According to The Centre for Economics and Business Research (CEBR), the amount of wealth being passed from one generation to another could reach £115 billion by 2027. Research by the leading independent economic forecaster also revealed that the figure was a 66% increase on the £69 billion that was left to loved ones in 2017.
This trend looks set to continue as well, with CEBR predicting that close to £1 trillion could be passed to younger generations by 2035. If you’re one of the millions of people who is likely to inherit from friends or family, it may not be as straightforward as you might think.
The reason for this is that many estates include investments, which could leave you feeling daunted if you’ve never had them before. As a result, you may fall foul of five common mistakes that could cost you dearly over the long term, and potentially devalue your inheritance over the long term.
Read on to discover more, and how a financial adviser can help you to sidestep them.
1. Cashing in the investments
It’s natural for clients to consider selling investments they’ve inherited. In some cases, this may be the right decision, particularly if the funds are required for immediate use. In other situations, however, it could prove to be unintentionally costly.
It’s therefore important to understand what such decisions now might mean for your wider financial goals. Selling investments can provide flexibility, but if the money is not required for an immediate purpose, moving investments into cash could reduce the potential for longer-term growth by unintentionally eroding the real capital value.
Markets have generally provided stronger return than savings. Although markets do experience periods of volatility and loss, they continue to outpace inflation. Whilst cash does offer stability and ease of access, it is not immune to inflation like some investment have historically proven.
Whatever your circumstances, it is always sensible to consider your time-horizon, appetite for risk, and financial objectives before making any decision. Seeking professional advice can help ensure your choices are well-informed and align with your financial goals.
Always remember that when it comes to investments, past performance is no guarantee of future performance. The value of your inherited investment could go down as well as up.
2. Not considering Capital Gains Tax
If you inherit investments, they may become liable to Capital Gains Tax (CGT) if you then decide to sell them. The tax is charged on the profit you make when you sell most assets, which includes any property that’s not your main residence and shares.
In 2025/26 you’re allowed to make a profit of up to £3,000 before CGT is charged at 18% if you’re a basic rate taxpayer. If you’re a higher rate taxpayer, CGT is typically charged at 24%. As such, selling your investments could result in a substantial CGT liability, which is why it’s important to understand the tax implications before deciding to sell.
A financial planner can help you to understand whether you could be exposed to the tax, and how much it’s likely to be. As a result, you can then make a more informed decision about whether or not you sell or keep the investment.
3. Becoming emotionally attached
As the investment has been passed to you from a loved one, it can be difficult to then sell them or transfer them as they may have an emotional attachment to the deceased. For example, you may see the investment as ‘mum’s shares’, which means you could hold on to them even if they’re performing poorly.
While holding on to a loved one’s investment is understandable, doing so could cost you dearly if they’re underperforming. A financial adviser, on the other hand, can help you to understand the investment’s performance and whether you should consider switching to a different investment that may provide greater return potential.
4. Not including the investments in your financial strategy
Inherited investment should be viewed as part of your overall wealth rather than something distinct and separate. While this may sound obvious, it’s common for inherited assets to be treated separately from the rest of your portfolio.
This could lead to outcomes that could impact your investment journey. For example, accepting more risk than you would normally be comfortable, or maintaining unsuitable investments that conflict with your existing holdings.
Seeing all investments as part of your overall wealth strategy means you’re more likely to make consistent, well-balanced decisions that support your long-terms financial objectives.
5. Rushing into a decision
If you’re unfamiliar with investments, you may make a knee-jerk decision that you later regret. For this reason, it’s worth the time to consider your options when you receive your investment, to ensure you don’t make a decision that could devalue it.
Speaking to a financial adviser is likely to be a shrewd idea, as they can help you to understand the type of investments you’ve inherited and whether they’re right for you. Furthermore, they can explain the pros and cons of keeping or selling them or transferring them to another investment that might be more appropriate for you.
Get in touch
As one of the UK’s largest independent financial advice companies, we can help you if you have inherited investments. We’ll explain your options using clear and jargon-free language so that you’ll enjoy peace of mind and understand how to make the most of the investments you’ve been left.
If you would like to discuss this further, please call us on 0333 010 0008 and we’d be happy to arrange a no obligation initial meeting with one of our Independent Financial Advisers.
22 October 2025