What to do with tax-free $10k?

[cinfooya]

My parents have started to gift annual lump sums to me and my sister to help us avoid inheritance taxes when they die. How should I invest that sum to yield best return?

[disneysteve]

My parents have started to gift annual lump sums to me and my sister to help us avoid inheritance taxes when they die. How should I invest that sum to yield best return?

What is the purpose of the money? Is it for retirement? Are you saving to buy a house? Are you saving to put a kid through college? What's the timeline for when you will need to use that money?

[msomnipotent]

Because I know nothing about you, I will post what I would do with the money. I would put most of it in our daughter's state 529 so I could get the tax deduction. I would use some to take my daughter and her grandparents on a trip to build memories. We took my parents with us to Yellowstone 2 years ago and this year was his parents at the Grand Canyon. Depending on our cash flow, it will either be Arizona or Belgium this summer with cousins.

[disneysteve]

My mother is probably going to start doing this. What will we do with the money? We will set it aside in a reasonably safe place and just ignore it so that if anything ever happens and my mother needs assistance, we can use that money to cover her care. Once she is no longer with us, then we will consider that money to be ours and use it as we see fit at that time.

[Jluke]

do you qualify for a Roth IRA account? You can put $5500 (max) there.

are you married? You can add $4500 to a Roth IRA for your spouse to use up the 10k; still can add another $1000 to max that one at $5500 too.

Vanguard funds: Wellesley, Wellington, Balanced Index fund, lifestrategy fund, target date fund, Total Stock Market Fund/International/Bond (3-fund portfolio).

research the above...

[disneysteve]

do you qualify for a Roth IRA account? You can put $5500 (max) there.

are you married? You can add $4500 to a Roth IRA for your spouse.

Is that a typo? The spousal IRA can be fully funded at $5,500 also.

[Petunia 100]

Is that a typo? The spousal IRA can be fully funded at $5,500 also.

10k - 5.5k = 4.5k. S/he is giving advice on what to do with 10k.

[disneysteve]

10k - 5.5k = 4.5k. S/he is giving advice on what to do with 10k.

Ah. I wasn't looking at it as a math problem. Oops.

[cinfooya]

Thanks all. Ideally I'd like to retire early in a couple of years. Have a good IRA for real retirement at 65. In the meantime, feeding some index funds with part of salary, although only at half my early retirement goal. Maybe thinking about rental properties. Would like to use this 10k for something that helps me get closer to my early retirement goal, possibly in next 5 years?