what to do with inherited money

[naomi_w]

how would you best invest your inheritance?

[disneysteve]

how would you best invest your inheritance?

It totally depends on your situation.

Do you have any debt? Tell us the details of that.
Do you have a fully funded emergency fund?
Are you saving adequately for retirement?

We can't advise you how to invest an inheritance without knowing the details. How much money are you talking about? What does your financial picture look like?

[GrimJack]

Pay off any debt; max out IRA and catch up; if the inheritance is enough to produce some income and you can open a 401k/403b/TSP at work, have that income put into your 401k + catch up. If it is enough to replace your employment income, retire.

[scfr]

Are you asking how we Saving Advice forum members would personally invest an inheritance, or what sort of general advice we'd give about investing an inheritance, or how we think that you specifically should invest an inheritance that you have received?

You'd get very different answers from me depending on which of these 3 situations we are talking about.

[naomi_w]

a more general question for you all to get an idea of what other people do

[disneysteve]

a more general question for you all to get an idea of what other people do

I think the answers will vary widely from person to person. The amount of the inheritance will also make a huge difference.

What I do with 10K or 20K is different than what I'd do with 100K or 200K.

What would I do if I got money today? The first 5-10K would be set aside for spring college tuition payment due in December. After that, it would really depend on the amount of money we're talking about.

This isn't really a question that can be answered in general terms other than to say first pay off high interest debt, then fund your emergency fund if you don't have one, then move on to other things depending on your situation.

[corn18]

I may get a high 6 figure inheritance from my MIL (hopefully not for a long time). If that were to happen today, I would put it in several different savings accounts to make sure it is all FDIC insured and then do absolutely nothing with it for 6 months. Then I would sit down with my wife and see what's what. And what's what would vary greatly between today and 20 years from now. I'm hoping she lives for 20 more years and then we could take her inheritance and start a foundation in her family name to support something she was passionate about. What a great way for her to leave a legacy.

[MonkeyMama]

I'm hoping she lives for 20 more years and then we could take her inheritance and start a foundation in her family name to support something she was passionate about. What a great way for her to leave a legacy.

Same. We are thinking charitable foundation when it comes to our own family money. Because of the (absurd) amount and how little we expect to want or need any of that money.

[scfr]

I know that neither my husband nor I will be inheriting anything other than expenses, so this is purely academic.

The standard (and very sensible) advice is to not spend an inheritance, but to just invest it and let it grow.

But because DH & I are ahead of schedule on retirement savings and very close to hitting our number, I would split an imaginary inheritance in to 3 pots ... the same 3 pots that kids use for their allowance (Give/Spend/Save). It wouldn't be an even 3-way split. It might be something like 10/30/60 (depending on the amount).

[disneysteve]

The standard (and very sensible) advice is to not spend an inheritance, but to just invest it and let it grow.

I would amend that to address debt, though. If someone has high interest debt and gets an inheritance, it makes more sense to pay off the debt than to park the money in a mutual fund. Of course, that assumes they have their spending under control and won't just run up the credit cards again.

[msomnipotent]

Forget what I originally posted.