What to do with inheritance

**disneysteve** · 11-20-2013, 10:10 AM

Sorry for your loss.

#1 advice. STAY AWAY from financial advisers, especially at the banks. There is no way an annuity is the right choice for you (or virtually anybody). That sales person is only concerned about her commission, not your well being.

I would do the following:

1. Put 6 months worth of living expenses in a savings account as an emergency fund.
2. Pay off any outstanding debts you have (credit cards, car loan, etc.)
3. Set aside the money you'll need for school in a different account.
4. Put $5,500 in a Roth IRA as soon as possible. A company like Vanguard can help you with that. If you don't know how to invest the money, choose a target retirement fund with a target year that is close to when you'll be 60-65 years old.
5. Set aside $5,500 to put in the Roth on January 2nd for your 2014 contribution.

That will still leave you a pretty big chunk of money. I would park it in a money market account for now until your living situation is figured out. You mention relocating. Once you know where you want to move, you will need to see how much homes are and decide how much to put down, or possibly to pay cash for a house entirely.

**MonkeyMama** · 11-20-2013, 11:27 AM

Agreed with Steve.

This may be obvious, but also make sure not to keep more than $250,000 per bank account, in the meantime. (FDIC limits)

You probably want to shop around bank accounts - here is a good resource:

Bank Account Rates | Bank Reviews, Deals & Promotions | Deposit Accounts

http://www.depositaccounts.com/

A solid 1% interest rate will net you about $4700 per year in interest. You might as well earn that interest, versus letting that cash sit in some 0.50% interest rate account (or whatever the average interest rate these days is).

**disneysteve** · 11-20-2013, 11:39 AM

Originally posted by MonkeyMama View Post

A solid 1% interest rate will net you about $4700 per year in interest.

Yes, 0.9% or right around there is about the best right now. Bankrate.com is another site to check rates.

You might also want to put some or most of the surplus in a few CDs to boost your rate a bit. You can get 1.2% for a 2-year CD.

**moneybags** · 11-21-2013, 09:20 AM

Originally posted by Ginny36 View Post

Right now the money is in 3 separate savings accounts. I talked with a "financial advisor" at one of the banks and she wanted me to put the money into an annuity. Not interested in that.

Sorry about your loss. From your post, it doesn't sound like this will be taxable. Make sure the "savings accounts" are not retirement accounts, which could lead to taxable income to you.

**MakeAStash** · 11-21-2013, 09:36 AM

I would not buy a house until I had an earned income to either buy it outright or pay the mortgage. Culinary school is a wise investment only if it will enable you to obtain such an earned income.

**DisciplinedSaver101** · 12-16-2013, 07:35 PM

Put as much of the money as you can into an S&P 500 Index Fund (Charles Schwab has a very good one) and leave it there as long as you can. If you put $200,000 in there today, in 25 years when you are in your early 60's you would expect that to be worth $1,700,000. You have to ignore the ups and downs of the market and realize that over a 25-year period the stock market is going to average a very nice return.

**Jerry91** · 12-16-2013, 09:08 PM

I agree with Disneysteve. First and foremost, it will be better if you create an emergency fund for yourself. You should keep around 9-12 months of your monthly expenses saved in that account. Then you should save money for your culinary course so that you do not have to take out a student loan for it. Then you should concentrate on opening a retirement account to safeguard the golden years of your life. Once you have done so, then you place the rest of the funds in stocks, annuity or whichever option you feel like.

**97guns** · 12-17-2013, 05:08 AM

if you can earn just 5% on your money you can have a $2000/month cash flow. you should be able to find a solid stock that pays a 5% dividend

**BrianWeatherdonCFP** · 01-02-2014, 12:09 PM

Safe-guarding your Inheritance <> Values for Life

Dear Ginny, you've opened a vital subject as if you were among close friends here. I appreciate your trust, and also appreciate how vital it is to get this right because it's unlikely you'll get another inheritance of such size again. And because, your dreams are important to you and this money can help you achieve them.

I won't comment as people have done above about bank advisors or annuities because that's not the place to begin this discussion. Just to say, you can find a trustworthy advisor by seeking someone who is reasonably near you, fully accredited with proper designations and years of experience, and clean in terms of "word of mouth" and how others have experienced such an advisor's service. You want a long term relationship to help clarify the goals for your money and how you will implement them.

In short let's consider the following ....and you can pick this up in further discussion with someone locally you can be trusting to guide you further.

a) Cash reservoir: this is any money you intend to use in the next 3-to-36 months including your studies at culinary college. This is money that cannot take any short-term risks. Wherever it's invested, or with whom, this money needs to be 100% safe.

b) Future income and growth: "Life Income Mandates" is a practice to secure a strong income yield from dividend, real estate, global infrastructure, etc. It's rare that a do-it-yourself investor would manage this on their own. Many so-called advisors also never get to it, which is sad because Life Income Mandates can be built on any financial platform you choose ....and at far less risk than investing as people do in various assets & equities. I recommend you google this...freely explore two or three items you find on this subject.

c) BUT FIRST ....hey hey that's funny since I'm putting it third here. However when I serve as someone's advisor the first thing I do with them is what I'm recommending you do now. Sit down with a pad of paper and a few pencils, and ask yourself: what are my personal values around money? What are the 3-5 things I most want to avoid? What are the 3-7 things I most want to capture or get because of this money (this wealth)? What will it look like, and what will I be saying to myself every month and year going forward when I realize I'm attaining the values, getting the results, I want? Get fully associated into this; see it; hear it, feel what you'll feel because you're being successful with money. Explore this further, and even consider someone in a coaching field to help you with this for an hour or two.

d) Realize a secret here, that many financial geniuses are not the ones you see in the newspaper ...but the simple lives and genuine people who never lost their wealth doing sad or foolish things. In my books, the best place to begin is knowing your own values as in (c) above, and then finding how to implement these safely to reach your life goals (a) + (b) above. That will qualify you as a financial genius ...and also a very good client for a high-integrity advisor that you choose nearby.

For further, see chapter 3 on inheriting wealth, and chapter 5 on how not to lose it. That's in, "A Lifetime of Wealth -- And How Not To Lose It."

Warm wishes,
Brian Weatherdon MA CFP CLU CPCA

**llckll** · 01-03-2014, 04:29 PM

Just wanted to say sorry for your loss.

Other posters suggestions are spot on.

What to do with inheritance