if you had a lot of money left to you

[Cannot_Wait_4Disney]

how are you investing it?

In order.
1. Establish a $2,000 emergency fund
2. Pay off all debt exclusive of your mortgage.
3. Establish an emergency fund of at least 6 months net income.
4. Pay off your mortgage.
5. Invest for your retirement, kids college
6. Other investments and splurging.
7. No splurging unless 1-3 are done. Splurge a little only unless 4 and 5 are done.

That's what I'd do.

 

[Nagle]

Better, more expensive wine and travel accommodations.

 

[Neapolitan Ice Cream]

Premium bonds. And a little fun on the side

 

[tvguy]

My sister and I inherited parents annuity, 50/50. We have 5 years to get it all out, each doing it differently. Started drawing it out. The annuity company wasn't taking out enough federal tax as directed and no state tax, which they were told to do. Come tax time, we were considered understating our income, hit with penalities and since this has already occured, our tax advisor recommended to start paying towards our taxes next year with the annuity because it has been beyond difficult to get this straightened out. Everytime I call annuity company, I'm told a different story. Tried contacted local agents of this annuity company to help, said they can't do anything. When ax forms came in, they got it mixed it. Had the total amount (including my sisters) that I had taken it all. What a mess that I'm still trying to fix for almost 2 years.

This sounds like you inherited an IRA that happened to be invested in annuity. You would have had the same issues if you had inherited this if it was in an IRA no matter how it was invested.
We have warned our children, that when we are gone, any money remaining in our IRAs.....money in ANY investment in an IRA, they will have a specific time limit to withdraw the money and pay taxes on it. Of course, those rules are subject to change, but based on when these accounts were started, they will have 10 years to draw the money out in any manner they wish.

 

[tvguy]

Not in the mood to get into a long, prolonged debate on this, but there are a number of different reasons why annuities are bad investments. Google is your friend

And annuities have been a friend of our family.

 

[SandyinMonterey]

This sounds like you inherited an IRA that happened to be invested in annuity. You would have had the same issues if you had inherited this if it was in an IRA no matter how it was invested.
We have warned our children, that when we are gone, any money remaining in our IRAs.....money in ANY investment in an IRA, they will have a specific time limit to withdraw the money and pay taxes on it. Of course, those rules are subject to change, but based on when these accounts were started, they will have 10 years to draw the money out in any manner they wish.

No. It's an annuity. My cousin set it up for them. He's since retired. Also inherited several IRA's. Was also told that we have 10 years to draw the money out but now getting letters that RMD's need to be set up. My parents IRA's go by their age(s). Ten years to get it all out but there are scheduled amounts.

 

[leebee]

We inherited about $50K from selling my mom's house and then 10 years later about $40K when my FIL passed away. About 10% went into retirement each time, but the bulk of the money was used to pay off car loans, do major home repairs, pay down our HELOC, buy a used car, and then into savings. Sometimes I wish we'd just put it away into retirement, but it is nice to have a new heating system for the house, a properly built retaining wall so the back of the house doesn't collapse, new roof, etc. Oh and a frivolous purchase: DDs senior prom dress. Her junior prom dress cost $15 and a homecoming dress was $10, both from Goodwill, so when she asked if for her senior prom she could "have a dress that nobody else had sweated it," it seemed like the least I could do, hahaha!

 

[china mom]

My mother died with about $560K in real estate. I have three brothers so essentially, my inheritance was $140K. I got mortgages for $420K and bought the brothers out. So, I guess my answer is, I did inherit some money and I invested it in real estate.

If there ends up being money in my brother's estate, we will probably spend some fixing up our house (the renters all live better than we do ). If there ends up being a lot of money, we will invest some, probably in CDs. Our retirement accounts are pretty well funded already.

 

[Robbie Cottam]

Lot of subjective phrases here define:

invest,

 

[DawnM]

We inherited a decent sum from my father who passed away this past December (mom passed away over 3 years ago).

Most of his money was in several ROTH accounts so we can leave it where it is for up to 10 years. The laws are trying to make it so you have to withdraw over time rather than all at once after 10 years, but currently it can be left where it is for 10 years.

Anyway, we are in the process of moving and will be using some of dad's money to pay off the house we are buying (mostly it is our proceeds on our house sale) but we want to have 0 mortgage.

The rest we will leave where it is until we have to take it out and we will reinvest into some sort of retirement account/savings.

We aren't huge risk takers when it comes to investing, however, most of our investments have been real estate and so far, we have done quite well with it. Our next house will be 100% paid for and it isn't a cheap house. We have spent the last 27 years buying and fixing up houses and selling.

 

[georgina]

Not in the mood to get into a long, prolonged debate on this, but there are a number of different reasons why annuities are bad investments. Google is your friend

That's why I said in my post, not right for everyone. There are a lot of different kinds of annuities. I have seen immediate annuities recommended more lately, put in a lump sum for a certain monthly payout. For DH and I, with a family history of longevity, guaranteed income for life for a segment of our investments works for us. We have a lot of money in stocks (they have done well over 30 years) and the idea of a portion of our money tucked away safely somewhere is appealing. Someone else mentioned putting $200,000 inheritance in a HYSA. Not what I would do, but if it works for them...

I have a 30 year old son who will probably never get married or have kids. He does not care much about money management and I often help him with it. I have concerns for when he gets old and may suggest he go the annuity route with his accumulated wealth when he retires without a pension. Most likely he will have no one he cares to leave it to.

 

[Mrs. Ciz]

You need to define "a lot". $20k? $200k? $2M? $20M? The answers would be very different.

This is a case where your best bet is to leave it as is, in whatever investment vehicle, until you've educated yourself. If you're not a savvy investor, there are financial planners who can help you. When my sister's husband got a large medical settlement, her lawyer sent her to a planner. Sis ran his advice by me (I'm more of an investor than she is), to make sure she was getting sound advice.

A couple things you need to be careful of:

If you've received an inheritance that's in retirement accounts, there are rules on withdrawals and taxes may be owed. Do NOTHING until you understand this.

If you've inherited because you've lost a loved one, do only the minimum for a year. A lot of people, in their grief, make bad decisions. Leave the money alone for a while--it'll still be there.

You need to look at your overall financial picture, not just a stand-alone windfall. Do you have kids going to college? Is your retirement set? Do you have debt? Some "standard" advice, like paying off your mortgage, might not be the right choice for you (if the payment is manageable and you've locked in a low interest rate, for example).

Thank you for this. I inherited money from my grandmother years ago and from her brother, my great uncle, recently. A quarter of my grandma’s money along with a bunch of our own money went to help us purchase our state’s prepaid college tuition 529 plans for our 2 kids. They both graduated debt free a few years ago. The rest of the money I put in mutual fund accounts. But it hasn’t done that well over the last 10 years as it grows then the economy tanks and it drops back down. I haven’t lost the original investment but I haven’t grown it as much as I need to either, and I really need for it to grow.

Two years ago, I got money from my great uncle. I wasn’t sure what to do with it, and wanted to meet with an advisor, so I temporarily parked it in a HYSA. I’ve been feeling guilty for not doing more with it. I’m glad I waited though because my siblings, who immediately invested theirs, lost a bunch of it when the economy tanked. However, I need to make it grow, so I’m interviewing advisors next month.

We don’t have much debt other than our low interest rate mortgage, which will be paid off by the time we retire, and a small car loan, which I pay extra on each month to pay off faster. We want to save and invest the inherited money to supplement our retirement. We both contribute 15% to our 401k/403b accounts; I will get a very small pension and have a small annuity that will pay me monthly; plus we’ll get Social Security, but we don’t think all that will be enough each month. It would be wonderful if the inherited invested principle generated enough money in interest to supplement our monthly retirement income. Then we could eventually pass the principle (or hopefully most of it) down to our children. At least that’s the plan I need to work on with the advisor.

 

[tvguy]

No. It's an annuity. My cousin set it up for them. He's since retired. Also inherited several IRA's. Was also told that we have 10 years to draw the money out but now getting letters that RMD's need to be set up. My parents IRA's go by their age(s). Ten years to get it all out but there are scheduled amounts.

Must have been a rule specific to the annuity your parents purchased.

IRA rules are constantly changing. My kids know that if we have any money left in ours when we are gone that they have 10 years to withdraw the money. They can take it in 10 equal payments over 10 years, all at once, all in 10 years or any way they want. That is different that my mom's IRAS. At the time she started taking her RMD, she didn't need the money and wanted to reduce the RMD. At the time, you could use your beneficiary's age (mine) and average it with your age to expand the life expectancy they divided the fund by. When she passed, I had the option of cashing it in, or continuing the same distributions she had been taking. I decided to continue the same distributions, so for the last 10 years I get a check every year from her IRA. So far, the income the investments it is in have produced have exceeded the withdrawals. So the balance is the same as it was 10 years ago, and that money goes to pay for my long term care insurance.