A recent Wall Street Journal article - headed Too Rich, Too Soon - discusses what can go wrong when someone is showered in money. Journalist Jessica Silver-Greenberg points to the
example of a baseball player who amassed $58 million in net assets only to end
up a bankrupt.

Of course, few of us have much chance of becoming sports stars or winning the lottery, but
many of us will experience some form of instant wealth by receiving a sizeable
inheritance.

In her article, Silver-Greenberg quotes statistics from the Centre for Retirement Research at Boston College
estimating that North America's 78 million
baby boomers - born between 1946 and 1964 - will inherit $8.4 trillion during
their lives.

The underlying message of this article, which quotes a range of financial planners, is that
individuals should understand what to do if they suddenly come into possession
of a large, perhaps unexpected, sum.

Tips from these advisers include create a diversified portfolio, treat "sure-fire" investment
schemes with extreme caution, and revise your estate planning so the windfall
is not distributed in an unexpected way in the event of your death.

And don't rush to spend your newly acquired money - perhaps lock a large amount away in term
deposits until you gather your thoughts and revise your financial plan.

Interestingly, many of the challenges faced by a person receiving a big inheritance are
similar to those faced by numerous recent retirees who gain full control over
their superannuation savings after 40 years or so in the workforce.

By Robin Bowerman
Smart Investing
Principal & Head of Retail, Vanguard Investments Australia
28th February 2012