Lookng For Investment Advice

We’ve never seriously thought about investments, since, like most Americans, we pretty much lived paycheck-to-paycheck with a little to spare as a cushion. However, with the passing of my mother-in-law, Ruth is going to be getting a 6 figure payout from her retirement account, plus a second inheritance (probably also 6 figures) when her mothers’ various properties are sold.

We want to save 1/3 for emergencies and a little travel, and invest the other 2/3 into something that will generate some revenue. Since I’m 70 and Ruth is 63, we don’t want something that’s going to take 10 or 20 years.


I was going to say “index funds, probably at Vanguard, and nothing else”, but you’re at retirement age, so… I don’t know. Just remember that financial advice is worth exactly what you pay for it. ;)

Yeah, I can give you long term advice. But at retirement age (I’m just about there myself) I’d recommend a good financial advisor (and do your homework before picking one.) They may put you in something relatively safe like municipal bonds, etc. to also minimize tax hits.

Prevailing wisdom would be that at/past retirement age you’d want a ratio that’s heavy on low risk items like bonds and lighter on stocks.

It really depends on when you think you’ll need the money. If you don’t need to pull anything for awhile you can park it in some index funds and basically be tied to the overall market. If you go that route then absolutely go for something reputable like Vanguard and pay attention to the management fees on the funds. There is a huge variance and expensive doesn’t mean better.

Also for the portion you aren’t investing right now take a look at what types of rates you can get on a new savings account. I recently opened a new one at a little over 4.5% and that was without shopping around.

Many years ago I was on a business trip and got bumped to first class. The guy sitting next to me was a funds manager for Fidelity. We chatted (long flight) and after a while he said, well, most people I sit next to on the plane ask me for investing advice. I told him, yeah, didn’t want to bug you. He said, well, you’re young, and I just finished giving my son (who’d just graduated from college with a business degree) advice and I have that folder here, if you’re interested.

He said, the dirty little secret is that guys like me that manage various funds for big companies can beat the S&P 500 over the short term, sometimes, but none of us can beat the index over the long term. He pulled out a chart showing the market index from before the depression in 1929 to current (at the time.) The chart was one steady climb up. He said, there are times where it drops, but it always comes back and keeps getting higher. I told my son, max out your 401K the day you start work, put it all in an S&P 500 index fund, and never do anything with it in terms of moving the money, and by the time you’re ready to retire you’ll have a LOT of money.

I remember being in a panic in 2008 when the financial world melted down. I was in a panic; my 401K was dropping SOOO low. I would listen to the radio on the drive home from work, and they would interview a guy from Merril Lynch and ask him, “Well, Joe, just how low do you think the market can go?” and he’d reply with “Well, it wouldn’t surprise me if it dropped to 2000.” And I wanted to pull over and throw up. I knew people who locked in their losses by moving everything to bonds or cash just to be able to not worry about the market any more.

The market dropped from 14,000 to about 6500 from 2007 to early 2009. I was upset recently when it dropped below 33,000.

There was a “lost decade” of about 10 years where the S&P actually had a return of a negative 0.9% but that is only the second time ever it had a negative return over 10 years and of course it came back strong.

Again, not helpful for shorter term returns. I will be retiring in about 3 -4 years, hopefully, but I can’t get myself to put everything in “safe” low return investments yet. But I have moved a good chunk.

An annuity would seem to maybe make sense at your ages? I don’t know what the market for them is like in the US though.

Latter some in CDs? I know rates are at/near 5%, and FDIC insured.

Napkin maths, $200k @ 5% for 5 years, is a cool $50k give or take in interest.

Maybe it’s time to pay a professional. Get up with someone like an American Express financial planner who is paid by the hour without commissions. Talk about everything, from assets, to insurance, retirement planning, investing goals and options, etc.

I recently put some money into a 36 month CD that pays 5%. That’s not bad, but it ties up the money for three years. The same credit union recently offered 12 month CDs at 4.5%.

You’re probably going to want to seek professional advice because getting an inheritance from a retirement account has different rules. If you reinvest the funds you have to take a certain amount of the money out every year based on the age of your wife’s mother.

This is what I’m talking about.

I have some money in a high yield savings account that is paying 4.85%.

As for the initial question, what do you do with this money depends a lot on your current financial situation, and your upcoming obligations, needs, and desires. My suggestion is that you find a fee-only fiduciary, financial planner, present your situation to them, and let them recommend what you do with the money. Note that I am not saying you should turn your money over to this person. This person is producing a financial action plan, if you will. You are free to follow or not follow the plan as you decide. if you decide the advice is reasonable, you could possibly work with them to take action but you don’t have to use the same person. And nowadays it’s really easy to open brokerage accounts and manage your money yourself if you have a good plan.

The fee-only part means you are paying them for the time they spend producing your plan. So you may pay for five or six hours of their time, which should include a free initial consultation and a presentation of the whole thing at the end.

The fiduciary part means they legally must have your best interests at heart and will not try to sell you items that pay them a commission.

In the interim, once you receive your inheritance, it would be a good idea to stash it in a high yield savings account while you are figuring out what to do with it.

That would mean you are selling the investments, which will create an immediate tax burden. Again, I’d suggest talking to a professional who will present all your options.

Thank, all. We’re leaning towards a CD once the $ comes in (Ruth just got the paperwork today) but i was wondering if there was a preferable option. Sounds like talking to an advisor is the way to go.

That’s when you want to buy, not when you want to sell! Of course, that’s only relevant if you have time to wait for the market to pick back up.

I glanced over what the money was currently invested in. So if it’s invested in something I would keep it, as is to avoid an immediate tax burden, as you mentioned.

I’m going to +1 the train on this one. Obviously you’ll have to pay for their services, but a good advisor will be worth it.

Certainly talk to an advisor. My immediate thought would be Roth IRA, but find an expert.

Or just buy crypto :)

I was also recently in this exact same position, though I am still 12+ years from retirement. After liquidating my mom’s estate (which consisted primarily of her small retirement fund and her home), my sister and I each received an inheritance that, while not enough to retire on or do anything overly dramatic with (you won’t see me on a house hunting show on HGTV or anything), was still a sizeable amount of money. My recommendation would be to seek the advice of both an investment professional AND a tax attorney, preferably one familiar with estate tax laws.

In terms of the home/property, in the United States you most likely won’t have to pay any tax on the money if the inherited property is sold within a year of the person’s passing AND you haven’t rented the property out or made improvements to it over that time. The way my tax attorney explained it to me was that if you inherit a house and then sell it a few months later without really changing anything about it the IRS considers the sale price to be the stepped-up basis for the property, and since you only pay tax on the amount you sell for above basis, you would essentially owe no income tax on the money from the sale.

When it comes to money inherited from a retirement account, if you choose to withdraw the money then you ARE going to be paying taxes, though thankfully not capital gains taxes or penalty taxes people pay when withdrawing money early from retirement accounts. You’re only going to pay whatever tax rate the additional income would bump you to as if it was earned income, but that rate will only apply to the amount above and beyond the tax bracket cutoff. So in the case of $200,000 ($75K in job earnings and $125K in inheritance) as a random example, when married filing jointly, you’re going to be paying 24% Federal tax on the amount over $178,000, plus the $30,000 you would have paid on the first $178,000. This is important because the fund management company is supposed to have you fill out an IRS form asking about withholding, and in the example above it would be wise to set that withholding rate at 20% to 24% depending on your own annual income. If you don’t make a choice the default withholding is only 10%, and that’s going to leave you with a sizeable tax liability when it comes time to file. Again, a tax attorney is a vital consultant when dealing with this.

As to what to do with all of that money, I agree with the folks in the thread that it is going to depend on your personal circumstances, your age and risk comfort factor, and since you’re already retired or close to it, what your retirement plans were already. A financial advisor is a necessity here, and a good one will offer sound advice without pressuring you to give them any of the money. It may well be that you’re risk averse enough now that you’re retired that you simply diversify into low-risk lower-yield investments like bond portfolios and money market funds. You may want to pay off debts to save paying interest over time, or you may still owe money on your home and wish to pay that off and or make improvements to it to gain all the advantages that brings. A good financial advisor will recommend spreading your wealth around in many ways, earning money here, saving money there, improving your financial situation while protecting your assets.

I personally decided to pay off a bit of debt we’d been carrying for a long time now to save paying the interest rate on it, which was probably more money that I could have earned each month investing the same amount, plus now those monthly payments revert to being pure income that I can invest over time or use for other things. I took a large chunk of it and opened a money market account at the bank I use for most of my banking needs, so I’ll get 4.25% APR on it while having full unfettered access to it if I decide to do something with it. A small chunk of it is going to go to paying down my oldest son’s student loans, because unlike my younger son and daughter, I didn’t have the financial resources to help pay for his school as much when he was in college, so I feel this is a good way to even things up among my kids while improving his financial situation that much more as well. My wife and I will also likely use some of the money to make long overdue improvements to our home, which in turn will add value to our greatest asset.

And maybe, just maybe, I will actually take a very small bit of my inheritance and do something for myself. I thought about upgrading my GPU and buying a pair of 4K monitors, but 4000 series cards are still $1,800+ and I’m sorry, but that is fucking ridiculous. Maybe a nice 3060ti instead…

For retirement, I would talk to an advisor. I haven’t researched it myself and don’t want to give advice there.

For younger people 10+ years away from retirement, index everything. Keep 3 months in cash (money market).

At 70, it’s hard to really invest. I’d suggest a hedge against an uniquely American meltdown, largely safe investment.

A lot depends on how much you spend in a year.