down housing debt or cover ongoing housing costs, the boost to retirement income may be smaller than many people expect,” Shrimski said.

“It also raises an important question: how will Australians fund the dignified retirement they’ve worked hard for if a significant portion of their super is needed to pay off their home?”

The report also noted younger Australians believe they will need more income in retirement, with those under 45 estimating an annual retirement income of more than $90,000 compared with around $60,000 reported by those aged 65 and over.

By: Jason Spits | August 27, 2026 | smsfadviser.com

The post Super viewed as mortgage solution appeared first on Professional Wealth Services.

Many SMSF trustees see the annual investment strategy review as a compliance obligation. A form gets updated and signed, and the document sits in a folder until next year.

The ATO’s position is increasingly that this is not enough. More importantly, this is not in the interests of the trustees themselves either.

With a right analytical framework, the investment strategy review can become one of the most valuable exercises an SMSF trustee undertakes each year. Here is how to approach it as a data-driven portfolio insight, rather than an annual burden on the trustee.

1. Check the portfolio-strategy match

The Superannuation Industry (Supervision) Act 1993 requires trustees to consider the risk, return, diversification, liquidity, and the ability to meet liabilities when formulating and giving effect to an investment strategy. This means the portfolio must reflect the strategy, not just reference it.

The first analytical question is therefore: does my current portfolio match what my strategy document says? If the strategy specifies a target allocation of 60% Australian equities and 40% international and income assets, what does the portfolio hold today? Asset prices drift between rebalances, so a strategy that was accurate twelve months ago may no longer be accurate now.

2. Measure the real diversification

Trustees commonly describe their portfolio as diversified because it holds ten or fifteen different stocks, but the holdings count is the least useful measure of diversification.

Consider a portfolio of twelve ASX-listed stocks spread across banking, mining, and energy. Those three sectors are all highly sensitive to domestic economic conditions, commodity prices, and interest rate movements.

A portfolio may hold many stocks but some of them could be exposed to similar risks.

A more useful measurement is the pairwise correlation between portfolio holdings. Correlation indicates how portfolio holdings move together – in bull markets but especially in bear markets when the risk of loss comes into play. If most pairs of stocks in the portfolio have correlations above 0.5, the portfolio is concentrated regardless of how many holdings it contains. Professionals recommend having holdings that are not correlated at all (correlation close to 0) or are negatively correlated (correlation is negative).

Various tools usually provide a view of correlations as a colour-coded matrix, where red and dark red indicates high correlations between holdings.

A related good metric to consider is the Diversification Ratio, calculated as the weighted average of individual holdings volatilities, divided by portfolio volatility. A value of 1 or lower means that there is no diversification benefit in the portfolio, and investors should aim for a diversification ratio as high as possible.

3. Evaluate the risk-adjusted return, not just the return

Trustees often assess their portfolio by comparing its raw return to the ASX 200 or another index. This comparison is incomplete without accounting for the risk taken to generate that return. Other indicators help with that understanding, for example:

The Sharpe ratio (calculated as the portfolio’s excess return above the risk-free rate, divided by its annualised volatility) measures how much return is being generated per unit of risk. Two portfolios that both returned 12% in a year are not equivalent if one achieved that return with an annualised volatility of 15% and the other with 28%. The latter exposed the investor to much more risk of loss during the year.

Similarly, a portfolio’s beta (its sensitivity to the broader market) tells trustees how much portfolio return may fluctuate when the market moves. E.g., a portfolio with a beta of 1.25 will tend to rise 1.25% for every 1% the market rises and fall 1.25% for every 1% the market falls. Understanding this sensitivity is relevant to the fund’s risk objectives and the members’ time horizons.

4. Stress test the portfolio against a drawdown scenario

The investment strategy review is also an appropriate moment to consider how the portfolio would behave under adverse conditions. A straightforward stress test can be constructed using each holding’s beta.

For example, if the ASX 200 were to fall 20%, each holding’s estimated loss can be approximated as its beta multiplied by 20% and weighted by its weight in the portfolio. A portfolio whose weighted average beta is 1.1 would be expected to fall approximately 22% under that scenario (or $220,000 on a $1 million fund).

5. Document the analysis

The final step is practical. Auditors are looking for evidence that trustees have considered various factors and made informed decisions. A portfolio analysis document that includes a correlation matrix, a performance analysis and a stress test output provide that evidence. If you don’t know how to run all those calculations yourself, technology and portfolio analysis tools can help.

The annual review, approached this way, becomes something more useful than a compliance exercise. It becomes a monitoring ally, so the trustee knows at any time whether the portfolio is still doing what the strategy says it should.

This article is for educational and informational purposes only. It does not constitute financial advice or a recommendation to acquire or dispose of any financial product. SMSF trustees should seek advice from a licensed financial adviser regarding their specific circumstances.

By: Laura Rusu | August 8, 2026 | smsfadviser.com

The post How to turn your annual SMSF investment strategy review into a genuine analytical exercise appeared first on Professional Wealth Services.

Few SMSF compliance issues create as much anxiety as discovering a minimum pension hasn’t been met. Fortunately, not every underpayment results in a pension ceasing.

With the ATO recently clarifying its self-assessment guidelines, now is a good time to revisit the rules and the practical steps SMSF accountants should take when a pension shortfall is discovered.

What happens if the minimum pension is not paid?

In the ATO’s view, if a fund fails to pay a pensioner the required minimum annual amount for a financial year, the pension ceases for tax purposes effective from the start of that year. This means:

• the fund won’t be entitled to ECPI in respect of that pension account – for that year and any future year,

• the failed pension is no longer a separate super interest and its tax components will combine with any other failed pension accounts or accumulation account held by the pensioner (there are exceptions for failed death benefit pensions), and

• any payments actually taken in the year will be lump sums instead of pension payments.

To resume all the great tax breaks of pensions, the pensioner needs to consciously stop their failed pension and start a new one.

When can trustees self-assess a minimum pension shortfall?

There are some circumstances where the ATO can “forgive” a failure and the pension can be treated as if it has always met the rules. In addition, the ATO allows SMSF trustees to self-assess that the ATO would overlook their failure if certain conditions are met. So what are these self-assessment conditions?

Condition #1 – Honest mistake or circumstances outside the control of the trustee

The first condition to be met is that the shortfall must have been caused by an honest mistake or circumstances outside the control of the trustee. Whether something is an honest mistake should be relatively easy to assess but assessing whether circumstances were outside the control of the trustee will be much harder. A recent situation we’ve seen which was considered outside the control of the trustee was the bank freezing the SMSF’s account because of suspected fraudulent activity – definitely sounds like it was outside the trustees’ control. But we’ve also seen cases where a shortfall due to trustee ill-health wasn’t considered outside their control if there were other trustees who should have been capable of making the payment.

Condition #2 – The size of the shortfall

Where the shortfall was due to an honest mistake, the shortfall must also be “small”. This means no more than 1/12th of the required minimum pension amount for the year.

However, there is no limit on the size of the shortfall where it was caused by circumstances outside the control of the trustee. That is, it doesn’t need to be small. The ATO has recently confirmed their position in this area and it does seem rather generous. Having said that, without any clear guidance from the ATO on when something will be “outside the trustee’s control”, SMSF trustees should be very cautious before assuming their particular shortfall will qualify. Where trustees self-assess their entitlement to the concession and the ATO subsequently decides the circumstances were not “outside the trustee’s control” (eg during a review or audit – which could be many years later), the pension will be considered to have failed with all the associated consequences.

Condition #3 – Catch-up payment within 28 days

Trustees must make a “catch-up” payment of the shortfall amount within 28 days of becoming aware of the problem, and their SMSF accountant must accrue this amount into the prior year accounts.

Condition #4 – Self-assessment is only available once per fund

This opportunity to self-assess is available only once per fund; not per pension, per member or per year. If there are multiple pensions which fail in the one year, only one pension can qualify for the concession. If a fund has self-assessed a minimum pension shortfall in the past, it can’t self-assess again in the future – even if it’s in respect of a different pension account or member. Instead, the trustee would need to write to the ATO and ask them to overlook the shortfall. The trustee would also not be eligible to self-assess if the ATO has specifically overlooked a shortfall in past – they would need to write to the ATO again.

What if the SMSF can’t self-assess?

Where an SMSF doesn’t meet all the conditions to self-assess, the ATO may still decide to exercise its discretion and overlook the shortfall but the trustee must make written application to the ATO. In our experience, it can take quite some time for the ATO to make their decision. In the meantime, the fund is potentially missing out on ECPI in respect of the failed pension account.

Practical steps for SMSF accountants

As the dust settles on (yet) another 30 June, now is the ideal time for SMSF accountants to be re-checking that minimum pensions were paid. If you discover a shortfall, ATO discretion may be available but it’s important to make sure the circumstances of the shortfall can tick all the boxes by asking the following questions:

1. Was the shortfall due to an honest mistake?

2. Was the shortfall due to circumstances outside the control of the trustee?

3. How big is the shortfall?

4. When did the trustee become aware of the issue?

5. Have payments been made since 30 June?

6. How many pensions have failed?

7. Has the fund failed the minimum pension rules in the past and self-assessed or requested the Commissioner’s discretion?

By: Lyn Formica | August 20, 2026 | smsfadviser.com

The post SMSF pension shortfall – when can trustees self-assess? appeared first on Professional Wealth Services.

The Institute of Public Accountants has criticised the government’s intention to impose a levy on SMSF trustees to fund the CSLR.

The Institute of Public Accountants (IPA) has questioned the long-term viability of the Compensation Scheme of Last Resort (CSLR) and confirmed its opposition to the government’s intention of imposing a levy on SMSF trustees to fund it.

“The Compensation Scheme of Last Resort … is broken and is not sustainable,” IPA advocacy and emerging policy general manager Michael Davison said.

However, Davison acknowledged amending the CSLR framework to determine compensation amounts based on actual losses, eliminating the ‘but for’ provision, was a positive development, but maintained including SMSF trustees in the monetary support of the consumer protection measure is imprudent.

“Removing the ‘but for’ provision where a consumer may be compensated for potential losses, and not actual capital losses, will help, but forcing SMSF trustees to pay a levy is grossly unfair,” he indicated.

“SMSF members are no different to any other retail investor. They are individuals or families who just happen to invest in their retirement through a specific type of government-approved savings vehicle. They have been targeted by these predatory schemes and are victims just like any other retail investor.

“SMSF trustees invest their life savings, often based on licensed financial advice – which is regulated by ASIC – just like any other retail investor. They entrust their savings to the product providers and financial advisers and expect them to act in their best interests. They should not have to insure their own savings in case there is misconduct or product failure caused by others, which they have no control over.”

With regard to the introduction of the new class of adviser, he supported the idea, but was critical of its limited application.

“The financial adviser population has halved and it is difficult for consumers to access quality affordable financial advice. However, limiting the new class of adviser to superannuation funds and insurers is a missed opportunity,” he noted.

“There is a large pool of qualified professionals, such as accountants, that could be utilised to provide limited or scaled financial advice to consumers, giving them more opportunities to access quality affordable professional advice.”

By: Darin Tyson-Chan | August 24, 2026 | smsfadviser.com

The post CSLR levy on SMSFs unfair appeared first on Professional Wealth Services.

How well do we understand our money?

Most of us make financial decisions almost every day.

We decide whether to save or spend, how much of the mortgage to pay down, where to invest and, eventually, how to turn decades of savings into an income that can support us through retirement.

But how well do Australians understand the financial concepts and systems behind those decisions?

Vanguard's How Australia Retires 2026 report surveyed more than 1,800 Australians and found that while older Australians showed higher financial knowledge than younger Australians, significant gaps remain across everything from basic investment concepts to superannuation and the retirement system.

And that's important because financial literacy isn't about becoming an investment expert. It's about having enough knowledge to make informed decisions about your money throughout your life.

How would you fare on the 'Big Three' questions?

To measure financial literacy, we asked Australians three internationally recognised questions developed by researchers Annamaria Lusardi (Stanford University) and Olivia Mitchell (University of Pennsylvania), which have been used to assess financial knowledge around the world.

They're designed to test three foundational financial concepts: interest, inflation and diversification.

Have a go at the following and see how you do:

1. Suppose you put $100 into a zero-fee savings account paying a guaranteed 2% interest rate. You make no further deposits or withdrawals. How much would you have after one year?

2. Imagine the interest rate on your savings account was 1% a year while inflation was 2%. After one year, would your money allow you to buy more than today, exactly the same amount, or less?

3. True or false: Buying shares in a single company usually provides a safer return than buying shares in a number of different companies.

We'll reveal the answers at the end of this article, but first, how did Australians fare in Vanguard's How Australia Retires 2026 report?

• Financial literacy scores were generally higher among older Australians. Scores were relatively consistent among Australians aged 18-44 before rising substantially among older age groups. Men aged 55+ recorded average scores above 80%, with men aged 75+ achieving the highest score of 88%.

• Younger Australians are improving. Men aged 18–24 scored 66%, up from 54% last year, while women in the same age group scored 59%, up from 50%.

• The gender gap persists. Women scored below men across every age group, with the largest gap among 45–54-year-olds: 76% for men versus 58% for women.

Retirement knowledge remains a challenge

Understanding concepts such as inflation and diversification is one thing. Navigating Australia's retirement system is another.

Vanguard asked respondents four questions covering the Age Pension, voluntary super contributions, the taxation of super and when people can generally access their super savings. The results were mixed.

• Knowledge of voluntary super contributions improved. 78% correctly understood that employees can contribute to their own super, up from 74% last year.

• More Australians understand Age Pension eligibility. 75% answered correctly, up from 65%.

• Understanding of super's tax treatment also increased. 57% answered correctly, compared with 49% last year.

• Super access remains a major blind spot. Just 38% correctly identified the super preservation age, down from 40% last year. Among women aged 18–34, fewer than 30% answered correctly.

That's a significant knowledge gap given super is likely to become one of the largest financial assets many Australians own.

How well do Australians understand their super?

The research also asked the 1800 Australians surveyed how confident they felt about understanding different financial products.

Unsurprisingly, the humble savings account came out on top: 56% reported being very or extremely confident in their understanding.

But confidence dropped considerably for products that can play an important role in building and funding retirement.

Only around one-third of Australians reported high confidence in understanding superannuation, while confidence was even lower for equities, managed funds, ETFs, bonds and annuities.

More broadly, just 35% of Australians said they were very or extremely confident in making financial decisions, slightly below 37% last year.

Fees are another area where knowledge could improve.

Nearly half of Australians said they wouldn't feel confident explaining the fees charged on their super account to a friend or family member, while more than one-third weren't very aware – or weren't aware at all – that super funds may charge multiple fees.

Over long investment periods, even small differences in fees may have a significant impact on your investment balance. The extent of that impact will depend on factors such as investment returns, fees and your individual circumstances.

Vanguard's modelling found that an additional 0.5 percentage points in annual fees could reduce the retirement balance of a hypothetical full-time worker by around $77,000, or approximately 12.5% of their accumulated savings under the assumptions used in the analysis.

Building your financial knowledge

The good news is that financial literacy isn't something you either have or don't have.

It's something that can be built gradually through reading, research, conversations and experience.

You could start with some of the fundamentals: understand how inflation affects your purchasing power, learn how compound returns work, explore the relationship between investment risk and return, and understand why diversification matters.

When it comes to retirement, make a habit of learning how your super works, how your savings are invested, what fees you're paying and how the Age Pension fits into Australia's broader retirement system.

Answers to the financial literacy questions:

1. Exactly $102.  2. Less than today.  3. False.

Source: Vanguard How Australia Retires 2026 research. Nationally representative survey of 1,800+ Australian adults aged 18 years and over in February 2026. Survey findings and examples reflect respondents' opinions, expectations and intentions at the time of the survey and should not be taken as forecasts or predictions of individual retirement outcomes.

By: Vanguard Australia | 2026 | vanguard.com.au

The post Financial literacy in Australia: Where we’re improving (and falling behind) appeared first on Professional Wealth Services.

Small steps today could make a big difference to how you feel about retirement.

For many Australians, the answer isn't particularly reassuring.

Retirement can feel like a distant and complicated goal, particularly when you're balancing more immediate priorities such as mortgage repayments, household expenses and the rising cost of living.

But Vanguard's How Australia Retires 2026 research suggests building retirement confidence doesn't necessarily require having everything figured out today.

In fact, our analysis identified five actions associated with a meaningful uplift in retirement confidence: building a retirement plan, improving financial literacy, understanding superannuation and the Age Pension, making voluntary super contributions, and engaging with super at least every six months.

To illustrate the potential impact, let's meet Alex.

Meet Alex

Alex is 38, married and works full-time in healthcare, earning around $90,000 a year. They own a home with a mortgage, have $70,000 in super and another $35,000 in personal investments.

But Alex isn't particularly engaged with retirement.

They have some gaps in their financial literacy, don't fully understand Australia's retirement system, have never made a voluntary super contribution and check their super less than once a year. Most importantly, they don't have a clear retirement plan.

Based on Vanguard's survey findings, someone with Alex's characteristics has a 21% probability of having high retirement confidence and a 25% probability of having low confidence.

Now imagine Alex takes five relatively straightforward actions. According to Vanguard's modelling, Alex's probability of high retirement confidence would triple, while Alex's probability of low confidence would fall significantly.

Alex is a hypothetical person and this example is illustrative only and is based on the factors stated. It should not be taken to contain personal financial advice.

So, what are those five actions – and how can you put them into practice?

1. Build a retirement plan

A retirement plan doesn't need to begin with a complicated spreadsheet or knowing exactly how much money you'll need decades from now.

It can start with something much simpler: thinking about where you are today, what you'd like retirement to look like and what might need to happen to get there.

That's important because our research found a strong association between planning and confidence. Among Australians who know exactly what they need for retirement and how to achieve it, 75% report high retirement confidence. That compares with just 4% of people with no retirement plan.

A useful starting point is to ask yourself a few questions.

• When would you ideally like to retire?

• Where will you live?

• Will you still have a mortgage?

• How much income might you need for essentials as well as things such as travel, hobbies and healthcare?

You don't need all the answers immediately. Retirement planning is an ongoing process, and simply starting to think through these questions may help identify the gap between where you are and where you want to be.

2. Improve your financial literacy

You don't need to become an investment expert to make more informed financial decisions.

Financial literacy can develop gradually through reading, research, conversations and experience. Vanguard's research found that financial literacy and retirement knowledge are jointly associated with higher levels of retirement confidence.

One area where knowledge remains surprisingly low is super access. Just 38% of Australians correctly identified when they can access their super savings, so understanding the rules around your own super could be a good place to start.

From there, you could explore how inflation and compound returns affect your money over time; the benefits of diversification and the relationship between risk and return; the fees you're paying on your super; and how the Age Pension and Australia's broader retirement system operate.

3. Understand how super and the Age Pension work

Your retirement income may come from several places, which makes understanding Australia's retirement system another important piece of the puzzle.

Start by learning how your super is invested, what fees you're paying and how your savings may eventually be converted into retirement income.

It's also worth understanding how the Age Pension works and how it could interact with your super and other savings.

You don't need to master the entire system overnight. The goal is to gradually build enough knowledge to understand the decisions that may shape your retirement.

4. Consider making extra super contributions

Nearly one in two Australians surveyed by Vanguard had never made a voluntary contribution to their super.

For those in a position to do so, additional contributions may be another way to engage with retirement savings.

Depending on your circumstances, this could include salary sacrifice or personal deductible contributions. Before contributing, it's important to understand the contribution rules and limits that apply to you.

You can also log into your ATO online account to review your total super balance, contribution history and available contribution caps.

The key isn't about making a large contribution today. It's understanding the options available and considering whether additional contributions fit your circumstances and longer-term goals.

5. Check in with your super regularly

Engaging with your super doesn't mean watching your balance every day or continually switching investments.

Instead, Vanguard's research points to engaging with your super at least every six months as one of the five actions associated with higher retirement confidence.

A regular check-in can be relatively simple. Log into your super account and:

• Review your balance and recent contributions.

• Check your employer contributions are arriving correctly.

• Review how your money is invested and your fund's returns, and check whether your investment option aligns with your risk tolerance and investment timeframe.

• Check the fees you're paying and your insurance arrangements.

Your annual member statement provides another opportunity to review your contributions, investment returns, fees and insurance cover.

You don't need to solve for retirement today

Perhaps the most encouraging finding from Alex's story is that none of the five actions requires knowing exactly what retirement will look like decades in advance. Instead, they're about becoming more engaged with your financial future.

Vanguard's research suggests these actions, taken together, are associated with a substantial difference in retirement confidence. And the earlier you start, the more flexibility you may have to adjust along the way.

By: Vanguard Australia | 2026 | vanguard.com.au

The post Five steps towards a more confident retirement appeared first on Professional Wealth Services.

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Australia is entering one of the largest intergenerational wealth transfers in its history. Over the next two decades, Australians aged 60 and over are expected to transfer around $3.5 trillion in wealth¹. As more Australians receive an inheritance, taking time to develop a clear plan may help turn inherited wealth into long-term financial security.

Whether your inheritance is a modest sum or worth millions, taking time to develop a clear investment strategy may help ensure the funds support your long-term financial goals.

The first steps…

Receiving an inheritance often comes with a mix of emotions, which can make it difficult to think long term. Rather than rushing into financial decisions, taking time to develop a clear plan may help you make the most of the opportunity.

An inheritance may come in the form of cash, property, shares, managed investments or superannuation benefits. Each type of asset may be subject to rules around their transfer and relevant capital gains or estate taxes. Those rules can be confusing, so it may be helpful to get accounting, legal or wealth-planning advice early to ensure major decisions are made with a full understanding of the implications.

What does a financial plan look like?

A well-structured financial plan may help you make the most of an inheritance and ensure it supports your long-term goals. Consider starting with the following:

• Conduct a financial stocktake. Review your income, savings, debts and existing investments to understand your overall financial position. Before investing an inheritance consider whether paying off any high-interest debt or setting aside an emergency savings buffer could provide greater financial security.
• Set clear financial goals in line with your new inheritance. Are you looking to cut debt, save for an event, or secure your retirement? Defining your priorities will help shape your strategy.
• Develop a savings and investment strategy. Once you have a clear understanding of your financial position and goals, consider how your inheritance could be allocated to support them. This may involve balancing shorter-term priorities, such as travel or education expenses, with longer-term objectives, such as retirement. Diversifying across different asset classes, including shares, fixed income, cash and exchange-traded funds (ETFs), may help manage risk and support long-term growth. Avoiding excessive exposure to a single investment or asset class may also help create a more resilient portfolio.

Common mistakes to avoid

People often think of an inheritance as unexpected money rather than part of a long-term financial plan. This can lead to people making decisions that feel rewarding in the short term but do little to improve long-term financial well-being. Common mistakes include making large lifestyle upgrades too quickly, leaving sums in cash in low interest accounts, ignoring tax implications and failing to consider diversification.

Don’t forget your superannuation and family trusts

Depending on individual circumstances, contributing some of your inheritance to superannuation may offer tax advantages, although contribution caps, eligibility requirements and tax outcomes may vary. Consider seeking financial advice to understand how super rules apply to your situation.

Other investment structures such as family trusts may also play a role in managing wealth. Depending on your circumstances, they may offer tax planning opportunities. Some people may also choose to use part of their inheritance to support charitable causes, including through donations to deductible gift recipient (DGR) organisations.

Turning a windfall into a legacy

An inheritance is about more than money. For many people, it represents the legacy of a loved one and the culmination of years of saving, investing and planning.

While every situation is different, understanding your goals, maintaining a diversified approach and focusing on long-term outcomes may help transform inherited wealth into lasting financial security.

Vanguard
15 July 2026
vanguard.com.au

The post How to maximise the impact of your inheritance appeared first on Professional Wealth Services.