Where to put inheritance

[davet77]

I recently inherited about $250K.  I don't need the money right now; I am financially ok.  I am a renter but other than that I have no bills.   I am 51 but only have about $40K in a 401K.  Since I don't need the money right now, I just want to put it somewhere safe with the best return on investment.  But I would like to have it available in case I need to for an emergency, something like my car dying.   

Any recommendations?

Thanks

[Wolfpack Mustachian]

The investment order is always a good start.

https://forum.mrmoneymustache.com/investor-alley/investment-order/msg1333153/#msg1333153

Beyond that, 250k and no debt (sounds like) is much more than you'd need in all but the most extreme circumstances. Get the bulk of that invested ASAP.

[Omy]

Maybe spend some of it on a trip or frivolous gift to yourself to remember them by and/or donate some to a charity to honor their memory?

One year CDs are so good right now that it wouldn't be a horrible idea to park some there until you've had some time to think about your long term plan.

Do you want to buy a house? Do you want to continue renting and build up investments? Do you have an emergency fund? Do you have a pension coming and this can all be fun money?

Without knowing more about you, it's hard to say what the best use of the money would be for your situation.

[Dee18]

Treat it (or at least 90% of it) the same as you would earned money, following Wolfpack’s link to the investment order.

[JupiterGreen]

Provided you don't have debt, so following in line with @Wolfpack Mustachian suggestion of investment order, I would then put the rest in a brokerage like Vanguard index fun (or even one of their targeted retirement fund). I would not suggest spending any of the money on something frivolous or even donations because

I am 51 but only have about $40K in a 401K.

You are in an emergency situation being 51 and woefully unprepared for retirement (unless this comment doesn't represent the full picture).

[mistymoney]

Maybe spend some of it on a trip or frivolous gift to yourself to remember them by and/or donate some to a charity to honor their memory?

One year CDs are so good right now that it wouldn't be a horrible idea to park some there until you've had some time to think about your long term plan.

Do you want to buy a house? Do you want to continue renting and build up investments? Do you have an emergency fund? Do you have a pension coming and this can all be fun money?

Without knowing more about you, it's hard to say what the best use of the money would be for your situation.

I really disagree. At 51 with only 40k in 401k, this money need o go all into investment and savings. An extravagant trip would be a bit too extravagant at this savings level.

OP - do you have any pension or other retirement savings?

My advise would be to shore up the EF if necessary, and put the rest into savings and investments for the long haul.......if buying a house in the near term is a potential, would alter that advice

[Villanelle]

You are in a bad situation, with a lucky break that can help get you a decent start on getting out of that bad situation, if you let it.

It depends on your monthly expenses and how stable your income is, but I'd likely put about 3 months expenses into a high-yield savings account, and then invest the rest in broad, low-cost index funds.  Max an IRA (roth or trad, depending on your situation) after getting any company match on an 401k.

Right now, you are on a path to have to work until you drop dead.  that's bad enough, but consider what happens if your body (or you mind) start to go.  Unless there's something in your situation you haven't included, your situation is bad, and you don't seem to realize that.  Let this inheritance be what jumpstarts you to turning around your finances.  It's not anywhere near enough to retire on, but it's enough to give you a good start.  hard to say much more without details on your income and expenses, but regardless, you need to start saving.  A lot.  Immediately. 

[Omy]

We have no idea if OP is in a bad situation. I have a sibling who rents and is 55 with less savings....but at age 60 will have over $7K per month in pension income (and social security on top of that a few years later).

I didn't intend that OP should spend it all on hookers and blow...just that it's not a terrible idea to spend some of this found money honoring the memory of the deceased.

[Villanelle]

We have no idea if OP is in a bad situation. I have a sibling who rents and is 55 with less savings....but at age 60 will have over $7K per month in pension income (and social security on top of that a few years later).

I didn't intend that OP should spend it all on hookers and blow...just that it's not a terrible idea to spend some of this found money honoring the memory of the deceased.

Yes, that's why I said, "Unless there's something in your situation you haven't included," which would be something like a $7k/m pension.

[davet77]

Thanks for all the replies.  I will try to add some context. 

I basically started over about 5 years ago with $0 so I get that I am way behind where I should be.  I have a Fidelity 401K through work, about $40K in it.  I contribute 10% of my pay into it, company matches 50% of 3%.  That is in FID 500 Index.   I have about another $10K in saving that I know I need to move somewhere else since it is not doing anything for me. 

My monthly outgo is about $2,500.  The major expense is rent, $1,2500 a month.  Other than I have no debt, just the normal utilities and food.  I could probably live a little cheaper if I tried.  I have worked from home for almost the entire time I have had this job, but they are requiring us to go to the office 3 days a week now.  It is about 12 miles away, 15 minutes.  The job is stable, little to no chance of losing it, but my yearly raise was only 2%.  There is some chance of advancement and more money. 

I realize I am behind where I should be financially, I had $0 in the back 6 years ago, trying to build up now.  I don't really care about an extravagant trip or anything like that, I did enough of that when I was married. 

Not sure if this is pertinent to anything but my health is good.  I went from 6'4" and 270 lbs to 187 lbs now about 2 years ago.  I thought about 30 years of being fat was enough.  No health issues at all. 

I think that is everything.   

Thanks

edited because I couldn't spell, or form sentences that make sense for some reason. 

[sonofsven]

If you received an inherited IRA there's the ten year rule to deal with, otherwise I would increase your cash savings (emergency fund) to approximately $20k in a high yield savings accout at around 4% interest and put the rest into Vanguards total stock market index fund ETF (VTI).

Editing to add: if you left the $240k invested and figured a yearly increase of 8% that would amount to $796k in fifteen years.

[mistymoney]

edited because I couldn't spell, or form sentences that make sense for some reason.

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